State Nat. Bank v. Smith

• Decision Date: 23 May 1899
• Docket Number: 794.
• Citation: 94 F. 605
• Parties: STATE NAT. BANK OF FT. WORTH, TEX., v. SMITH.
• Court: U.S. Court of Appeals — Fifth Circuit

94 F. 605

STATE NAT. BANK OF FT. WORTH, TEX., v. SMITH.

No. 794.

United States Court of Appeals, Fifth Circuit.

May 23, 1899

This action was brought by John P. Smith, receiver of the City National Bank of Ft. Worth, Tex., to recover of the State National Bank of Ft. Worth and John C. Harrison the sum of $6,000 and 10 per cent. interest per annum thereon from July 10, 1896. The petition alleged, in substance, that the State National Bank of Ft. Worth was, at the date of the failure of the City National Bank, the legal and equitable owner and holder of 60 shares of the capital stock of said bank; that said City National Bank became insolvent on the 4th day of April, 1895, and on said date a national bank examiner, by order of the comptroller of the currency of the United States, took charge of the bank; that defendant in error John P. Smith, was appointed receiver of said insolvent bank on the 12th day of April, 1895; that on the 10th day of July 1896, the comptroller of the currency made an assessment on the shareholders of said bank of $100 per share for each and every share of the capital stock held and owned by them respectively at the time of its failure; that said 60 shares of stock were issued to said John C. Harrison, as trustee, in two certificates, of date, respectively, Jun 28 and November 2, 1894, numbered 86c, for 50 shares, and 96c, for 10 shares that said stock was so issued to said Harrison for the use benefit, and advantage of said State National Bank, plaintiff in error, and he took the same in his name, as trustee for said bank; and that all said stock and certificates for same appeared on the books of the City National Bank in the name of John C. Harrison, trustee. The petition contained all proper allegations to entitle plaintiff to a recovery against the State National Bank if the ownership of the stock was as alleged in it at the date of the failure of the other bank. The defendants in the court below, John C. Harrison and the State National Bank, by their answer, denied ownership of the stock mentioned, and alleged substantially that 50 shares of the same were pledged to the bank by one Garner as security for a debt owing by him to it, and that the other 10 shares were pledged to it by A. W. and H. C. Caswell to secure a debt owing by them to the bank; that said stock, as well as the dividends arising therefrom, were pledged to the bank, and that, to protect it and the City National Bank against conflicting claims of other creditors of said pledgors, new certificates of said stock were issued to John C. Harrison, trustee, respectively on June 28, 1894, and November 2, 1894; that said stock, since said dates, has appeared on the books of the City National Bank in the name of John C. Harrison, trustee, and has never at any time appeared in the name of the State National Bank; and that the State National Bank at no time became the owner of any of said shares of stock, and never had any interest in the same, except as pledgee to secure said debts. On the trial, the parties, by agreement in writing, waived a jury, and the cause was submitted to the court without a jury. October 15, 1898, a judgment was rendered for plaintiff against the State National Bank of Ft. Worth for the sum of $6,815 and costs of suit, and in favor of defendant John C. Harrison that plaintiff take nothing as to him, and that he go hence without day, and recover his costs. After the rendition of the judgment, the defendant below moved the court to find a special verdict as to the facts proved on the trial of said cause which are material to the issue raised by the pleadings, and to find a certain conclusion of law in favor of the defendant. This motion appears to have been granted so far as it sought to have a special verdict on the facts proven on the trial of said cause prepared and filed, and also so far as it sought to have the court find its conclusions of law. Thereafter there is in the record, of date October,--, 1898, the following, entitled 'Special Findings of Fact':

'First. It was admitted on the trial of this case: That the City National Bank is a national bank, chartered under the laws of the United States. That the bank became insolvent on the 4th day of April, 1895, closed its doors, and ceased to transact business. It passed into the hands of a bank examiner on the 5th day of April, 1895, at which time John P. Smith was appointed receiver. That he qualified as such receiver, and is acting in that capacity, under appointment from the comptroller of the currency of the United States. That the comptroller of the currency of the United States on the 10th day of July, 1896, made an assessment of 100 cents on the dollar of the entire capital stock of the City National Bank of $300,000. That demand has been made by the plaintiff receiver in this case upon the defendant for payment of $100 per share on the stock in litigation, amounting to $6,000. That said demand was made on the 10th day of July, 1896, and that payment has been refused.

'Second. The two certificates of the capital stock of the City National Bank sued on in this case are (1) No. 96, Series C, for ten shares issued to John C. Harrison, trustee, on the 2d day of November, 1894, signed by John C. McCarthy, president, and Max Elser, cashier. On the reverse side of this certificate is indorsed, 'For value received, assigned and transferred to Warren Coleman.' This transfer bears date April 4, 1895, and is signed by John C. Harrison, trustee. Both of said certificates of stock were left with John C. McCarthy, president of the City National Bank of Ft. Worth, on the 4th day of April, 1895, in an envelope, on which was indorsed the following: 'The property of John C. Harrison, trustee. Left at 5:30 o'clock p.m., April 4, 1895, for transfer.' It was admitted on the trial of the case that the sale to Warren Coleman was a sham sale, and was in no way relied upon by the defendant, and that Coleman was a negro porter of the State National Bank, and insolvent, at the time of the sale; that he paid to John C. Harrison, cashier of the State National Bank, $10 for the said stock, which said $10 was returned by the said John C. Harrison, cashier of the State National Bank, on the morning of the 5th of April, 1895.

'Third. On or about the . . . day of August, 1893, the State National Bank loaned to Dan Garner $5,000, taking as security therefor his note for that sum, and also, as collateral security, 50 shares of the capital stock of the City National Bank of Ft. Worth.

'Fourth. On or about the . . . day of November, 1893, the State National Bank loaned to Caswell Bros. the sum of $1,300, and took the note of said firm for that amount, and also, as collateral security, 10 shares of the capital stock of the City National Bank of Ft. Worth, Texas.

'Fifth. Both of said notes gave full power and authority to the State National Bank to sell at public or private sale, at the option of said bank or its assigns, with the right to become the purchaser at such public or private sale of the collateral attached thereto, which is 60 shares of the capital stock of the City National Bank of Ft. Worth, heretofore described, on the non-payment of said notes, without advertisement or notice, and, after deducting the legal costs of said sale and delivery, to apply the residue of such sale or sales to the payment of said notes.

'Sixth. While the evidence as to whether or not there was a sale and purchase of said stock is conflicting, I find as a matter of fact there was a sale of said stock under the authority conferred by said notes. The said State National Bank, on or about the 28th day of June, 1894, sold and became purchaser of the stock of the City National Bank of Ft. Worth, known as the 'Lee and Garner stock,' and on or about the 2d day of November, 1894, sold and became purchaser of the stock known as the 'Caswell stock,' and thereby the said State National Bank became the owner of the same, and caused new stock to be issued for it on the above dates in the name of John C. Harrison, trustee; and after said dates said stock was credited upon the books of said State National Bank as an asset of said bank, and was so reported on March 5, 1895, in its sworn report to the comptroller of the currency of the United States, required by law to be made to the comptroller of the currency of the United States.

'Seventh. At the close of business of the City National Bank of Ft. Worth on the 4th day of April, 1895, both of said certificates of stock sued on stood on the books of said bank in the name of John C. Harrison, trustee. I find that John C. Harrison, trustee, was trustee for the State National Bank of Ft. Worth, and both of said certificates of stock were then and now owned by the State National Bank of Ft. Worth, Texas.

'Eighth. The defendant introduced in evidence a note dated on or about the . . . day of July, 1894, signed by C. E. Lee and W. A. Garner, which note recited that the 50 shares of stock of the City National Bank of Ft. Worth were placed as collateral to secure this note. On the back of this note of Lee and Garner there was an indorsement of interest paid on same up to October 1, 1894, and there was a credit on said not of $10.23, dated July 14, 1894, and a credit of $164 was entered on the back of said note on the 10th day of September, 1894. The amount of this note was the same as the amount of the Dan

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