Hummell v. Bank of Monroe

• Decision Date: 11 May 1888
• Parties: HUMMELL v. BANK OF MONROE. MULLENS v. BANK OF MONROE.
• Court: Iowa Supreme Court

75 Iowa 689

37 N.W. 954

HUMMELL

v.BANK OF MONROE.

MULLENS

v.BANK OF MONROE.

Supreme Court of Iowa.

May 11, 1888.

Appeals from district court, Jasper county; W. R. LEWIS, Judge.

Action by Lewis Hummell against the Bank of Monroe, and action by G. L. Mullens against the same. The plaintiffs in each case appeal. These causes involve the same questions, and may be disposed of in a single opinion. The appeal in each case is from the order sustaining a demurrer to the petition.Bosquet & Earl, for appellants.

Winslow & Varnum for appellee.

REED, J.

The substance of the petition in each case is that one R. C. Anderson, who at the time was defendant's cashier and general business manager, defendant being a corporation engaged in a general banking business, by means of certain false and fraudulent representations as to his financial condition, and the uses to which he intended to devote the money to be obtained thereon, induced plaintiff to execute to him an accommodation promissory note for $5,000; that he afterwards negotiated said note to an innocent purchaser, in the one case to the Des Moines National Bank and in the other to the Bank of Newton, receiving therefor in each case the draft of the purchaser on its correspondent in Chicago, payable to his own order; that he subsequently indorsed the draft to defendant, who collected the money thereon, and appropriated the same to its own use; that in the purchase of said draft Anderson acted as the agent of defendant, and for it, and in its name, received the same, and did all of the business pertaining to the transaction; that at the time he knew and had in mind the fact that the draft was the proceeds of said note, and that the signature of plaintiff to the note had been obtained by the fraudulent means alleged; and that at the maturity of the note plaintiff was compelled to pay the same; and that he has not been reimbursed therefor except in the case of Mullens by a small payment made by Anderson. The propositions on which plaintiff's case rests are (1) that as the note was obtained by fraud, plaintiff had a lien upon the proceeds in Anderson's hands for his indemnity against the note, or, in other words, was the equitable owner of the proceeds, and may pursue the same in the hands of any person who received them from Anderson, with notice of his rights; and (2) that defendant is charged with knowledge of the facts out of which plaintiff's lien or ownership of the draft arose by the knowledge of Anderson, which was present in his mind when he made the purchase for it.

For the purposes of the case the correctness of the first proposition will be conceded. With reference to the other proposition, it will be observed that the transaction in which the note was obtained in no manner pertained to the business of Anderson's office or agency, but was a mere personal matter between him and plaintiff, so that defendant is in no manner responsible for the fraud which was perpetrated on plaintiff in the transaction. It is also to be observed that there is no claim that any other officer or agent of defendant had any knowledge of that transaction, or that the draft was the proceeds of a note obtained from plaintiff. But the effort is to charge it with the liability on the ground solely of Anderson's knowledge. If the alleged fraud upon plaintiff had been perpetrated by another than Anderson, from whom he, acting for defendant, had purchased the draft with the knowledge alleged in this case, there probably would be but little doubt that under the settled rule of law defendant would be liable, and this whether the...