Meyer & Chapman State Bank v. First Nat. Bank of Cody

• Decision Date: 24 January 1918
• Docket Number: 4758.
• Citation: 248 F. 679
• Parties: MEYER & CHAPMAN STATE BANK v. FIRST NAT. BANK OF CODY. [1]
• Court: U.S. Court of Appeals — Eighth Circuit

248 F. 679

MEYER & CHAPMAN STATE BANK v. FIRST NAT. BANK OF CODY. ^[1]

No. 4758.

United States Court of Appeals, Eighth Circuit.

January 24, 1918

W. L Walls, of Cody, Wyo., and E. E. Enterline, of Billings Mont., for plaintiff in error.

William A. Riner, of Cheyenne, Wyo., for defendant in error.

'This was an action by the plaintiff, Meyer & Chapman State Bank against the defendant, First National Bank of Cody, to recover $10,000 as for money loaned. It was tried to the court without a jury, pursuant to written stipulation. At the conclusion of plaintiff's case the court entered judgment in favor of defendant, dismissing the complaint upon the merits. Plaintiff brings error. Plaintiff insists that it was entitled to judgment upon the uncontroverted facts. This requires a full statement of the evidence.

W. J Deegan was defendant's cashier. He had been accustomed to obtain rediscounts of paper held by his bank, both by the plaintiff, the Meyer & Chapman State Bank, and by Mr. Chapman, its president. On May 5, 1913, he wrote a letter to Mr. Chapman, personally, signed by himself, as cashier, on the letter head of his bank, inclosing a note of $10,000, executed by Aaron Holm to the Holm Transportation Company, dated May 1st, due in 6 months, secured by 200 shares of the stock of the Holm Transportation Company as collateral. The note was indorsed by the payee. In the letter he expressed his wishes as follows:

'I have no disposition whatever to 'ride a willing horse to death,' but this loan is larger than we are allowed to carry, and should you feel that you could not carry this, in addition to what you are now carrying, you might return any of the notes that I have previously sent you, or such portion thereof as you felt was necessary to make up the amount of this one. * * *

'There is not much possibility that this loan would be taken up at its maturity, but the interest would be paid and a note furnished at that time, and in fact it would probably be about 18 months before this loan would be entirely taken up, and I would guarantee the payment of the principal at that time, and the interest at the end of every 6 months period.

'This would make a little more permanent investment than the notes I have sent you, and, so far as the security is concerned, I think it is absolutely good.

'If this would be agreeable to you, you might make the remittance to the Merchants' National Bank, as usual, and I will agree not to send you any more paper, as I feel now that I am crowding the limit, and exceeding anything that I expected to ask for at the time I was talking to you.'

A few days after this letter was received, namely, May 8th or 9th, Mr. Chapman called Deegan by phone, and stated that he personally had no funds to invest, but that the plaintiff, Meyer & Chapman State Bank, had the money. Deegan then said, 'I do not think we will need this money over 30 days. ' Mr. Chapman said that would suit him much better and that the plaintiff bank would make the loan for that time. Mr. Deegan confirms this conversation, and says, in answer to a question as to what he stated to Mr. Chapman as to how long the money would be required, 'I told him probably not to exceed 30 days. ' As the result of this conversation, and immediately following it, Mr. Chapman, as president of the plaintiff bank, took the letter, the note, and the collateral to Mr. Alden, plaintiff's cashier, and told him 'we would let the First National Bank of Cody have the money,' and to place it in the Merchants' National Bank of Billings for the First National Bank of Cody. On May 9th plaintiff's cashier wrote the Merchants' National Bank of Billings as follows: 'Please charge our account ten thousand dollars ($10,000), and credit the same to the account of the First National Bank of Cody, Wyoming, and oblige. ' At the same time he sent notice to defendant that he had caused this credit to be given.

On May 12th the cashier of the Merchants' National Bank of Billings wrote the First National Bank of Cody as follows: 'We are crediting your account $10,000, this amount having been remitted by Meyer & Chapman State Bank, Red Lodge, for your credit.'

The $10,000 credit given defendant by the Merchants' National Bank of Billings was drawn out between May 12, 1913, and June 24, 1914, so that on the latter date the account was overdrawn $810.49. These are the uses made of the credit:

'In two cases currency was remitted to the First National Bank of Cody; in two cases funds were remitted to the United States National of Omaha for the credit of the First National of Cody; in one case, for interest on a demand note; in one case, in payment of a collection; in one case, exchange charges; and in all other cases, the exchange of checks upon Cody, Wyo., which were sent them and charged to their account in the usual course of business.'

This is the testimony given by the cashier of the Merchants' National Bank of Billings as to the manner in which the fund was used.

Mr Deegan was an officer of the Holm Transportation Company, and interested in its affairs. In explanation of 'how he happened to get that note,' he testified on cross-examination by d...