Mays v. Bd. of Cnty. Comm'rs

• Decision Date: 16 May 1933
• Docket Number: Case Number: 20269
• Citation: 23 P.2d 664,164 Okla. 231,1933 OK 326
• Parties: Mays v. Board of County Comm'rs
• Court: Oklahoma Supreme Court

1933 OK 326

23 P.2d 664

164 Okla. 231

Mays v. Board of County Comm'rs

Case Number: 20269

Supreme Court of Oklahoma

Decided: May 16, 1933

Syllabus

¶0 1. Judgment--Vacation of Default--Discretion of Court.

An application to vacate a default judgment and to be allowed to defend is addressed to the sound discretion of the court, and will not be disturbed on appeal unless it clearly appears that the court has abused its discretion.

2. Banks and Banking--National Banks--Power to Pledge Assets to Secure Deposits of Public Funds.

National banks have power to pledge assets to secure deposits of public funds as incidental to the banking business without specific statutory authority therefore.

3. Same.

Such power can be denied to national banks only by the Congress of the United States in the event the laws of the state authorize a bank organized under the laws of the state to pledge its assets to secure a deposit of public funds.

4. Same--Statutory Provisions.

Section 1, chapter 99, Session Laws 1925, relating to banks and banking, has no application to county depositories of public funds, such depositories being governed by chapter 88, Session Laws 1925.

5. Bills and Notes -- Negotiable United States Bond--Rights of Bona Fide Purchaser From One not Owner.

A negotiable United States bond duly executed and delivered and payable to bearer, passes by delivery, and it is well settled that such a bond is enforceable by a bona fide purchaser, and he is entitled to the proceeds thereof, although he obtained it through one not the owner, who had stolen it, or otherwise unlawfully obtained it, and this is the rule under the Negotiable Instruments Law.

6. Same--Negotiable Instrument Taken as Security.

One who takes a negotiable United States bond before maturity as collateral security is a purchaser for value and unaffected by any equities between the original parties of which he had no notice.

Appeal from District Court, Creek County; Frank Mathews, Assigned Judge.

Action by Joseph Mays against the Board of Commissioners of Creek County et al. Judgment for defendant, and plaintiff appeals. Affirmed.

L. O. Lytle, K. L. Lytle, Chas. E. McPherren, J. D. Lydick, and R. K. Robertson, for plaintiff in error.

Sebe Christian, for defendants in error.

SWINDALL, J.

¶1 Joseph Mays, plaintiff in error, commenced an action in the district court of Creek county, against the defendants in error, to recover United States Liberty Bonds, or their value in lieu thereof, in the event the immediate possession of said bonds as described in plaintiff's petition could not be had. The record discloses that the plaintiff was the owner of 39 United States government Liberty Bonds, each being for the principal sum of $ 1,000, each being payable to bearer and each having maturity date not earlier than 1933. These bonds were deposited in the First National Bank of Bristow, Okla., by the plaintiff for safekeeping. The cashier of the bank, desiring to secure a deposit of additional funds of Creek county, on March 25, 1927, presented said bonds to the county treasurer of Creek county, at his office in the courthouse building. during the business hours of the day as the property of said bank, and said county treasurer accepted the pledge of said bonds by the cashier of said bank in lieu of a surety bond, and, in consideration of the delivery of said bonds to said county treasurer by the cashier of said bank, the deposit of public funds of Creek county, Okla., was increased in said bank from $ 32,000 to $ 73,500; that continuously since the receipt of said bonds by said county treasurer, the bonds had been kept in the safe in the office of said county treasurer, and continuously since said time said county treasurer has kept a deposit of the public fund of Creek county in said bank approximately equivalent to the amount of bonds pledged to him as security for said deposit. That prior to the date of the delivery of said bonds to the county treasurer, he had on several occasions received bonds and securities from other banks in Creek county, pledged for security of county deposits, and was at that time in possession of other bonds so pledged by the First National Bank of Bristow, Okla., in prior transactions. That on the date said bonds were delivered by the cashier of said bank to said treasurer, and for a long time prior thereto, said First National Bank of Bristow, Okla., had been approved by federal bank examiners as being financially sound and continued to be so approved until April 25, 1928; that said bank had been designated as an official county depository; that said bonds had been in the custody of the First National Bank of Bristow, Okla., for a long time prior to the date they were delivered by the cashier of said bank to said county treasurer, and had been referred to as being the property and assets of the bank in examination reports of federal bank examiners; that at the time of the receipt of said bonds, the county treasurer had no reason to believe that the bank was not the owner thereof, and had no notice that any other person had rights therein or claimed to be the owner thereof; that said bank failed and ceased to do business as a bank on April 25, 1928, and on that date was taken over by the Comptroller of the Currency; and that on said date the county treasurer of Creek county was in possession of $ 54,500 worth of bonds, including the Liberty Bonds involved in this action, and on said date had on deposit to his credit as county treasurer of Creek county, Okla., in said bank the sum of $ 54,000, and that no part of said deposit has been paid or tendered to him as county treasurer of Creek county.

¶2 The defendants were legally served with summons and did not answer within the time provided by law, and default judgment was rendered against them in favor of plaintiff. Thereafter, and within two days of the rendition of the default judgment, defendants filed a motion to vacate and set aside said default judgment, and thereafter filed supplemental motion to vacate and set aside said default judgment. The default judgment was rendered on the 4th day of October, 1928. Thereafter, on the 10th day of October, 1928, at the same term of court, the motions to vacate the default judgment came on for hearing, and after a hearing thereon were sustained by the court, to which the plaintiff excepted. The journal entry of judgment sustaining said motions to vacate the default judgment recites:

"Upon a hearing of the matters therein presented the court finds that said default judgment so made and entered on said day and date should be by this court set aside and held for naught."

¶3 The testimony taken at said hearing is not contained in the case-made. Thereafter plaintiff filed his amended petition alleging that he was the owner of and entitled to immediate possession of the property therein described, that defendants after due demand unlawfully detained the possession of the property from plaintiff. Answer of defendants was by way of general denial, and further alleged that during the period beginning March 25, 1927, and ending March 9, 1928, and for a long time prior thereto, the First National Bank of Bristow, Okla., a banking corporation duly organized and existing under and by virtue of the laws of the United States, with its principal place of business located in Bristow, Creek county, Okla., was engaged in the banking business in said city, and alleged the delivery of the bonds to Ralph H. Blake, as county treasurer of Creek county, to secure a deposit of county funds in said bank, as above stated, and that said bonds were negotiable instruments, and that the defendant Ralph Blake, as county treasurer of Creek county, was a holder in due course to the amount of said county deposit in said bank. Plaintiff replied by a general denial, except admitted the defendant Ralph H. Blake as county treasurer had the bonds in his possession continuously since March 25, 1927, and admitted that he was county treasurer of Creek county, and admitted that the bonds were all written negotiable instruments not matured, payable to bearer, and title and ownership were transferable by delivery, and that the copy attached to the answer is a true and correct copy of said bonds and coupons except as to serial numbers. The reply further alleged that the said Ralph H. Blake, county treasurer, took said bonds contrary to the specific public policy of the state and contrary to the specific law of the state, and that the contract whereby said bonds were taken was illegal and void, that said bonds were not taken in due course or in good faith, nor for a valuable consideration, that at the time of taking of said bonds, Ralph H. Blake, individually, and as county treasurer, had notice and knowledge of facts which would put a reasonably prudent person upon inquiry that said bonds were the property of and owned by the plaintiff, and prayed judgment in accordance with the prayer of plaintiff's petition. On the day of trial, by permission of court, defendants filed a supplemental answer and pleaded in addition to their previous answer that during the period beginning on the 25th day of March, 1928, and ending on May 1, 1928, plaintiff well knew that the bonds had been pledged by said bank and to Ralph H. Blake, county treasurer, as security for a deposit of county funds, and that said bonds had been left with said bank by the plaintiff with the understanding and agreement on the part of plaintiff and the bank that the same might be used for the purpose of pledging the same as the assets of the bank for security for public funds, or any other like purpose; that plaintiff has asserted a claim against the bank for the value of said bonds, and intends to prosecute his claim and collect same from the bank, and employed counsel for that purpose and elected to pursue such manner and by virtue thereof he is estopped to assert ownership and claim possession of the bonds. A jury was waived and...