Court Opinion

ID: 8811431
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:04:53.98455+00
Date Added: 2024-06-11T17:04:18.222234
License: Public Domain

BATTS, Circuit Judge
(dissenting). Anna and William Rust sued First National Bank of Sweetwater, Tex., on three certificates of deposit of $2,000 each, issued in the' name of the bank by its president, J. V. W. Holmes, July 5, 1915, to mature 11 months after date, with 6 per cent, interest. Interest was paid June 5, 1916, and the certificates extended, by verbal agreement, for one year. Upon the presentation of the certificates for payment, the bank denied liability. Holmes owed plaintiff certain land notes. He wanted to dispose of the land by which the notes were secured, and Rust, to accommodate him, accepted as part payment of the notes, which were not then due, certificates of deposit, payable at. the date of the maturity of the notes. The transaction was by correspondence, and a letter from Holmes stated that the deposit for which the certificates were issued had been made.
The bank denies liability upon the certificates, upon the ground that the debt which was discharged was the individual debt of Holmes. The legal proposition is made that a note or other obligation of a bank, given in discharge of a.personal debt of the official, in the absence of express authority from the directors, is void. The general principle is well enough established and upon entirely satisfactory grounds. When the creditor of a bank official receives the obligation of the bank in discharge of such debt, he has notice that the credit of the bank is being used for an illegal and an improper purpose. He will know that the officer is acting outside of his general authority. The creditor cannot safely accept the obligation without knowledge of the actual authority of the officer. ' Ijven if he should ascertain that the directors have undertaken to authorize the giving of the bank’s notes for an individual debt, a question would arise as to whether such authority could be conferred.
The present case presents a situation somewhat different. The certificates of deposit in suit are not negotiable instruments. The liability which such a certificate imports is not created by the instrument itself, but exists as the result or effect of facts which the certificate evidences. The certificate is a receipt for money, but is not conclusive evidence that the deposit has been made. There may *35be a denial of the fact of the deposit and evidence to support the denial. If the deposit has not in /act been made, the bank is not liable, notwithstanding a certificate has been issued. The certificate is evidence, but not conclusive evidence, of facts which place liability upon the bank. The certificate does not itself create a liability. The execution of a promissory note may result in a liability, without reference to whether it is based upon a consideration. A° certificate of deposit creates nothing, but merely establishes, or prima facie establishes, a fact which may be the basis of a liability.
The question in this case is whether or not a deposit was made for the plaintiff. If it was the bank is liable. If it was not, the bank (under the issues made) is not liable. Holmes, at the time he issued the certificates of deposit, was the president of the bank. In the course of husiness of the bank, he had a right to speak for it. He had authority to accept deposits and issue certificates of deposit. He exercised this authority. He made a statement in writing to the effect that the deposit had been made. He was authorized to make such statement for the bank. If it was not true, the bank (no issue of estoppel being presented) would not be liable, notwithstanding his statement.
A certificate of deposit, issued in the course of business by a person who was the chief officer of the bank, and who had specific authority to receive money for the bank and issue statements that it had been received, ought to carry the prima facie presumption that the deposit which it recites had been made. The tender to plaintiff of the bank’s note would have given notice that Holmes was undertaking to do that which was beyond his authority as hank president. His statement that money had been deposited to the credit of plaintiff1 was a statement made in the course of business that he had done something which he had a right to do, and the doing of which would place liability on the bank.
Nor would the transaction necessarily be one for his own benefit. By securing deposits and issuing certificates, he was carrying out the policy of the bank. Plaintiff had been given the option of being paid in cash or having the money deposited in the bank. It would have been advantageous to the bank that the deposit be made. She had made deposits before and received certificates from Holmes, and she accepted these certificates without knowledge of anything wrong, and without reason to make any character of inquiry, and without any knowledge, or notice, or intimation that she was doing anything that would be advantageous to Holmes, or other than advantageous to the bank. The bank held out the president as a person worthy of confidence. Plaintiff cannot be charged with any character of fault in assuming that the deposit which he said was made, was in fact made. The president had a right to make such a deposit. He had general authority to issue certificates of deposit. Plaintiff had a right to assume that he had properly exercised his authority.
The certificate on its face was regular. It was issued in the name of the bank, by the president of the bank, who had authority to issue. It imported a consideration, and prima facie evidenced a debt *36of the bank. The burden was properly placed on defendant to prove its invalidity.
At the time, payment of the certificates of deposit was requested, Holmes was no longer connected with the bank, having prior thereto become a defaulter. Ascertaining that fact, Mr. Rust asked Mr. McAdams, then president, whether the bank books showed the deposit. The latter went into the vault, examined the books, returned, and stated that the books showed the deposit. There is no controversy about this. Mr. Rust testifies that McAdams also stated that the books showed three certificates, of $2,000 each, and promised that they would be paid at maturity on June 5th. McAdams denied these statements, and further testified that he subsequently ascertained that he was mistaken as to the records showing deposits of $6,000 by Mrs. Rust, explaining that he had been misled by entries on the deposit register offered in evidence, which showed four certificates issued to Mrs. Rust, aggregating $1,000, and one immediately under these for $5,000, without either ditto marks or name. He testified that this $5,000 certificate was in fact issued to the Kansas City Life Insurance Company.
The verdict of the jury involved a finding that the deposit had been made. If there was any evidence to that effect, the verdict should be sustained. It is insisted that the statement of McAdams was made by an agent of the bank, long after the transaction, and that the corporation would not, on that account, be bound. The transaction betwéen plaintiff and Holmes was not the subject-matter of the statement by McAdams. His statement had exclusive reference to what was shown by the records of the bank as to the business of the bank.' If the bank’s books showed that the deposit was made, that fact could be established to show the fact of the deposit. McAdams was president of the bank, in actual control of its affairs. He was in charge of and helped to make its records. In the course of the business of the bank, in response to the question of a customer of the bank with regard to pending bank business, he made a statement of what was shown by the books of the bank. It was not a recital of a past transaction, but a statement of an existing status. It was his duty, under the circumstances, to make the examination and state the, facts disclosed. It may be that that which he said was not conclusive, either as to what the books showed, or as to the fact which the books evidenced. It may be that the bank is not es-topped from showing that the president was mistaken as to what the bank books showed. It may be that the admissions are not conclusively bindjng.
Certain bank books were introduced which contained nothing to sustain the statement which Rust says the president made to him. It is entirely possible that the president did, in the first instance, make a mistake. It is entirely possible that the part of the record which he pointed out was that which misled him. It is also possible that there were other records, which he examined at the time, which sustained the statement that Rust said he made at the time. If the books showed what Rust says McAdams told him, they evidenced the deposit which is the basis of the suit* The admission as to the contents *37of -the books was made in the course of the business of the hank, by the person properly conducting that business, and within the line and scope of his duties as an officer. The matter was before the jury; they were entirely within their province in determining whether they would accept the admission which they had a right to find he had made when first asked about the liability of the bank, or accept the statement which he subsequently made, supported by such hank books as were produced.
It may be that no deposit was ever made in the bank for the benefit of the plaintiff; but a jury was justified in concluding that the hooks showed the deposit, and that such a deposit had been made. Two presidents of the bank made statements to that effect. In the selection of high officers of the bank, the directors make a peculiar appeal to the public to rely upon their integrity. The relations which result are of the most confidential character. The entire business of the country is based upon the belief of the general public that confident reliance may be placed in the honesty of such officials. If the hank is to be sustained on this appeal, one of its customers is to be deprived of more than $6,000, because she was willing to rely upon the honesty of a bank president, held out by the bank to he worthy of confidence, and accepted the word of his successor, held out by the bank as worthy of confidence.
The jury were authorized to find that the persons selected by the First National Bank of Sweetwater, Tex., to represent it in its financial affairs, did not defraud the plaintiff, but that the deposits for which she holds the bank’s certificates were in fact made.
The judgment ought to be affirmed.