Kendrick State Bank v. First Nat. Bank of Portland

• Decision Date: 04 August 1913
• Docket Number: 5,877.
• Citation: 206 F. 940
• Parties: KENDRICK STATE BANK v. FIRST NAT. BANK OF PORTLAND.
• Court: U.S. District Court — District of Oregon

206 F. 940

KENDRICK STATE BANK v. FIRST NAT. BANK OF PORTLAND.

No. 5,877.

United States District Court, D. Oregon.

August 4, 1913

Prior to June, 1910, the Kendrick State Bank of Idaho had been a correspondent of the defendant, the First National Bank of Portland, Or. J. W. Bradbury, who was the president of the former bank, was the owner of the capital stock thereof to the amount of $23,000 out of an entire capitalization of $25,000. In practical reality, he was the owner and manager of the bank, and transacted its business affairs very much as if no one else were interested with him. About the 11th day of June, 1910, the Kendrick Bank, acting through J. W Bradbury, its president, arranged by correspondence with the Portland Bank to issue to the latter its certificate of deposit for $5,000, accompanied by certain collateral, in consideration of which the Portland Bank extended a credit to the Kendrick Bank in a like sum, the same to bear interest at 6 per cent. per annum. This credit was extended from time to time under the same arrangement until December 6, 1910, when J. W. Bradbury, as president of the Kendrick Bank, wrote the Portland Bank as follows:

'Kendrick Idaho, Dec. 6, 1910.

'J W. Newkirk, Cashier, The First National Bank, Portland, Ogn.-- Dear Sir: In reference to our C.D. due Dec. 12th, for $5,000.00, would it be possible for us to get an extension on this for six months? The collections with us are at a standstill, and from the outlook I am of the opinion they will continue so until another crop is harvested. We inclose our C.D. for $5,000.00 for the time asked for, in case you can grant us the extension asked to replace the one you hold. We are writing you on another sheet for this to be carried in another way, with our reasons for asking for the change. Hoping you will grant us the favor of an extension, and thanking you for your many kindnesses of the past, I am,

'Very truly yours, J. W. Bradbury, Prest.'

The letter referred to in the above is as follows:

'Kendrick, Idaho, Dec. 6, 1910.

'J. W. Newkirk, Cashier, The First National Bank, Portland, Ogn.-- Dear Sir: I am sending herewith my personal note for $5,000.00 with Kendrick Bank stock for like amount attached for your consideration. We would like to have you, in case you can grant us the extension asked in letter regarding our C.D. for $5,000.00 due Dec. 12, 1910, to have you take this note and pass to our credit in place of the C.D. The reason for this is in our statements to the state bank examiner which are published we now have to publish any certificates of deposit to other banks for borrowed money as such, and in a farming community this always causes unfavorable comment and naturally hurts. I feel sure our average daily balance as we have kept it for the past few months will be kept as strong, and we want this extension more to keep our reserve in as good shape as possible. Hoping, if you can carry us for the extension, you will accept this method of loaning us this amount, and again thanking you for your great kindness of the past, I am,

'Yours truly, J. W. Bradbury, Prest.'

On the 7th the Portland Bank, through its cashier, wrote the Kendrick Bank:

'Answering yours of the 6th instant, we will be pleased to make the extension referred to by you, and will accept the note in lieu of the certificates of deposit.'

Certain certificates of stock in the Kendrick Bank were indorsed by Bradbury and another to the Portland Bank as security for the extension. In pursuance of this arrangement credit was extended to the Kendrick Bank from time to time in the amount of $5,000, the note of Bradbury in like amount being renewed until December 11, 1911, when, under a like arrangement, the credit to the Kendrick Bank was enlarged to $10,000, Bradbury giving his individual note in like amount to the Portland Bank. At the same time Bradbury indorsed to the Portland Bank an additional 50 shares of stock of the Kendrick Bank as security for the loan or credit. The money in either instance, whether credit was extended the Kendrick Bank by reason of the issuance of its certificate of deposit or by reason of the execution by Bradbury of his note to the Portland Bank, was placed to the account of the Kendrick Bank by the Portland Bank, and was checked against at all times by the Kendrick Bank, and by none other.

Speaking of the enlarged credit, Mr. Newkirk, of the Portland Bank testifies that they were not loaning any money to Bradbury individually-- 'absolutely none.' At this time Bradbury visited Portland, and the arrangement for the enlargement of the loan was then agreed upon. Newkirk knew nothing of Bradbury's personal responsibility, and cared nothing about it, as he supposed he was dealing with the Kendrick Bank and upon its sole credit and...