Scottsbluff Nat. Bank v. Blue J Feeds, Inc.

• Decision Date: 11 July 1952
• Docket Number: No. 33184,33184
• Citation: 156 Neb. 65,54 N.W.2d 392
• Parties: SCOTTSBLUFF NAT. BANK v. BLUE J FEEDS, Inc.
• Court: Nebraska Supreme Court

Page 392

54 N.W.2d 392

156 Neb. 65

SCOTTSBLUFF NAT. BANK v. BLUE J FEEDS, Inc.

No. 33184.

Supreme Court of Nebraska.

July 11, 1952.

Syllabus by the Court.

1. Findings of a court in a law action in which a jury is waived have the effect of the verdict of a jury, and judgment thereon will not be disturbed unless clearly wrong.

2. The resolution of a corporation designating a bank as depositary for corporate funds and authorizing its designated officer or agent to borrow money from the bank in the name of the corporation on behalf of the corporation does not authorize the bank to loan money on corporate notes executed and delivered by such officer or agent and deposit the proceeds in his personal account for his own use and purposes.

3. When such a transaction is attempted, the bank is put upon notice by the very forms of the transaction itself and the corporate resolution, and thereby the bank has a duty of inquiry and investigation imposed upon it to ascertain that its own and such officer or agent's authority is sufficient to authorize the transaction in order to hold the corporation liable thereon.

4. The fact that such officer or agent might have accomplished the same result by another method without imposing liability on the part of the bank therefor is not controlling.

5. A negotiable instrument as between the parties requires a consideration the same as any other contract, and when there is no consideration, the original note and each successive renewal thereof are void and such absence of consideration is a defense to such instruments.

6. In order for a detriment to the promisee to constitute a valid consideration for a note or contract, it must have been within the express or implied contemplation of the parties and known to and agreed to by them.

7. The true test of liability by a bank in cases where it, without requisite authority, loans money on a corporate note executed by a corporate officer or agent and deposits the proceeds to the personal credit of such officer or agent, is not solely that the bank obtains a profit or benefit therefrom by its initiative action, but that by failure to perform a duty of inquiry and investigation, it aided such officer or agent in a misappropriation of corporate funds.

8. The doctrine of estoppel has no application where all the interested parties have equal knowledge of the facts or where the party claiming its benefit is chargeable with notice of the facts or is equally negligent or at fault.

9. The rule that as between two innocent parties the loss should fall on him who made the loss possible protects only those who exercise ordinary care and caution in performance of duty.

Davis, Stubbs & Healey, Richard D. Wilson, Lincoln, for appellant.

Young, Williams & Holm, James H. Anderson, Omaha, for appellee.

Heard before SIMMONS, C. J., and CARTER, MESSMORE, YEAGER, CHAPPELL, WENKE and BOSLAUGH, JJ.

CHAPPELL, Justice.

The Scottsbluff National Bank, hereinafter designated as plaintiff or the bank, brought this action at law against Blue J Feeds, Incorporated, hereinafter designated as defendant or the corporation, to recover upon a promissory note for $30,000. The note represented the execution, renewal, and subsequent consolidation and renewal of two corporate notes, one for $20,000, originally dated July 2, 1949, and the other for $10,000, dated August 3, 1949. Defendant admitted liability with respect to the $20,000 item but denied liability with respect to the $10,000 item, primarily upon the ground that the proceeds therefrom were not credited by the bank to defendant's account therein, but, as requested by Frank R. Warden, defendant's vice president, they were unlawfully, without any authority or inquiry with relation thereto, credited by the bank to the personal account of Frank R. Warden for his own use and purposes. After hearing upon the issues, jury waived, whereat evidence was adduced, the trial court rendered a judgment in favor of plaintiff for $20,000 with interest at five percent from March 27, 1950, upon defendant's admitted liability, but otherwise denied liability of defendant upon the $10,000 item, and, with respect thereto, rendered a judgment in favor of defendant. The entire controversy here relates to such $10,000 item. Plaintiff's motion for new trial was overruled, and it appealed, assigning in effect that the findings of fact, conclusions of law, and judgment based thereon were not sustained by the evidence but were contrary thereto and contrary to law. We conclude that the assignments should not be sustained.

It is elementary that in a law action such as this, tried without a jury, findings of the court have the effect of a verdict of a jury, and judgment thereon will not be disturbed unless clearly wrong. Cotner College v. Estate of Hester, 155 Neb. 279, 51 N.W.2d 612.

The relevant facts are not in dispute. Most of them were actually stipulated. Insofar as important here, there were as follows: Defendant corporation was originally, from June 1936 to January 1947, a partnership, composed of John R. Jirdon and Frank R. Warden, who as such engaged in the grain and feed business at Gering, Nebraska. Warden was sole manager of the business and handled its fiscal affairs. Jirdon was not ordinarily consulted except upon matters of policy. Such partnership had a deposit or checking account at plaintiff bank beginning in 1945. Prior thereto, its fiscal affairs were handled at the Live Stock National Bank in Omaha. During its existence as such, the partnership itself made no borrowings from plaintiff. However, during such period Warden, who also had an account at plaintiff bank, personally borrowed money from plaintiff for the partnership and himself, but there was no evidence that he ever paid any of his personal indebtedness to plaintiff with a partnership check. The partnership business prospered, and the capital investment of both Jirdon and Warden increased substantially. On such investments they each received seven percent interest. Thus, from June 1936 until January 1947, Warden was trusted by Jirdon, and during all of such period the record does not disclose any defalcation of partnership funds by Warden.

On January 2, 1947, they formed defendant corporation, with John R. Jirdon, president, Frank R. Warden, vice president, and R. D. Hildebrandt, secretary-treasurer. The secretary-treasurer had only a nominal interest in the corporation. Eight hundred shares of paid-up capital stock were issued for a par value of $100 each. Out of such shares, 240 were issued to Warden and 160 to his relatives. The corporation, on February 1, 1947, had $64,651.55 of surplus and undivided profits. Its property statement of January 2, 1950, showed capital stock, $80,000, with surplus and undivided profits of $148,654.50. Thus, it was concededly always entirely solvent, had excellent credit, and no creditors and here involved in any manner.

After its formation, the corporation designated plaintiff as its corporate depositary, opened an account therein, and established credit with such bank. The corporation deposited $50,000 from other sources, and transferred $40,000 from the partnership account to the corporation account in plaintiff bank. On January 15, 1947, defendant corporation tendered and delivered to plaintiff its own duly prepared, adopted, and certified corporate resolution which defined the authority of Warden and the bank with relation to funds of the corporation to be handled by the bank. It was prepared on a printed form of the Live Stock National Bank of which Jirdon was then a director. Insofar as important here, it provided: '(1) Be It Resolved, that THE SCOTTSBLUFF NATIONAL BANK OF SCOTTSBLUFF Nebraska, be and hereby is designated a depositary in which the funds of this Corporation may be deposited by its officers, agents, and employes, and that the Vice-President F. R. Warden, * * * shall be and * * * hereby is authorized to endorse for deposit or negotiation any and all checks, drafts, notes, bills of exchange, and orders for the payment of money, either belonging to or coming into the possession of this Corporation. * * * (2) Be It Further Resolved, that the Vice-President F. R. Warden * * * of this Corporation * * * (is) authorized to SIGN ANY AND ALL CHECKS, DRAFTS, AND ORDERS, including orders or directions in informal or letter form, against any funds at any time standing to the credit of this Corporation with the said Bank, and/or against any account of this Corporation with the said Bank, and that the said Bank hereby is authorized to honor any and all checks, drafts and orders so signed, including those drawn to the individual order of any such officer and/or other person signing the same, without further inquiry or regard to the authority of said officer(s) and/or other person(s) or the use of said checks, drafts and orders, or the proceeds thereof. (3) Be It Further Resolved, that the PRESIDENT AND/OR VICE PRESIDENT, singly or jointly of this Corporation (are) * * * authorized to borrow from time to time on behalf of this Corporation from the said Bank such sums of money for such time and upon such terms as may to them, or any of them, seem advisable, and to execute in the name of the Corporation notes, drafts, or agreements for the re-payment of any sums so borrowed, * * *.' (Italics and numerals supplied). Concededly, insofar as important here, the resolution was never rescinded or modified as provided therein.

After incorporation, Warden continued to manage the business and fiscal affairs of the corporation and transacted defendant's business with the bank in the manner authorized by the aforesaid resolution, with certain exceptions, one of which was the transaction here involved.

In that connection, on July 2, 1949, Warden borrowed $20,000 from plaintiff and executed a corporate note therefor in which the bank was payee. The proceeds of such loan were deposited in defendant's account. However,...