Grow v. Cockrill

• Decision Date: 06 February 1897
• Citation: 39 S.W. 60,63 Ark. 418
• Parties: GROW v. COCKRILL
• Court: Arkansas Supreme Court

39 S.W. 60

63 Ark. 418

GROW v. COCKRILL

Supreme Court of Arkansas

February 6, 1897

Appeal from Pulaski Circuit Court, ROBERT J. LEA, Judge.

STATEMENT BY THE COURT.

The appellant, Jennie Grow, had a credit in the First National Bank of Little Rock, in February, 1892, and on the 15th of that month wrote to H. G. Allis, then president of that bank addressing him in his individual capacity, however, and made inquiry of him as to how much the bank would pay as interest for the loan of her money, or language to that effect. This letter seems to have been answered on the 24th by W. C Denny, who was then cashier, and he informed her, among other things, "that the bank would pay four per cent. interest on deposits, giving their (the bank's) certificate for the same, which is not subject to check. If the certificate is cashed before the expiration of the time mentioned--six months--the interest is forfeited. I can give you a very secure loan for $ 800 for a year, secured by stock of this bank at par, interest payable semi-annually. If you care to avail yourself of this loan, let me hear from you."

On May 2d appellant wrote again, asking if the loan could still be made as stated in Denny's letter of February 24th, and quoted last above; also as to the rate of interest she could get, and also saying she had about $ 900, including the amount in bank, then amounting to $ 500.

Denny answered this letter on the 5th of May, saying "Replying to your favor of the 2d inst., have to say, if you will send us enough to make $ 1,000, we can get you a loan for one year at 9 per cent., secured by the stock of this bank, interest payable semi-annually."

On May 16, 1892, appellant wrote, saying: "I send in to-day's mail check to Mrs. Kimbrough, who will hand you five hundred dollars, and take the five hundred dollars I now have in your bank, making one thousand dollars, and loan out and give the note the party gives you loaned it to, to Mrs Kimbrough, * * * * Please let me hear from you." P.S. "You wrote your bank would secure the loan." Signed. "J. Grow."

This letter was answered by Denny on the 21st May, saying: "I have your favor of the 16th inst., stating that Mrs. Kimbrough would deposit $ 500 with us, making your balance $ 1,000, which you desired us to lend for you. It seems that you are mistaken about the bank securing the loan. I believe I stated that I could get you a loan for $ 1,000, secured by the stock of this bank at par, which is good security. We would not lend your money, unless we knew it was perfectly safe. I can assure you you need have no fear on that point. The $ 500 has not yet been delivered; but as soon as we have it on hand, we will make the loan, and notify you, and deliver Mrs. Kimbrough the note."

This correspondence is given in full, in order to show the exact nature of the transaction between the appellant and these bank officials, as well as the relation of the parties to the loan, which was on the 2d of June, 1892, made in accordance with the tenor of this correspondence.

The appellant, during the period of this correspondence, was residing in Caldwell, Kansas, and wrote her letters from that place. It seems that she subsequently moved to Washington City. The Mrs. Kimbrough was an aunt of appellant, residing in Little Rock, and the "Cousin Clif." mentioned subsequently in testimony and letter was T. C. Powell, then residing in Little Rock, a good business man, and one well acquainted with such business as he was called upon to transact by and for appellant. He has since died.

Mrs. Kimbrough testified that appellant, from Washington City, in May, 1892, wrote to her as follows, to wit: "I enclose drafts for $ 500. I have $ 500 in the First National Bank. Take these there to be cashed. * * * I wrote them [the bank people] you will hand them $ 500, and to give you the note from the party they loan it to. Tell Cousin Clifton all about it. It is $ 1,000 they are to loan out, including the $ 500 I have in bank." Witness, proceeding further, stated: "I got my nephew, Clifton Powell, an insurance man, to help me, and go with me to the bank when I deposited the $ 500. It was not fixed that day, as they said the man they were going to loan it to was out of town. I had no more to do with it. Mr. Powell is dead. The note and collateral were delivered to him, and he sent them to my niece (appellant). Mr. Powell is the 'Cousin Clif.' mentioned in the letter, and he went with me to see the matter was arranged according to plaintiff's letter."

G. R. Brown testified, in substance, that on June 2, 1892, Denny brought the note in suit to him to sign, saying that Mrs. Grow had some money in bank which Allis wanted to borrow, and he (Allis) desired me to make the note for it. Witness answered, "All right, if he will put up the security." He did not own the stock, never got the money, and never knew anything more about it. He said the bank failed in February, 1893, and, previous to that event, he had signed accommodation paper for Allis amounting to several hundred thousand dollars. Witness stated that when he made the note in suit on the 2d June, 1892, he was the owner of $ 25,000 worth of property, but that when the bank failed in February following, Allis failed, and that made him (witness) insolvent.

The testimony of Clement H. Yost, a former book keeper of the bank, shows that on 2d June, 1892, appellant had to her credit in the bank $ 1,000, and that on that day Allis' account was credited with $ 1,000; that Allis' account, at that time, was overdrawn to the amount of $ 23,249; that he had no way of telling from the books why Mrs. Grow was debited with $ 1,000, or why Allis was credited with $ 1,000, on that day; that the certificate of stock was genuine, and that it was shown upon the books that it belonged to Allis, and that he purchased the same from Roots, and that Allis' irregular transactions wrecked the bank.

Nick Kupferle testified as to the market value of the bank stock on June 2, 1892, and until October following; as to Allis' misconduct in the management of the bank, and the ignorance of the same on the part of the directors, of whom he was one.

The affairs of the bank, after its failure, were placed in the hands of appellee, as receiver, and he is sued in this action as such. Judgment for defendant, and plaintiff appealed to this court.

Affirmed.

Dan W. Jones & McCain for appellant.

The answer constituted no defense. Bank officials, having undertaken to lend money for depositors, cannot become borrowers, or interested with the borrower. 26 Ark. 445; 16 id. 345; Mechem, Agency, secs. 66, 67. The entire correspondence shows that the bank officials acted as officials, and not as individuals. Boone, Banking, secs. 110, 115; 5 Wheat. 326.

S. R. Cockrill and Ashley Cock rill for appellee.

The action ex contractu is not sustained by any proof, and fails. The president and cashier have no power to bind the bank, except in the discharge of their ordinary duties, and the bank is not liable for their torts. A national bank has no power to act as broker. 6 Pet. 51; Boone, Banking, secs. 119, 353; ib. 682, 101; 152 U.S. 346; 42 Md. 581; 89 Pa.St. 324; 92 U.S. 122; 42 N.E. 567; 28 S.W. 303; Cooley, Torts, 119; 65 F. 932; 77 id. 129; L. R. 9 Q. B. 301.

BUNN, C. J. BATTLE, J., did not participate in the decision of this case.

OPINION

BUNN, C. J., (after stating the facts.)

The complaint, in brief, charges that the bank and its president,...