German Sav. Bank of Davenport v. Citizens' Nat. Bank of Davenport

• Decision Date: 09 April 1897
• Citation: 70 N.W. 769,101 Iowa 530
• Parties: GERMAN SAV. BANK OF DAVENPORT v. CITIZENS' NAT. BANK OF DAVENPORT (CITY NAT. BANK OF CLINTON, INTERVENER).
• Court: Iowa Supreme Court

101 Iowa 530

70 N.W. 769

GERMAN SAV. BANK OF DAVENPORT

v.CITIZENS' NAT. BANK OF DAVENPORT (CITY NAT. BANK OF CLINTON, INTERVENER).

Supreme Court of Iowa.

April 9, 1897.

Appeal from district court, Scott county; Charles M. Waterman, Judge.

The undisputed facts in this case are that the plaintiff bank and the defendant the Citizens' National Bank are both situated in the city of Davenport, Iowa. Both have for many years been conducting a banking business in the same building in that city. The two banks have a separate and independent corporate existence, though to some extent the stockholders in both institutions are the same, and a majority of the directors of the plaintiff bank are also directors in said Citizens' National Bank. The business of each bank is conducted independently of the other. About February 15, 1893, one John McLaughlin, a resident of the city of Clinton, in Clinton county, Iowa, claiming to represent one William Quinlan, his brother-in-law, also of said Clinton county, and residing some 30 miles northwest from the city of Clinton, applied to the plaintiff bank for a loan of $8,000 on the farm of said Quinlan, upon which the latter was living. He was furnished by the plaintiff bank with a blank application for a loan, a blank mortgage and note. In due time, McLaughlin caused to be returned to said bank the application properly filled out, and purporting to be signed by said Quinlan; also, the mortgage properly filled out, and purporting to be signed by Quinlan and his wife, and to have been duly acknowledged by them before a notary public; also, the note filled out, and purporting to be signed by said Quinlan. A mistake had been made in the mortgage, and the bank furnished McLaughlin with another blank, with the request that he have it signed and acknowledged by Quinlan and his wife, and also have it duly recorded. When the plaintiff bank received from McLaughlin the first mortgage, and at the time it sent him the other blank, it drew its check for the $8,000, the amount of the loan, payable to William Quinlan, and mailed the same to McLaughlin, at Clinton, Iowa, and in the letter of transmittal directed McLaughlin that the check should not be used until the new mortgage was executed, acknowledged, and recorded. The check for the $8,000 was dated February 18, 1893, and was presented to the intervener bank for payment by McLaughlin on the 21st day of said month. The new mortgage bore date February 20, 1893, and purported to have been acknowledged and recorded on the same day. It reached the plaintiff on February 21, 1893. The check was presented to intervener bank by McLaughlin on February 21, 1893. On the back of it there appeared the name “William Quinlan.” It was also indorsed by McLaughlin. McLaughlin asked for the cash on said check. Before cashing the said check, the cashier of the intervener bank called up the plaintiff bank by telephone, and certain communications were thus had between the two banks relating to the check, as to which there is a conflict in the evidence. After the conversation had ended, the intervener bank cashed the check, and the same day indorsed it for collection, and transmitted it to its Davenport correspondent, the defendant the Citizens' National Bank. The latter bank had on deposit money of the plaintiff bank in a sum in excess of the amount called for by the check, and charged the $8,000 up against the plaintiff's said deposit account. Nothing further was done in the matter until about February, 1894, when the plaintiff bank sent a notice to Quinlan that the interest on his $8,000 note and mortgage would soon be due. Quinlan denied signing the application, note, or mortgage, and denied having authorized McLaughlin to act for him in procuring a loan; whereupon it became known that the note, mortgage, appraisement, certificate of acknowledgment, and certificate of recording, and the indorsement upon the check of William Quinlan's name, were all forgeries. In November, 1893, and a short time before the first interest payment became due, McLaughlin suicided and died, insolvent. It appears that neither plaintiff's officers, nor the officers of the Citizens' National Bank, nor the officers of the intervener bank, had ever seen Quinlan. May 22, 1894, plaintiff filed its petition in the district court of Scott county, Iowa, claiming that the defendant the Citizens' National Bank had without authority appropriated to its own use, out of the money plaintiff had deposited with it, the sum of $8,000 on February 21, 1893, and refused to pay the said sum over to plaintiff. Judgment was asked for said sum, with interest thereon from said date of appropriation. Thereafter the defendant the Citizens' National Bank gave notice to the City National Bank of Clinton, Iowa, of said suit, and of the facts claimed by plaintiff, and that said Citizens' National Bank would hold said City National Bank responsible for any judgment which might be obtained against it, and that it should come in and defend for it, in said suit; whereupon the City National Bank employed counsel to defend the said Citizens' National Bank in said suit. August 6, 1894, said counsel filed an answer for said Citizens' National Bank, which was in substance a general denial. September 6, 1894, said counsel filed an answer for said bank, pleading five separate defenses. These are lengthy, and may be summarized as follows: (1) That the City National Bank paid the check as an accommodation to plaintiff, and to the defendant, upon the statement and representation of plaintiff that it had issued such a check on a loan made to William Quinlan, and was therefore estopped from denying that it had such a transaction with Quinlan, and from claiming that the check was wrongfully cashed or paid. (2) Pleaded the same facts, and alleged that in the transaction McLaughlin was the agent of the plaintiff, and set forth the facts claimed to constitute such agency. (3) Embraced all prior allegations, and alleged that the facts pleaded showed that the plaintiff was negligent in not informing the City Bank that it had dealt with McLaughlin, instead of Quinlan, and that it had dealt solely with McLaughlin, and had never seen Quinlan, and that it had suspicions of McLaughlin, and declined to trust him, and therefore made its check payable to Quinlan. (4) This defense is not now insisted upon. (5) In this defense it is claimed that the City Bank inquired of the plaintiff for general information with regard to the check, and asked whether it should pay the check, and that plaintiff was negligent in not imparting to it full information touching the check. It is pleaded in each defense that the City Bank paid the check upon the direction of the plaintiff. April 23, 1895, the defendant the City National Bank of Clinton intervened in said action, and pleaded substantially the same matters as have been referred to as having been pleaded by the Citizens' National Bank. On the same day, the Citizens' National Bank filed an amendment to its answer, alleging that it acted in good faith in paying the $8,000 to the City National Bank, and without knowledge of any forgery or fraud. The plaintiff answered the petition of intervention, putting in issue all of the facts therein pleaded, and averred that the pretended indorsement of the name of William Quinlan on said check was a forgery, and made without his knowledge or consent, and that said Quinlan never received any part of the consideration for said check or of the money paid thereon. The cause was tried to the court and a jury, and a verdict returned for the full amount claimed, upon which a judgment was entered against the defendant the Citizens' National Bank. The defendant the Citizens' National Bank and the intervener appeal. Affirmed.L. A. Ellis and Davison & Lane, for appellants.

Julius Lischer and Bills & Hass, for appellee.

KINNE, C. J.

1. After the City National Bank had intervened in this action, it filed a motion for the removal of the cause to Clinton county, the place of residence of said intervener. This application for a change of the place of trial was made under section 2586 of the Code, which provides for the bringing of personal actions in a county wherein some of the defendants actually reside. Intervener's thought is that it is the real party in interest, and that the defendant the Citizens' National Bank is a nominal party only, and made a party solely for the purpose of giving the district court of Scott county jurisdiction of the action. The motion was overruled, and error is assigned thereon. We think the ruling was correct.

Counsel for appellants rely upon several cases, which may be briefly considered. Howell v. Furnace Co., 69 Cal. 153, 10 Pac. 390, was a case where the company, claiming a residence in San Francisco, held $2,000, to which it made no claim. Howell, the plaintiff, lived in Santa Barbara county, and brought his action there against the furnace company, claiming the money. In accordance with the provisions of the statute of California, the furnace company paid the money into court, and procured one Thompson, the claimant of it, to be substituted as sole defendant in the case. After Thompson had thus become the only defendant, he moved to transfer the case to San Francisco, the place of his residence. It was held that the lower court erred in not sustaining the motion. In the opinion, stress is laid upon the fact that Thompson did not voluntarily place himself under the provisions of the statute, and the fact that he was the only defendant in the case. Buell v. Dodge, 57 Cal. 645, was a case where two parties were made defendants, but the complaint stated a cause of action against only one of them, and it was held he was entitled to a change of venue to his own county. Mill Co. v. Bowen, 7 Iowa, 465, is also relied upon. In that case the holding was that the defendants spoken of in the statute must be persons having an actual,...