German National Bank v. Moore

• Court: Arkansas Supreme Court
• Writing for the Court: HART, J.
• Citation: German National Bank v. Moore, 116 Ark. 490, 173 S.W. 401 (Ark. 1915)
• Decision Date: 01 February 1915
• Docket Number: 148
• Parties: GERMAN NATIONAL BANK v. MOORE

173 S.W. 401

116 Ark. 490

GERMAN NATIONAL BANK v. MOORE

No. 148

Supreme Court of Arkansas

February 1, 1915

Appeal from Pulaski Chancery Court; Jno. E. Martineau, Chancellor affirmed.

STATEMENT BY THE COURT.

R. H Moore instituted this action in the chancery court against the German National Bank to recover from it the amount of a certificate of deposit, a true copy of which is as follows:

"German National Bank,

Capital $ 750,000.

"No 538.

"$ 4,000.

"Little Rock, Ark., January 14, 1913.

"R H. Moore has deposited with us four thousand ($ 4,000) dollars, payable to the order of self twelve months after date with interest to maturity only at the rate of 4 per cent per annum upon the return of this certificate properly endorsed.

"Not subject to check."

The facts are practically undisputed. The plaintiff, Moore, was engaged in the cotton business in the city of Little Rock and was a customer of the German National Bank. About the end of the cotton season he deposited in the bank $ 4,000 and received a certificate of deposit, a copy of which is above set out. That certificate was then placed in the vaults of the bank for safe keeping.

In November, 1913, the plaintiff was advised to go south for his health and he took the certificate of deposit from the vaults of the bank and put it in his pocket with other papers which he carried with him on his journey. He left Little Rock with his nephew and traveled with him to the city of Texarkana. There he separated from his nephew and bought a ticket to Alexandria, Louisiana, via Shreveport. When he arrived at Shreveport he was told that it would be better to go to San Antonio, Texas, than to Alexandria, because of the higher altitude at the former place. He went to the ticket office of the railroad company and asked for a rebate on his ticket. He was told that it could not be procured there, and then bought a ticket to San Antonio, Texas. The ticket upon which he desired a rebate was in an envelope with the certificate of deposit. During the course of his conversation with the ticket agent he took out the envelope and exhibited the ticket to the agent and then left, leaving the envelope on the desk or ledge of the ticket office. He did not discover the loss until he had boarded the train and was on the way to San Antonio, Texas. En route he wired the German National Bank the circumstances of his loss and when he arrived at San Antonio wrote them fully the particulars of it. He then procured money with which to return to Shreveport and went back there and made a diligent search for the certificate of deposit but was unable to locate it.

After the certificate of deposit became due he went to the bank and demanded payment. The bank refused to pay him unless he would furnish an indemnity in double the amount of the deposit. Moore endeavored to furnish the indemnity to the bank but was unable to do so. The bank still declined to pay him the amount of the deposit and he instituted this action on the 14th day of October, 1914.

Other facts will be referred to in the opinion. The chancellor found in favor of the plaintiff and entered a decree to that effect on the 21st day of October, 1914. The defendant has appealed.

Decree affirmed.

Moore Smith & Moore, for appellants.

1. This is a case of first impression in this State. Indemnity should be required, at least where the note is not clearly shown to have been destroyed, or barred by limitation, and the fact that it was unindorsed constitutes no exception to the rule. 2 Pom., Eq. Jur., §§ 831, 832; 16 Pick. 315; 104 F. 187; 45 Oh. 39; 15 Id. 39; 3 Bing. 273; 1 J. B. Moore 510; 7 B. & C. 90; 1 Exch. 167; 2 Daw., Neg., Inst., § 1484; Story on Eq. Jur., § 86; Story on Prom. Notes, § 106; 104 F. 187; 78 S.E. 671.

2. The remedy upon a lost negotiable instrument can be sought only in equity. Daniels on Neg. Inst., 1475, and cases supra; 78 S.E. 671.

Miles & Wade, for appellee.

1. In this country the authorities preponderate that no indemnity is required. The chancery court was the proper forum. 2 Pom. on Eq. Jur., §§ 831-2; 20 Vt. 407; 2 Daw., Neg. Inst. (5 ed.), § 1475; Ib. (6 ed.), §§ 1481-4; 57 Ark. 49; 101 Id. 4; 25 Cyc. 1615, 1616; 2 Greenl., Ev., § 156; Story, Prom. Notes, § 451; 1 R. I. 401; 49 Iowa 37; 15 Oh. 242; 16 Col. 134; 138 S.W. 314; 125 N.Y.S. 402; 140 N.C. 640; 4 Cal. 37; 109 P. 499; 25 Cyc. 205; 3 Wend. 344; 12 Vt. 433; 3 Stew. (Ala.) 31. The question of indemnity is one addressed to the sound discretion of the court. Cases supra.

OPINION

HART, J., (after stating the facts).

Equity was the proper forum in which to institute this action. The loss or destruction of a written instrument in no way affects the liabilities of the parties to it or changes the nature of the demand. 25 Cyc. 1608.

In an extensive case note to 48 L.R.A. (N.S.) 648, the jurisdiction of courts of law and equity in actions on lost instruments is discussed. In some of the States courts of law have enlarged their jurisdiction by their own acts and in other States such jurisdiction has been conferred by statute.

Article 7, section 15, of the Constitution of 1874, provides that until the General Assembly shall deem it expedient to establish courts of chancery, the circuit courts shall have jurisdiction in matters of equity. By this is meant such jurisdiction as a court of chancery properly exercised at the time of the adoption of the Constitution. The jurisdiction of courts of equity linder our Constitution is fixed and permanent and its jurisdiction can not be enlarged or diminished. Gladish v. Lovewell, 95 Ark. 618, 130 S.W. 579; Hester v. Bourland, 80 Ark. 145, 95 S.W. 992; Walls v. Brundidge, 109 Ark. 250, 160 S.W. 230.

It has long been settled that courts of equity have jurisdiction of suits brought to recover the amount due on lost instruments. Pomeroy's Equity Jurisprudence (3 ed.), vol. 2, §§ 831-2.

Inasmuch as courts of equity originally had jurisdiction in actions on lost instruments, even if courts of law were given jurisdiction in such cases by statute or otherwise, such action would not deprive courts of equity of the jurisdiction which they originally had.

Our courts and the courts of many other States have held that a negotiable instrument payable to the order of a particular person but not endorsed can not be made the issue of an action against the maker except in the right of the payee. Case note to 48 L.R.A. at page 655, and in Lewis Mercantile Co. v. Harris, 101 Ark. 4, 140 S.W. 981, this court held that the drawee of a draft payable to order who pays upon a forged or unauthorized endorsement does so at his peril.

It is, therefore, insisted by counsel for plaintiff that the instrument sued on, being payable to the order of the plaintiff, and not having been endorsed by him at the time it was lost, only the plaintiff could sue on it and, such being the case, no indemnity is needed. Hence they contend that in all cases where the lost instrument, though negotiable, is payable to the order of the payee and unendorsed it does not come within the rule requiring indemnity to be furnished.

On the other hand, it is contended by counsel for the defendant that the maker upon payment of the instrument has a right to its possession as a voucher of its payment and that this right should not be taken from him without an equivalent.

Again they contend...