Nakdimen v. First National Bank

• Decision Date: 21 May 1928
• Docket Number: 462
• Citation: 6 S.W.2d 505,177 Ark. 303
• Parties: NAKDIMEN v. FIRST NATIONAL BANK
• Court: Arkansas Supreme Court

6 S.W.2d 505

177 Ark. 303

NAKDIMEN v. FIRST NATIONAL BANK

No. 462

Supreme Court of Arkansas

May 21, 1928

Appeal from Sebastian Circuit Court, Fort Smith District; J. Sam Wood, Judge; affirmed.

Judgment affirmed.

James B. McDonough, Jr., and James B. McDonough, for appellant.

Daily & Woods, for appellee.

OPINION

WOOD, J.

This is an action instituted in the circuit court of Sebastian County by the First National Bank and the Merchants' National Bank of Fort Smith, Arkansas, against I. H. Nakdimen. The plaintiffs alleged, in substance, that they are national banks; that Nakdimen is the president of the City National Bank of the city of Fort Smith; that, on or about December 21, 1927, the officers of the Arkansas Valley Bank, another bank at Fort Smith, reported to the plaintiffs and to the City National Bank that the Arkansas Valley Bank would close its doors unless some arrangements could be made to pay its depositors in full, and offered to the plaintiffs and to the City National Bank all of the assets of the Arkansas Valley Bank and, in addition, the sum of $ 70,000, provided the three banks mentioned would pay the depositors and the valid debts of the Arkansas Valley Bank; that the City National Bank declined to enter into such an agreement, but I. H. Nakdimen agreed that he would personally pay the plaintiffs the sum of $ 5,000 if plaintiffs would accept the offer of the Arkansas Valley Bank; that the plaintiffs accepted the offer of Nakdimen, and, in consideration of his promise, agreed to pay all the depositors of the Arkansas Valley Bank in full and to assume and pay all other valid debts, if any, of the Arkansas Valley Bank; that the Arkansas Valley Bank had conveyed to the plaintiffs all its assets, and the directors of the Arkansas Valley Bank had paid to the plaintiffs the sum of $ 70,000; that the plaintiffs had performed each and every one of the covenants of their contract with Nakdimen, and that he had wholly failed to pay the plaintiffs the sum of $ 5,000. The plaintiffs prayed judgment for such sum, with interest due thereon at the date of the judgment.

The defendant, in his answer, admitted the organization and business status of plaintiffs, as set up in the complaint and admitted that he was the president of the City National Bank at Fort Smith, Arkansas. He denied specifically all the other material allegations of the complaint and further denied that there was any consideration passing from the plaintiffs to the defendant, or to any one else, whereby the defendant obligated himself to pay the plaintiffs, or any one else, any sum of money. The defendant further denied that any covenant was made by the plaintiffs to the defendant in any contract, and denied that any contract was made in writing, or otherwise, whereby the defendant undertook to become liable for the debts, default, or other obligation of either of the plaintiffs, or to the Arkansas Valley Bank or its officers or directors, and denied that there was any consideration whatever for the alleged agreement between the plaintiffs and the defendant.

The issues of fact were submitted to a jury, and the testimony was substantially as follows:

W. J. Echols testified that he had lived in Fort Smith forty-six years, and had been president of the Merchants' National Bank about twenty years. He was called by Hugh Branson, president of the Arkansas Valley Bank, on December 21, 1927, to attend a meeting of the directors of that bank. There were present at that meeting the directors of that bank and John C. Gardner, A. M. Sicard, I. H. Nakdimen, and the witness. The president of the Arkansas Valley Bank announced that, on account of the recent defalcation of one of its officers in the sum of about $ 25,000, and whose bond was $ 15,000, and on top of another misfortune that the Valley Bank had had, they had decided to close the Valley Bank, unless some arrangement could be made for taking it over. The directors of the Valley Bank offered $ 70,000. Mr. Nakdimen said that he would gladly take over the bank if he had room, but that his bank was so small that he could not do it, and suggested that one or the other of the plaintiffs take it over. The feasibility of the three banks taking it over and paying the depositors and the debts in proportion to their respective resources, was discussed. Mr. Nakdimen stated that he would not do that. Witness asked Mr. Sicard if he would take it over for $ 10,000. He stated that he would not, but would give witness $ 10,000 to take it over. Nakdimen said he would give $ 5,000 if witness would take it over, and if witness' loss was more than that he would give $ 1,000 more, and give his personal check for it. Witness asked Nakdimen if he would hold his proposition open in case he took the bank over, and Nakdimen stated that he would. Several of the officers of the plaintiffs went over the paper of the Valley Bank, and the losses were apparently so great--so much paper that they did not know anything about--they could not form a very definite conclusion as to what the losses might be; they might be $ 50,000 or over $ 50,000--they could not tell.

A meeting of the citizens was called that night in the room of the Arkansas Valley Trust Company. Mr. Nakdimen was present at that meeting. Witness further testified as follows: "I stated that the Arkansas Valley Bank would close the next morning, unless arrangements were made to take it over and pay the depositors and other just debts. I stated that they would turn over to the Merchants' National Bank all their assets; that the directors would pay personally $ 70,000; that Mr. Nakdimen had agreed to donate $ 5,000; that the First National and the Merchants' National Banks had agreed to lose $ 25,000, including the $ 5,000 that Mr. Nakdimen would give, before the citizens would be called upon to give anything; that if the citizens, subject to these payments, would underwrite a bond for $ 40,000, guaranteeing us against loss to that extent in excess of the assets of the bank and the $ 70,000 paid by the directors and the $ 25,000 the banks would lose, we would take it over and pay the depositors of the bank. It was a splendid meeting, and saved a very serious situation. I made the statement twice, because there were about 25 or 30 that came in at first and probably 15 later. Mr. Nakdimen was present when I made the statement both times, and when the bond was being written up I turned to him and said, 'You agreed to give $ 5,000, and in addition to that you agreed to pay another $ 1,000 if the losses were greater than we expected,' and he subsequently signed for $ 1,000. Witness further testified that Nakdimen did not deny that he had agreed to pay $ 5,000 to the plaintiffs under the conditions as above stated. The bond for $ 40,000 was signed by some that night and by others the next day.

The Arkansas Valley Bank turned over to the First National and Merchants' National Banks all the assets of the Arkansas Valley Bank under the following agreement:

"This agreement this day entered into by and between Arkansas Valley Bank of Fort Smith, party of the first part, and Merchants' National Bank of Fort Smith and First National Bank of Fort Smith, parties of the second part:

"Arkansas Valley Bank, for valuable consideration, receipt of which is hereby acknowledged, hereby sells, assigns, transfers, sets over and delivers unto the First National Bank of Fort Smith and the Merchants' National Bank of Fort Smith all of its assets, both real and personal, and wheresoever located, and it hereby agrees to execute such other and formal deeds, transfers, assignments and indorsements as may be necessary. In consideration of said sale and transfer, and in consideration of other valuable considerations and agreements moving to them from individuals, said Merchants' National Bank of Fort Smith and First National Bank of Fort Smith hereby agree with the said Arkansas Valley Bank to pay all valid debts of said Arkansas Valley Bank.

"In testimony whereof Arkansas Valley Bank has, by order of its board of directors, caused these presents to be executed by its president, attested by its cashier, and corporate seal; and First National Bank of Fort Smith has, by order of its board of directors, caused these presents to be executed by its president; and Merchants' National Bank of Fort Smith has, by order of its board of directors, caused these presents to be executed by its president, all in triplicate, this 22d day of December, 1926.

(Signed) "Arkansas Valley Bank,

"By Hugh Branson, its president.

"Attest: G. H. Sexton, cashier.

"First National Bank,

"By A. N. Sicard, its president.

"Merchants' National Bank,

"By W. J. Echols, its president."

(Seal of Arkansas Valley Bank).

There was also executed the following instrument:

"Whereas the Arkansas Valley Bank has, concurrently with the execution of this agreement, transferred all of its assets of every kind, shape, form, manner and description, to the First National Bank and Merchants' National Bank of Fort Smith and has placed John C. Gardner as liquidating agent for said First National Bank and said Merchants' National Bank in possession of said assets; and whereas, concurrently with the execution of this agreement, the directors of said Arkansas Valley Bank have paid to said First National Bank and said Merchants' National Bank the sum of $ 70,000; and whereas the First National Bank and the Merchants' National Bank, in consideration of said transfer of said assets, said payment of $ 70,000, and the execution by us and the delivery to them of this agreement, have agreed to pay in full all the valid debts of said Arkansas Valley Bank (including deposits).

"Now therefore each of us severally, but not one for the...