Kirkpatrick v. San Angelo Nat. Bank

• Decision Date: 03 April 1912
• Citation: 148 S.W. 362
• Parties: KIRKPATRICK et al. v. SAN ANGELO NAT. BANK et al.
• Court: Texas Court of Appeals

148 S.W. 362

KIRKPATRICK et al. v. SAN ANGELO NAT. BANK et al.

Court of Civil Appeals of Texas. Austin.

April 3, 1912.

Rehearing Denied May 8, 1912.

Appeal from District Court, Tom Green County; J. W. Timmins, Judge.

Action by C. W. Hobbs and others against the San Angelo National Bank and the American National Bank and another, in which the San Angelo Bank filed a cross-action against the other bank. From a judgment for plaintiff against the banks and a judgment for the San Angelo National Bank against the American Bank, and in favor of that bank against the City of San Angelo and another defendant, a part of defendants appeal. Reformed and affirmed.

Hill, Lee & Hill, for appellants. L. L. Montgomery, for City of San Angelo. Blanks, Collins & Jackson, for Hobbs and Brewer.

RICE, J.

The city of San Angelo, constituting an independent school district, having assumed charge of its public free schools, issued, on June 1, 1909, 32 municipal bonds, styled "City of San Angelo ward school building bonds No. 2"; said bonds being numbered 1 to 32, inclusive, each in the denomination of $1,000, dated June 1, 1909, maturing June 1, 1949, with option of redemption 20 years after date, payable to bearer at Seaboard National Bank, New York, or First National Bank, Chicago, or at the office of the State Treasurer, with 5 per cent. interest, payable semiannually on August 1st and February 1st, each year. To each of said bonds were attached 81 interest coupons, numbered 1 to 81, inclusive, coupon No. 1 representing the accrued interest from June 1, 1909, to August 1, 1909, and coupons Nos. 2 to 80, inclusive, being for $25 each, and coupon No. 81 for $16.67, all payable to bearer. The city of San Angelo, by ordinance duly passed after the issuance thereof, authorized C. W. Hobbs and C. C. Brewer to take charge of said bonds, pending their investigation by the Attorney General, and upon their approval and registration to negotiate their sale and receive the proceeds thereof for the use and benefit of the school fund of the San Angelo independent school district; and in accordance therewith said parties delivered said bonds to the San Angelo National Bank, which bank thereafter transmitted the same by express to the American National Bank at Austin, for the purposes aforesaid. One of said bonds, to wit, No. 32, having been lost or mislaid by the latter bank, subsequent to its approval by the Attorney General and registration by the Comptroller, this suit was brought by said Brewer and Hobbs, joined by the board of school trustees of San Angelo, against both of said banks for its value, to wit, the face thereof, plus its proportionate share of the premium for which said bonds had been sold, alleging the facts hereinbefore recited; it appearing that the other 31 bonds were forwarded by said American National Bank to the Hanover National Bank of New York, who delivered same to the purchaser.

The San Angelo National Bank answered by general demurrer, general denial, and by special answer, in which it alleged that if it had ever received the bonds, as stated by plaintiffs, that the same were received by it at the special instance and request of plaintiffs for their accommodation, and for shipment to its correspondent at Austin, to be delivered by it to the Attorney General for his approval and for registration by the Comptroller; that said bonds, after registration, were to be returned to the American National Bank, to be by it delivered to the purchasers to whom plaintiffs had contracted to sell same, and that, in accordance with instructions received by it from plaintiffs and for their accommodation, said defendant, on about June 2, 1909, sent the package of bonds by Wells Fargo & Co. Express to the American National Bank at Austin, to be delivered by it to the said state officers for approval and registration; that it fully carried out all instructions given it by plaintiffs; and that if any of the bonds were lost or destroyed it was through the fault or negligence of the defendant American National Bank, and prayed that it go hence without day. And, by way of cross-action against the American National Bank, it set up almost identically the same cause of action that plaintiffs had alleged against both of said banks, praying that in the event plaintiffs should recover any judgment against it that it have judgment over against the American National Bank for a like amount.

At the first term of court, the American National Bank filed its plea of privilege, in due form, to be sued in Travis county, the county of its domicile; and, not waiving its plea of privilege, but subject thereto, it answered, urging numerous exceptions to plaintiffs' petition, as well as to the cross-action of its codefendant, the San Angelo National Bank, challenging the sufficiency of said pleadings in many respects, all of which were by the court overruled. It likewise pleaded, among other things, a general denial, and specially to the effect that the San Angelo National Bank had sent it a registered package, requesting that it deliver the same to the Attorney General, which it did, and at the request of said bank it called at the Comptroller's office, where only 31 of the bonds described in the petition were delivered to it, and were all the bonds received by it, after the same had been approved and registered; and, at the instance and request of the San Angelo National Bank, said 31 bonds were forwarded to the Hanover National Bank of New York; that this defendant performed all of its service in a careful and prudent manner; that it did not know that said bonds had been sold; that this defendant did not have said bond 32, did not know where the same was, was not asserting any right, title, or interest therein, and that said bond had been lost, but not by it; that no one was asserting any right thereto; and, in the event that it should be held liable, that it be subrogated to all the rights as a holder of said bond. The same defense was also asserted by it by cross-bill against the San Angelo National Bank. And, not waiving its plea of privilege, the American National Bank asked that the city of San Angelo be made a party to the suit, and prayed that, in the event that judgment went against it, it be subrogated to all the rights as holder of said bond.

The city of San Angelo answered, admitting the issuance of and delivery to plaintiffs of said series of bonds, for the purposes alleged in plaintiffs' petition, and alleging that if one of said bonds had been lost by said defendants, or either of them, and if said defendants, or either of them, should be held responsible to plaintiffs in the original action for the value thereof, then, and in that event, it expressed its willingness to issue to such defendants, or either of them as may be held in damages for the value of such bond, a duplicate of said lost bond, conditioned as said bond, in all its terms and requirements, save and except such substitute bond should show on its face that it is issued in lieu of said last bond, and that the due dates of the interest and principal shall be deferred until such a time as that the original principal and interest due on the lost bond shall have been barred by the statute of limitations, or, in the event that the court should conclude that such substitute bond would not afford proper protection for such defendant or defendants, then it agreed that judgment might be entered against it in accordance with the terms and conditions of said bond in favor of the losing defendant, but upon the condition that such judgment should contain safeguards, making all interest payments and principal to become due under such judgment at such time as that the interest and principal shall have been barred by the statute of limitations, and with the further safeguard that, if the lost bond shall be hereafter found and established as a valid obligation against it, said judgment should be void.

A jury trial resulted in a verdict and judgment in favor of the plaintiffs against both of said banks for the value of said bond, together with interest, and judgment over in favor of the San Angelo National Bank against the American National Bank for a like amount, and in favor of the American National Bank against the city of San Angelo, subrogating it to all the rights of a holder of said bond for the value thereof; and to enforce such subrogation it decreed that the American National Bank should have and recover from the city of San Angelo the sum of $1,000, together with interest thereon from the 1st day of June, 1909, to the 1st day of June, 1949, at the rate of 5 per cent. per annum, said interest being payable in 85 installments in accordance with coupons thereto attached, as hereinbefore indicated, provided that neither the principal nor said interest installments shall be payable, nor shall execution issue under said judgment for the enforcement thereof, until such lapse of time from the respective maturities of said interest installments and principal as that the statute of limitations then existing would bar the recovery from the city of San Angelo of said respective interest installments and principal, in an action against said city for the enforcement of said original bond; and provided further, that said judgment, in so far as it runs against the city of San Angelo, shall become vacated and held for naught in the event said original bond No. 32 should become a valid obligation against the city in the hands of any person other than said American National Bank; from which judgment this appeal is prosecuted.

While numerous assignments have been urged and ably pressed upon our consideration, both in argument on the hearing and in the elaborate brief of counsel for appellants, still we are inclined to believe that only four of them need be discussed by us; the others having had due consideration, and being regarded by us as without merit.

It is insisted on the part of app...