Court Opinion

ID: 8830626
Source: CourtListenerOpinion
Date Created: 2022-11-26 16:02:14.053646+00
Date Added: 2024-06-11T17:04:55.090789
License: Public Domain

Mr. Presiding Justice Eldredge delivered the opinion of the court. It is claimed by appellant, the German-American Bank of Gridley, Illinois, that E. L. Coyle, its vice president and managing officer, on January 1, 1914, directed his brother, Harry B. Coyle, to inform appellee that the bank had loaned to a man by the name of Patton $7,000, which was an excessive loan, that it was expecting the bank examiner, and to request appellee to execute his note for the principal sum of $3,500 as an accommodation to the bank and thereupon the latter would deliver to appellee notes of said Patton aggregating $3,500 to hold as security. Ruvenacht executed his promissory note for $3,500 payable to his own order, indorsed it in blank and delivered it to said Coyle, who took it to the appellant bank and in return delivered to Ruvenacht certain Patton notes to the amount of $3,500. It further appears that at this time appellant was indebted to the First National Bank of Bloomington, Illinois, in the sum of $20,000 upon a note given ostensibly by one Davis and said Coyle but really for the benefit of appellant, and that appellant used notes deposited with it from time to time as collateral to secure the payment of the notes held by the First National Bank, and that in due course of time Ruvenacht’s note of $3,500 was sent to the First National Bank as such collateral. At the maturity of Ruvenacht’s note, he was called upon by the First National Bank to pay or renew the same. The latter renewed the note and, when it matured the second time, paid it at a cost to him of about $3,850. Ruvenacht thereupon demanded of appellant that it repay him this amount and offered to return the Patton notes. Appellant refused to repay the money and Ruvenacht brought this suit to recover the same and secured judgment therefor. It is insisted by appellant that appellee is not entitled to recover for three reasons: (1) That the agreement between Coyle or appellant and Ruvenacht was a scheme to cover up an asset of appellant which would not pass inspection, and so to deceive the bank examiner with a secret understanding that his note was an accommodation to appellant merely to take the place of the objectionable Patton paper, and was contrary to public policy and therefore void; (2) that the act of E. L. Coyle, the vice president and general manager of appellant, in entering into such agreement with Ruvenacht was ultra vires and appellant is not bound thereby; (3) at a previous term in the same court, appellee brought suit against said Coyle and Davis to recover on this same obligation. The contention of appellant, that this suit was brought to enforce an illegal contract, is not established by a clear preponderance of the evidence. The act of Ruvenacht in loaning his accommodation note to appellant in and of itself was not unlawful or contrary to public policy. Chicago Title & Trust Co. v. Brady, 165 Mo. 197; In re Tasker’s Estate, 182 Pa. St. 122; Fisher v. Simons, 64 Fed. 311. Appellant received the full benefit of the accommodation paper. Whatever the original purpose of the note may have been, appellant subsequently used it as collateral for its own indebtedness with the First National Bank of Bloomington, and, when Ruvenacht paid the note, appellant received credit for the amount on its note of $20,000 held by the First National Bank. The accommodated party is always liable to the accommodating party for money expended by the latter by reason of his accommodation paper. Appellant was not insolvent and no rights of creditors had intervened. Whether this note was executed by appellee with his consent that it should be used by appellant for the purpose of deceiving the bank examiner was a question of fact to be determined from all the evidence and was squarely submitted to the jury by appellant’s fourth given instruction. The jury, by its verdict, found adversely to such contention. Under such circumstances, even though the note was in fact used by appellant for deceiving the bank examiner, there is no rule of law which will permit appellant to thus profit by its own fraud. First Nat. Bank of Storm Lake v. Felt, 100 Iowa 680; Woodbury v. Glick, 151 Iowa 648; In re Tasker’s Estate, supra; Fisher v. Simons, supra; Chicago Title & Trust Co. v. Brady, supra. The defense of ultra vires cannot be sustained. Appellant never repudiated the act of its vice president in obtaining the note from appellee, neither did it return nor offer to return appellee’s note to him, but on the contrary negotiated the note with the First National Bank of Bloomington and received credit for the full amount thereof, and is estopped from now asserting that Coyle acted without its authority. Carr v. National Bank & Loan Co., 167 N. Y. 375, 43 N. Y. App. Div. 10, 189 U. S. 426; Hawkins v. Fourth Nat. Bank, 150 Ind. 117; Boyertown Nat. Bank v. Fridenberg, 206 Pa. 243; Cox v. Robinson, 82 Fed. 277; Roe v. Bank of Versailles, 167 Mo. 406; Willoughby v. Fidelity & Deposit Co. of Maryland, 16 Okla. 546, 205 U. S. 537; Citizens’ Bank & Trust Co. v. Thornton, 174 Fed. 752. Neither does the fact that appellee, in a former suit, misconceived his action and brought suit against Davis and. Coyle, personally, instead, of against appellant, estop him from maintaining this action against appellant. He recovered nothing in the former suit and it is not a bar to this action. There is no error in the record and the judgment of the Circuit Court is affirmed. Affirmed.