Wilde, State Examiner v. Zimmerman, 1827

• Decision Date: 13 March 1934
• Docket Number: 1828,1827,1829
• Citation: 30 P.2d 148,46 Wyo. 530
• Parties: WILDE, STATE EXAMINER v. ZIMMERMAN; SAME v. DOUGLAS SECURITIES COMPANY; SAME v. DOUGLAS RESERVOIRS COMPANY
• Court: Wyoming Supreme Court

30 P.2d 148

46 Wyo. 530

WILDE, STATE EXAMINER v. ZIMMERMAN;

SAME v. DOUGLAS SECURITIES COMPANY;

SAME v. DOUGLAS RESERVOIRS COMPANY

Nos. 1827; 1828; 1829

Supreme Court of Wyoming

March 13, 1934

ERROR to District Court, Converse County; CYRUS O. BROWN, Judge.

Three separate actions brought by A. E. Wilde as State Examiner, in charge of the First State Bank of Douglas, against C. D Zimmerman, Douglas Securities Company and Douglas Reservoirs Company respectively, on certain notes aggregating the principal sum of $ 27,000.00. Zimmerman was Vice President of the two corporations named, and the defense in each of the actions being that certain bonds of Casper Improvement District No. 4, of the par value of $ 28,000.00, then held by the bank as collateral, were sold to the bank, and that by reason thereof the notes sued upon were satisfied, the three cases were consolidated and tried as one action. From a judgment in favor of the defendants, the State Examiner brings error.

Affirmed.

For the plaintiff in error in each case, there was a brief and an oral argument by R. R. Rose of Casper, Wyoming.

The evidence is insufficient to support defendants' contention as to a sale and acceptance of the bonds, which were in possession of the bank as collateral security. The bank retained possession of the notes. Possession of a negotiable instrument is prima facie evidence and raises a presumption of ownership. 8 C. J. 1014. The burden of proof of payment is on the defendant, 8 C. J. 1011, by a fair preponderance of the evidence. 8 C. J. 1056; Hill v Waight, 118 N.W. 877. There was no effort on the part of defendants to regain possession of the notes, and from time to time after about January 10, 1929, they insisted that they were the owners of the bonds. The record of the testimony is inconsistent with the claim of defendants that they paid the notes by the sale of the bonds. It was shown that the notes of the corporations were good without security. It is likewise clear from the evidence that the bonds themselves were not good, in fact, nearly worthless. A defense of payment must be shown by clear and convincing evidence. 23 C J. 24-25. Steumbaugh v. Hallam, 48 Ill. 305; Inter. Motor Company v. Palmer, 155 N.Y.S. 357. The bank president was without authority to accept the bonds in payment of the notes; the management of the bank was vested in the Board of Directors. 7 C. J. 545-547; 1 Morawetz on Corporations, 537; 2 Cook on Corporations 716; 10 Cyc. 903. The president was without power to compromise an indebtedness due the bank, Swindell v. Bank, 60 S.E. 13; Wheat v. Bank, 55 S.W. 305; or to relieve the maker of a note of his obligation to the bank, Olney v. Chadsey, 7 R. I. 224; Loomis v. Fay, 24 Vt. 240; or to sell the bank's property, Greenwalt v. Wilson, 34 P. 403; Bank v. Lucas, 31 N.W. 805; Bank v. Bennett, 139 S.W. 219; 7 C. J. 549. The cashier of a bank has no such authority, Bank v. Wilson, 32 S.E. 889, or to accept anything in payment of a debt other than money. 3 R. C. L. 449; Bank v. Hart, 20 L. R. A. 780. The pretended sale was void under the Statute of Frauds. The notes had never been carried on the books of the bank and the bonds had been carried in the collateral files. There was neither an acceptance nor actual receipt by the purchaser of the goods, nor a part payment, nor a written memorandum signed by the party to be charged. Section 98-202, R. S. 1931; 27 C. J. 242; Cable Company v. Hancock (Ga.) 58 S.E. 319; Linde v. Huntington, 75 N.Y.S. 161; Godkin v. Webber, 117 N.W. 628; Silkman Lumber Co. v. Hunholz, 11 L. R. A. (N. S.) 1186; In Re Hoover, 33 Hun 553, 36 A. L. R. 651; Devine v Warner, 56 A. 562; Follett Wool Company v. Trust Company, 82 N.Y.S. 597; Dorsey v. Pike, 3 N.Y.S. 730; Lilywhite v. Devereaux, 15 M. & W. 285; Company v. Burwell (Fla.) 48 So. 213; Boiler Company v. McGinness, 64 How. Pr. (N. Y.) 99. Some act sufficient to constitute evidence of receipt and acceptance, indicating a change in the character of possession from that which existed prior to the sale, must be shown by clear and unequivocal proof. Porter v. Graves, 104 U.S. 171; Wilson v. Hotchkiss (Calif.) 154 P. 1; Norton v. Simonds, 124 Mass. 19; Harlan v. Carney (Mich.) 189 N.W. 27; Dietrick v. Sinnott, 179 N.W. 424; Young v. Ingalsbe (N. Y.) 102 N.E. 590; Company v. Mill Company, 36 A. L. R. 643. The testimony of Dr. Hylton that Mr Huie had declared that he would buy no more Casper bonds was incompetent and not binding on the bank. 1 R. C. L. 508; Rumbough v. Company (N. C.) 17 S.E. 536; Terry v. Birmingham Bank (Ala.) 30 A. S. R. 87; Bank v. Clark, 36 A. S. R. 710. Declarations of an agent made after a transaction are not binding on his principal. Younce v. Lumber Company, Ann. Cas. 1912-C, p. 107. It is submitted that there was no evidence, direct or circumstantial, indicating a sale contract; that if a contract was attempted, it was without authority and is not binding on the bank; and if there was a contract, it was within the Statute of Frauds and void.

For the defendant in error in each case, there was a brief and oral argument by Joseph Garst of Douglas, Wyoming.

It was clearly shown by the evidence that the bonds were purchased and taken over by the bank in satisfaction of the $ 27,000 in notes. An item of accrued interest amounting to $ 240.00 was paid in addition. It was true that Huie, president of the bank, did not return the notes to the makers, but reported that they had been mislaid. The bank pledged the notes to the County of Converse thereafter, to secure a public deposit. There was other evidence of the bank's claim of ownership of these bonds. In 1931, the bank went so far as to employ counsel to foreclose on the bonds as an asset of the bank, and it later accepted payment of some of the bonds by the City of Casper. It was clearly established that the bank took over the bonds in satisfaction of the notes. In making up the renewal notes of January 10, 1929, the market value of the bonds was shown to be par. As to the attempted defense of the Statute of Frauds, it should be remembered that the bank's possession of the bonds was special, or as bailee. Thereafter and on May 7, 1929, the bank pledged the bonds as security for the deposit of public money. There were declarations for the bank of ownership. 27 C. J. Section 279, p. 247. Wilson v. Hotchkiss, 154 P. 1. A person can sell his property to his bailee and make a good delivery without actually taking the property into his own possession and then returning it to the possession of the vendee. Snider v. Thrall, 14 N.W. 924. Huie was general manager of the bank and transacted all of its business; he therefore had authority to purchase the bonds. 7 C. J. 544. The bank is estopped to deny the authority of Huie. 7 C. J. Sec. 142, p. 539-40; Citizens' Bank v. Thornton, 174 F. 752; Mortimer v. McMullen, 67 N.E. 20; Union P. Ry. Co. v. Estes, 16 P. 131. A judgment based on conflicting evidence will not be disturbed on appeal. Kamp v. Kamp, 36 Wyo. 310; Christensen v. McCann, et ux, 41 Wyo. 101.

BLUME, Justice. KIMBALL, Ch. J., and RINER, J., concur.

OPINION

BLUME, Justice.

A. E. Wilde, State Examiner, in charge of the First State Bank of Douglas, brought three actions, namely one against C. D. Zimmerman to recover on a note of seven thousand dollars, another against the Douglas Securities Company to recover on a note of ten thousand dollars, and another against the Douglas Reservoir Company to recover on a note of ten thousand dollars, the various notes being dated January 10, 1929, due in six months after date. Zimmerman was vice president of the two companies herein named and in each of these actions the defense was set up that certain bonds of Casper Improvement District No. 4, of the par value of $ 28,000, then held by the bank as collateral, were sold to the bank a few days after January 10, 1929, and that by reason thereof the notes sued upon were satisfied. In view of this common defense the three cases were consolidated and tried as one action. The court found in favor of the defendants, and the State Examiner has appealed to this court.

1. It is assigned as error that the judgment is not supported by sufficient evidence, and, particularly, that no contract has been shown, in that no acceptance of the offer to buy the bonds appears herein. The notes in suit were renewals of previous notes which became due on January 10, 1929. On or about that date Zimmerman went to the bank, pursuant to a notice, for the purpose of obtaining an extension of the indebtedness. He dealt with Mr. Huie, who at that time was president and general manager of the bank, and who then indicated to Zimmerman, as the latter testified, that unless the bank could get more of the business of the defendants, the directors would be reluctant to continue to carry the full amount of the indebtedness. The testimony further shows that Zimmerman then stated, that in such case, it would be necessary for him to sell some of the bonds or some sheep; that thereupon Huie said: "We will buy the bonds," at first offering to do so at 98 cents on the dollar; but that, after further discussion, he finally made a definite offer to buy them at around 95 1/2 cents on the dollar; in other words that the bank would take over the bonds, of the par value of $ 28,000, in exchange for the notes of the par value of $ 27,000, with the balance of the interest due thereon, subsequently found to amount to $ 240.00, to be paid by the defendants. The testimony also shows that Zimmerman did not immediately accept the offer to buy, telling Huie that he would let him know in a few days for the purpose, apparently, of giving him time to investigate the market value of the bonds. In the meantime, the notes in suit had been made ready...