State v. Omaha National Bank
| Decision Date | 19 December 1899 |
| Docket Number | 10,586 |
| Parties | STATE OF NEBRASKA v. OMAHA NATIONAL BANK ET AL |
| Court | Nebraska Supreme Court |
ERROR from the district court of Douglas county. Tried below before BAKER, J. Reversed.
REVERSED AND REMANDED.
C. J Smyth, Attorney General, and W. D. Oldham, Deputy Attorney General, for the state:
Before final submission plaintiff moved to dismiss the case without prejudice, and its motion should have been sustained. See Code of Civil Procedure, sec. 430; Zittle v Schlesinger, 46 Neb. 844; Lawrence v. Schreve, 26 Mo. 492; Wood v. Nortman, 85 Mo. 298; Harris v. Beam, 46 Ia. 118; Mullen v. Peck, 57 Ia 430; Morrisey v. Chicago & N. W. R. Co. 80 Ia. 314; Vertrees v. Newport News Co. 95 Ky. 314.
The peremptory instruction to the jury to return a verdict for defendants was erroneous. Under the facts pleaded and proved, Bartley was guilty of a conversion of the money paid on the check, and Millard and the bank were participants in every act constituting the conversion. See Bartley v. State, 53 Neb. 310; Sharp v. Parks, 48 Ill. 511; Hoffman v. Carow, 20 Wend. [N.Y.], 21; Cerkel v. Waterman, 63 Cal. 34; Swim v. Wilson, 90 Cal. 126; Robinson v. Skipworth, 23 Ind. 311; Kearney v. Clutton, 59 N. W. [Mich.], 419; Hill v. Campbell Commission Co. 54 Neb. 59; Cook v. Monroe, 45 Neb. 349; Perkins v. Smith, 1 Wilson [Eng.], 328; Stephens v. Elwall, 4 M. & S. [Eng.], 259; Tugman v. Hopkins, 4 M. & G. [Eng.], 389; Everett v. Coffin, 6 Wend. [N.Y.], 603; Mead v. Jack, 12 Daly [N.Y.], 65; McPartland v. Read, 11 Allen [Mass.], 231; McCombie v. Davies, 6 East T. R. [Eng.], 538; Edgerly v. Whalan, 106 Mass. 307; Spraights v. Hawley, 39 N.Y. 441; Alexander v. Swackhamer, 105 Ind. 81.
Defendants had constructive knowledge of Bartley's lack of authority, and are chargeable the same as if they had actual knowledge. One who is bound to inquire is charged with the knowledge which he would have acquired had he made inquiry. See Knapp v. Bailey, 79 Me. 195; Beard v. Milmine, 88 F. 868; Bartley v. State, 53 Neb. 310.
John L. Webster, contra:
The transaction does not involve the elements of conversion. See Stough v. Stefani, 19 Neb. 468; Nichols v. Newsom, 2 Murphy [N. Car.], 303; Badger v. Hatch, 71 Me. 565; Spencer v. Blackman, 9 Wend. [N.Y.], 168; Ferguson v. Clifford, 37 N.H. 101; Laverty v. Snethen, 68 N.Y. 524; Bristol v. Burt, 7 Johns. [N.Y.], 258; Spooner v. Holmes, 102 Mass. 506.
The rule in larceny cases does not apply to money and negotiable paper. See Spooner v. Holmes, 102 Mass. 503; Goodman v. Simonds, 20 How. [U. S.], 343; Evertson v. National Bank, 66 N.Y. 14; Jones v. Nellis, 41 Ill. 482; Shipley v. Carroll, 45 Ill. 285; Burson v. Huntington, 21 Mich. 415; Olmstead v. Winsted Bank, 32 Conn. 278; King v. Doane, 139 U.S. 166; Swift v. Smith, 102 U.S. 442; Hotchkiss v. National Banks, 21 Wall. [U. S.], 354; Hopkins v. Withrow, 42 Ill.App. 584; Wilson v. Denton, 82 Tex. 531; First Nat. Bank of Cameron v. Stanley, 46 Mo.App. 440; Richards v. Monroe, 85 Ia. 359; Indiana & I. C. R. Co. v. Sprague, 103 U.S. 756.
The contention of the attorney general, that the Omaha National Bank had constructive notice of Bartley's want of authority to pay the warrant, and that such notice is equivalent to actual knowledge, is unsound. See Speer v. Board of County Commissioners, 88 F. 749; Wall v. County of Monroe, 103 U.S. 74; Thompson v. Searey County, 12 U. S. App. 627; Board of County Commissioners v. Sherwood, 27 U. S. App. 458.
The bank is not liable for the misapplication of the state funds by the treasurer, as there is no proof that the bank was in fact aware that the payment of the warrant was unlawful, and was not a participant in the transaction knowing it to be unlawful. See Fifth Nat. Bank v. Village of Hyde Park, 101 Ill. 595; Duckett v. National Mechanics Bank, 86 Md. 400; Munnerlyn v. Augusta Savings Bank, 88 Ga. 333; State Nat. Bank v. Reilly, 124 Ill. 464; Freeholders v. Newark Nat. Bank, 48 N.J.Eq. 51; Goodwin v. American Nat. Bank, 48 Conn. 550; Howard v. Deposit Bank of Owensboro, 80 Ky. 496; Walker v. Manhattan Bank, 25 F. 247; State Nat. Bank v. Dodge, 124 U.S. 333; United States v. American Exchange Nat. Bank, 70 F. 232; Wells, Fargo & Co. v. United States, 45 F. 337; National City Bank v. Westcott, 118 N.Y. 468; National Park Bank v. Seaboard Bank, 114 N.Y. 28; Herrick v. Gallagher, 60 Barb. [N.Y.], 566; Buller v. Harrison, 2 Cowper [Eng.], 568; Mowatt v. McClelan, 1 Wend. [N.Y.], 173; State v. Flint & P. M. R. Co. 89 Mich. 481; United States v. Dalles Military Road Co. 41 F. 493; United States v. McLaughlin, 30 F. 147; Commonwealth v. Heirs of Andre, 3 Pick. [Mass.], 224; Attorney General v. Ruggles, 59 Mich. 124.
The court did not commit error in overruling the plaintiff's motion to dismiss without prejudice, under the facts in this case. See Aultman v. Reams, 9 Neb. 487; Omaha & R. V. R. Co. v. Hall, 33 Neb. 229; Standiford v. Green, 54 Neb. 10; State v. Scott, 22 Neb. 628; Beaumont v. Herrick, 24 O. St. 446; Sheedy v. McMurtry, 44 Neb. 499; Huntington v. Forkson, 7 Hill [N.Y.], 195; Glass Co. v. Taylor, 99 Ky. 24; Beals v. Western Union Telegraph Co. 53 Neb. 601; Dunn v. Wolf, 81 Ia. 688; Toof v. Foley, 87 Ia. 8; AEtna Life Ins. Co. v. Board of County Commissioners, 49 U. S. App. 122; McArthur v. Schultz, 78 Ia. 364.
R. S. Hall and Connell & Ives, also for defendants in error.
NORVAL, J. took no part.
The facts are stated in the opinion.
The state of Nebraska brought this action in the district court of Douglas county to recover from the Omaha National Bank and J. H. Millard, its president, the sum of $ 201,884.05. The basis of the claim was an alleged conversion by the defendants of certain money belonging to the plaintiff. A jury, impaneled to try the issues, found, in obedience to a peremptory direction from the court, that the state had no cause of action. A motion for a new trial was denied, and, judgment having been rendered on the verdict, the attorney general, by this proceeding in error, has brought the record here for review.
The controversy arises out of the following facts: The defendant bank was a state depository, and as such had in its custody on January 2, 1897, state funds amounting to more than $ 200,000. The legislature of 1895 passed an appropriation bill, entitled "An act making appropriation for current expenses of the state government for the years ending March 31, 1896, and March 31, 1897, and to pay the miscellaneous items of indebtedness owing by the state of Nebraska." See Session Laws, 1895, p. 386, ch. 88. Among the items of appropriation contained in the first section of the act is the following: "For state sinking fund, one hundred eighty thousand and one hundred and one and seventy-five one-hundredths ($ 180,101.75) dollars, to reimburse said fund for same amount tied up in Capital National Bank." The bill was approved by the governor April 10, 1895, and the same day J. S. Bartley, the state treasurer, filed with the auditor of public accounts a claim for the entire sum appropriated to reimburse the sinking fund. This account having been examined and adjusted by the auditor and approved by the secretary of state, a warrant in the following form was made out and delivered to the claimant:
On left hand margin: "Treasury Warrant."
Upon the back of this warrant appears the following indorsements: This further indorsement appears:
This warrant, it is asserted by the defendants, was sold by Bartley to the Chemical National Bank of New York. The state does not deny the assertion, but, on the contrary, by implication, concedes its truth. At any rate, it is certain that the New York bank, claiming to be the owner of the instrument, forwarded it for collection to the defendant bank in October or November, 1896. On January 2, 1897, Bartley called at the Omaha National Bank, and, for the purpose of paying the warrant, drew his check, as treasurer, upon the funds of the state on deposit in said bank. The amount of the check was $ 201,884.05; it was made payable "to the order of J. H. Millard, Pt." and was delivered to the payee, who thereupon surrendered the warrant to Bartley, and caused the state's money, to the amount of the check, to be turned over to the Chemical National Bank of New York and the Exchange Bank of Atkinson. These are the salient facts and we proceed now to inquire whether they show a right of recovery in the state. Whether the appropriation to reimburse the sinking fund was legislation fairly embraced within the title of the act may well be doubted; but we pass that question by, as its determination is not necessary to a decision of the case. The warrant under consideration was issued to reimburse the sinking fund--to transfer the state's money from one fund to another. It was a direction to Bartley to take money out of the general fund and put into the sinking fund. It declared on its face, in unequivocal terms, the purpose of its existence. No one could possibly be deceived by it. It...
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State v. Omaha Nat. Bank
...... a brief after the submission of the cause, bring to the notice of the court points not suggested either in the original briefs or on the oral argument. Error to district court, Douglas county; Baker, Judge. Action by the state of Nebraska against the Omaha National Bank and another. From a judgment in favor of defendants, plaintiff brings error. Reversed.C. J. Smyth, Atty. Gen., and W. D. Oldham, Dep. Atty. Gen., for the State.John L. Webster, R. S. Hall, and Connell & Ives, for defendants in error.SULLIVAN, J. The state of Nebraska brought ......