Thomas v. City Nat. Bank of Hastings

• Decision Date: 02 May 1894
• Citation: 40 Neb. 501,58 N.W. 943
• Parties: THOMAS v. CITY NAT. BANK OF HASTINGS.
• Court: Nebraska Supreme Court

40 Neb. 501

58 N.W. 943

THOMAS

v.CITY NAT. BANK OF HASTINGS.

Supreme Court of Nebraska.

May 2, 1894.

Syllabus by the Court.

1. While a national bank may not lend its credit for the accommodation of others, still it may guaranty the payment of commercial paper as incidental to the exercise of its power to buy and sell the same.

2. A., being indebted to a national bank, and being the holder of certain negotiable notes, indorsed them generally, and delivered them to the president of the bank, who negotiated them for value to C., at the same time executing in the name of the bank a written guaranty of payment. From the proceeds of the sale, A.'s debt to the bank was canceled. Held, following People's Bank v. Manufacturers' Nat. Bank, 101 U. S. 181: First, that the guarantying of the notes under such circumstances was within the powers of the bank; second, that the authority of the president to execute the guaranty would be conclusively presumed in favor of the purchaser acting without notice to the contrary; third, that the retention and enjoyment by the bank of the proceeds of such transaction constituted a ratification of the president's act.

3. Where the evidence on behalf of the plaintiff suing upon such a guaranty tended to establish the state of facts set forth in the foregoing paragraph, it was error for the trial court, in the giving and refusal of instructions, to withhold from the jury the law as above stated.

Error to district court, Adams county; Gaslin, Judge.

Action by Joseph Thomas against the City National Bank of Hastings. Judgment for defendant, and plaintiff brings error. Reversed.Capps & Stevens and O. H. Dean, for plaintiff in error.

M. A. Hartigan and W. W. Morseman, for defendant in error.

IRVINE, C.

The plaintiff in error sued the defendant in error, a national bank, alleging that on January 21, 1889, one Elsmore and one Knowlton made and delivered to Charles H. Paul certain promissory notes secured by real estate mortgage of the same date. That Paul, in the ordinary course of business, indorsed and delivered the notes to the bank. That the bank executed and delivered to plaintiff a guaranty as follows:

“For value received, we hereby assign and transfer the within note to Joseph Thomas, trustee, and guaranty payment of the principal and interest on the same on the terms and conditions stipulated in the mortgage of even date securing the same.

City National Bank, Hastings, Nebr.,

By H. Bostwick, Pt.

+--------------------------+
                ¦(¦City National Bank of ¦)¦
                +-+----------------------+-¦
                ¦(¦[Seal.]               ¦)¦
                +-+----------------------+-¦
                ¦(¦Hastings, Neb.        ¦)¦
                +--------------------------+
                

That the foregoing contract was written upon each of said notes, and that plaintiff, relying thereon, and on the delivery of said notes and mortgage to him, paid over to the bank $10,500 as consideration therefor, which money was transmitted by certain bills of exchange which were duly indorsed, received, accepted, used, and transmitted to the credit of the bank. The petition then avers a default in payment, and the insolvency of the makers, and prays judgment upon the contracts of guaranty. The bank admitted the execution and delivery of the notes and mortgage, but denied the default of payment. This defense was, however, waived on the trial. As a second defense, it denied the indorsement or transfer of the notes to the bank, or that the bank was ever the owner thereof; denied its execution of the guaranty; denied that it authorized the guaranty to be executed; and denied the payment of any money by the plaintiff to the bank. It then alleged that Bostwick (who is shown to have been the president of the bank), without any right or authority, and solely for the accommodation of a partnership of which he, Paul, and the makers of the notes were all members, wrote the transfer and guaranty upon the notes, and thereby forged the signature of the bank. As a third defense, substantially the same allegations are repeated, and the defense of ultra vires set up. There was a fourth defense pleaded, but it was evidently abandoned in the district court, and has not been referred to in the argument here. The evidence on the part of the plaintiff tended to show that the notes and mortgage were made and delivered to Paul in payment for an interest in a brickyard; that Paul was then indebted to the bank in the sum of about $7,000, $5,000 of which seems to have grown out of the brickyard business, but constituted a debt which Paul testifies he had individually assumed. Bostwick, the president of the bank, took the notes and mortgage (Paul having indorsed the notes), and sold them to the plaintiff, writing the guaranty thereon before their transmission. The payment was made by two drafts of the National Bank of Commerce of Kansas City upon the National Bank of the Republic of New York. Each was drawn to the order of the defendant bank. Each draft bears the following indorsement: “Pay to the American Exchange Bank, New York, or order for collection, account of City National Bank, Hastings, Neb. J. M. Ferguson, Cashier.” Ferguson was cashier of the defendant bank. He ...