Hollis v. Commercial Nat. Bank of Salida, 12714.

• Decision Date: 20 June 1932
• Docket Number: 12714.
• Citation: 13 P.2d 262,91 Colo. 151
• Parties: HOLLIS v. COMMERCIAL NAT. BANK OF SALIDA.
• Court: Colorado Supreme Court

13 P.2d 262

91 Colo. 151

HOLLIS v. COMMERCIAL NAT. BANK OF SALIDA.

No. 12714.

Supreme Court of Colorado

June 20, 1932

In Department.

Error to District Court, City and County of Denver; Henry Bray Judge.

Action by the Commercial National Bank of Salida against Gordon Hollis and others. From judgment for plaintiff, named defendant brings error.

Reversed and remanded.

Frank L. Fetzer, of Denver (Pierpont Fuller, of Denver, of counsel), for plaintiff in error.

Bartels & Blood, Walter W. Blood, and Arthur H. Laws, all of Denver for defendant in error.

HILLIARD J.

The bank sued Hollis and two others, M. M. Miller and Harry T Bowen. There was voluntary dismissal as to Bowen. Judgment went against Hollis and Miller, and Hollis seeks review.

It appears that at all times material to this inquiry Hollis was president of the Drovers' Cattle Loan Company, a corporation; that October 19, 1925, Miller executed his note to the cattle company for $6,500, and gave as collateral security a certificate for 125 shares of stock of the Stockyards National Bank of Denver; that on the same day the cattle company made its note to the bank here for $6,000, attached the Miller note and bank stock as collateral, forwarded it to the bank, drew for $6,000, and its draft was paid. It seems that for a year or more Before the incident of the Miller note the cattle company had an arrangement with the bank to carry its paper up to $75,000 in items as sent, and the Miller note was one of many transactions which entered into the use of such credit.

The cattle company failed and did not pay its note, Miller did not pay, and the bank stock proved to be worthless. It was sought to hold Hollis and Bowen personally, on the theory, as the court found, that in establishing credit with the bank in behalf of the cattle company, they promised that only good and well-secured notes would be sent to the bank; and that they had knowledge at the time the Miller note was sent the pledged bank stock was practically valueless.

It further appears that one Myerson, assistant secretary-treasurer of the cattle company, who handled its notes and discounts, on his own initiative, and without the knowledge of Hollis or Bowen, sent the Miller papers to the bank; and that of the personnel of the cattle company only Myerson knew about it. But the court held that since at the inception of the credit arrangement Hollis had led the bank directors to believe that only 'gilt-edge' notes would be sent, and as the Miller note and its collateral were not good, Hollis should be held, as in fraud, and adjudged accordingly.

The only evidence of any representations made by Hollis was of a letter claimed to have been written by him to the bank, or one Basore, its then president. This letter was said to have been of date when the bank was considering the matter of discounting the cattle company's paper, and to have influenced the bank's favorable action. The letter was not produced, and error is assigned to the reception over Hollis' objection, of secondary evidence of its contents. Only the cashier of...