Court Opinion

ID: 7905833
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:00:20.887123+00
Date Added: 2024-06-11T16:32:24.787944
License: Public Domain

Burch, J.
(dissenting): In-my opinion, the facts stated in the first paragraph of the syllabus as the basis for the conclusion of law, are not the facts on which the decision depends, and the inference of fact stated in the second paragraph of the syllabus as the basis for the conclusion of law, is not warranted by the facts.
The transaction resulting in issuance of the certificate embraced two conditions imposed by the plaintiff: First, the plaintiff should have six per cent interest on its money; and second, the bank should leave with the plaintiff twenty-five per cent of the amount of the certificate until it matured. The term “bonus” was not used in the negotiations which resulted in issuance of the certificate. It was brought into the record by the attorneys. Eberhardt and Noonan *796conducted the negotiations which led to issuance of the certificate. They had with them, a list of banks, which included the Salina bank, and they afterwards marketed to the plaintiff paper of some of the other banks. Eberhardt testified as follows:
"Q. Who was it first suggested that there should be a bonus of one hundred dollars paid? A. Why, the understanding that we had, that any paper they bought had to net 6 per cent.
“Q. That is your understanding here with the trust company? Á. Yes, sir. And those CD’s drew 4 per cent, so we had to pay the additional amount to make the 6 per cent.
“Q. To bring it up to 6 per cent? A. Yes, sir.
“Q. And that'is the reason of this check of $100? A. That is the reason I sent that one-hundred-dollar check; yes.
“Q. Now, you talked with them, not only about the Kansas 'State Bank, but about these other banks? A. Yes, sir.
“Q. And after your conversation with Mr. Slaughter and Mr. Griest-and Mr. Collingwood — or rather, during your conversation — you were told that any arrangement that you made here by which they handled paper for any of these banks, would have to net them 6 per cent? A. Yes, sir.
“Q. So when you obtained a CD from the Salina State Bank you understood, if you handled it here, you would have to increase'it to 6 per cent, did you? A. Yes, sir.
“Q. And the one hundred -dollars was paid in order that the CD might be negotiated? A. Yes, sir.
“Q. That is 2 per cent interest in addition to the 4 per cent? A. What is that?
“Q. The hundred dollars, then, represented 2 per cent interest on ten thousand dollars for six months? A. Six months; yes, sir.
“Q. Did you make an arrangement with the trust company here for any of the other banks? A. That day we had a list of banks, and we asked them if it would be all right if we secured them.
“Q. Yes, sir. A. And later on we got two more banks for them.
“Q. What banks did you get? A. We got the Solomon National, and I think it is the Farmers State at Beloit that we got.
“Q. And were CD’s issued for those two banks? A. Yes, sir.
“Q. You had the Farmers State at Oakley? A'. I think it was the Farmers State at Oakley; yes, sir.
“Q. Those CD’s brought 4 per cent, the same as the others? A. Yes.
“Q. And in negotiating them here with the trust company you had to make them equal to 6 per cent paper, did you? A. Yes, sir.
“Q. And did so? A. He did; yes.
“Q. And the same arrangement of at least 25 per cent must remain on deposit? A. Yes, sir.
“Q. It was definitely understood, however, that 25 per cent should remain for the full period of six months? A. That was the agreement that was made.
“Q. That was the agreement that was made? A. Yes, sir.
*797“£¿. That was not reduced to writing, that agreement was not? A. No, sir.
“Q. Then you could not have, as you understood it — you could not have negotiated this CD for the Kansas State Bank without paying that one hundred dollars? A. That was the understanding.
“Q. Yes. A. And keeping the 25 per cent agreed to.
“Q. But after your preliminary conversation here, you then went to the Kansas State Bank at Salina and suggested to them that they might obtain— or might open negotiations here? A. Yes, sir.
“Q. And you told them at that time that if they would issue a CD for ten thousand dollars, you could have that passed to their credit on the books here, on the conditions that you have named? A. Yes, sir.
“Q. And one of which was that they must maintain here at least 25 per cent of their balance? A. Yes.
“Q. During the life of the CD’s? A. Yes.”
J. E. Griest, secretary and treasurer of the plaintiff, testified as follows:
“Q. State to the commissioner what the terms were of the arrangement. A. Well, we were to get the regular percentage from the bank on deposits that we required, the same as all other correspondents. This arrangement included opening an account in the trust company. They were to keep a balance of approximately 25 per cent of the amount, at least, of this certificate of deposit here.
“Q. Were you looking for a depositary at that time? A. We were in the bank correspondent business.
“Q. Were you looking for chances to deposit money in some new bank? A. Yes.
“Q. You were? A. Yes, sir.
“Q. You were looking for an opportunity to deposit ten thousand dollars? A. To invest money, or have them take it on.
“Q. To invest money? A. Yes, or its equivalent.”
When the transaction was closed, Mr. Griest wrote the cashier of the Salina State Bank as follows:
“Herewith credit slip for the $10,000 certificate of deposit received yesterday. Would like to have you understand that an arrangement is made to maintain at least a 25 per cent reserve while this loan is made to you.”
J. H. Collingwood, vice president of the plaintiff, testified as follows:
“We made deposits at Eberhardt’s and Noonan’s solicitations, in different banks; I think one at Solomon, and I believe one at Oakley, and I think there was one at Wilson, Kansas. I am not sure that we required the paper to be brought to 6 per cent, but I think we did in every case.
“Q. You had a surplus there? A. We wanted to have a better rate for it. You understand when it is deposited in banks such as we deposited that in the *798bank at Salina, and accept CD’s, it isn’t eligible for reserve; it is a time' deposit, and not subject to check.
“Q. And it is not a part of the reserve? A. Yes, and we had more money than we could use in our business.
“Q. And wanted to get it out? A. And wanted to get it out earning money for us.
“Q. And get it out at a high rate as possible? A. Exactly.
“Q. And the converse of that is true — and a bank needing money frequently gives one of its CD’s 'that way so they can borrow money? A; I think it is generally done, although I have never done it with any of my banks. I never put out CD’s for that purpose, but I am confident it is done in some cases.
“Q. And what they were doing here? A. And apparently what they were doing here.”
Commissioner Hunt returned the following finding of fact:
“Sometime prior to May, 1919, there was some communication from the Kansas State Bank, the nature of which is not disclosed by the evidence, but was an indication that the bank desired to withdraw the remaining $2,500. The plaintiff objected to its withdrawal because of the arrangement that approximately $2,500 was to remain in its hands, and the plaintiff wrote to the Kansas State Bank the following letter:
“ ‘Referring to your telephone conversation to-day with reference to the $10,000 CD issued to this company with the understanding that you were to retain a balance of $2,500 in this trust company during the time the CD was held by us: We shall expect you to keep your agreement in this respect. In case you desire to make any change, we prefer to have you take up the CD and close the account.’ ”
Cutting through forms, disregarding afterthoughts, and going directly to the substance of the transaction, it seems clear to me the plaintiff loaned the bank $10,000, at six per cent interest, on a certificate of deposit bearing four per cent interest, secured by retention of twenty-five per cent of the principal sum. The remaining two per cent interest was taken in advance in cash. The two per cent interest paid by Eberhardt was no more a bonus to the plaintiff than the four per cent interest recited in the certificate was a bonus to be paid to the plaintiff by the borrowing bank. The plaintiff required six per cent interest on its money, and the requirement was met. The agreement for the security was as definite as any other feature of the transaction. While a varying daily balance was contemplated, on which interest was to be paid, the balance was not to fall below $2,500 at any time during life of the certificate. Lefferdink needed all the money he had borrowed, and of course he disregarded the agreement. The plaintiff might have refused to pay the *799last draft without incurring any liability. That it chose to yield to Lefferdink did not affect the original character of the transaction.
The opinion of the court speaks of a practical interpretation of the contract relating to retention of the $2,500, and there was such an interpretation. It occurred when Lefferdink, knowing the contract prohibited him from drawing the money, indicated he desired to do so, and the bank, having the same understanding of the matter, denied the request.
There was no “reciprocal deposit,” and could be none, because of the agreement. Two thousand and five hundred dollars of the amount of the certificate was not subject to check or draft. The certificate was issued on that condition, and whether or not the condition was subsequently waived is immaterial.
In my opinion the writ should be denied.