Court Opinion

ID: 7056052
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:06:25.8689+00
Date Added: 2024-06-11T16:11:58.760859
License: Public Domain

On Petition for Rehearing.
Morris, J.
Appellants have filed a petition for rehearing, and, in their brief, counsel earnestly insist that the evidence without contradiction shows that appellant Charles Behrens was the cashier of the People’s State Bank, and as such cashier rediscounted three notes to the Crawford County State Bank for $5,700, and the former bank received the payment therefor; that the note sued on was executed to indemnify the People’s State Bank against loss by reason of its indorsement of the three notes rediscounted; that the three notes were paid by the makers thereof at maturity, and consequently there was a failure of the consideration for which the note in suit was executed.
The facts are, that on March 6, 1906, Charles Behrens, the cashier, was indebted to the Tell City National Bank in the sum of $6,000, evidenced by two notes of $3,000 each, executed by him and one Wulfmann, on November 14, 1905, due March 1, 1906. To procure funds with which to pay these notes, Behrens took from the safe in the bank vault three notes belonging to the bank, and sold them to the Crawford County State Bank, and received therefor a draft for $5,700, payable to the People’s State Bank. When this draft was received, on March 7, 1906, he remitted it to the New York correspondent of the People’s State Bank, to be credited on the latter’s account. At the same time he issued a draft of the latter bank on its New York correspondent, in the sum of $6,000, payable to the cashier of the Tell City National Bank, and sent this draft to the *510latter bank to pay the two notes for $3,000 each which he owed as an individual. This draft was received by the Tell City National Bank, and the proceeds applied as directed. All this was done without either the knowledge or the consent of any other officer of the bank.
In June following, the directors of the People’s State Bank discovered that Behrens had taken the three notes from the bank safe and had sold them for $5,700, and they demanded restitution. In response to this demand, the note in suit was delivered to the bank. The president of the bank testified as follows: “The note was given to reimburse the People’s Bank for certain notes that Behrens had taken out of the safe and sold to the Crawford County State Bank.” The facts before stated are shown by the evidence, beyond all doubt. The cashier frankly admitted, while on the witness-stand in the forenoon, that his purpose in selling the three notes for $5,700 was to take up his individual notes for $6,000, but in the afternoon he attempted to correct this testimony. The trial court was entirely justified in believing that his original testimony stated the truth. At the time the note in question was executed, nothing was said by the directors of the bank to indicate any apprehension on their part abodt the liability of the bank on its indorsement of the notes sold. No one questioned the. solvency of the makers of the three notes. The sole purpose of the directors, as shown by the evidence, was to procure reimbursement for the loss of the proceeds of the notes sold by the cashier.
Courts regard the substance rather than the form of a transaction, and determine its character by a consideration of all the parts thereof, rather than particular features. While it is true that the amount of the draft given for the sale of the three notes was placed to the credit of the People’s State Bank at the office of its New York correspondent, at the same time, and as a part of the same transaction, the account of the People’s State Bank with its New York *511correspondent was charged with the amount of the draft— $6,000 — issued to pay the cashier’s individual indebtedness, and as a net result its New York account was $300 short, and its notes, of the value of $5,700, were gone. It is to be presumed that if the directors of the People’s State Bank had known that, at the same time the notes were abstracted, $300 had been added to its liability to its New York correspondent, they would have demanded a note for $6,000 instead of $5,700, but all these transactions were had without the knowledge of the other officers of the bank.
The substance of the transaction was the conversion to his own use, by the cashier, of the proceeds of the sale of the bank’s notes. It would be a reproach to the court if it lost sight of the real character of the transaction by considering only a part of it as disclosed by a method of bookkeeping, contrived to deceive and mislead. There is no error in the record. Petition for rehearing overruled.