State Ex Rel. Walcott v. Brown

Opinion by MAXEY, C. The case was tried as between the plaintiff and the Federal Surety Company, no service ever having been had on the defendant Sherman William Brown. The record shows that the parties stipulated as to the formal matters, such as the First State Bank of Pensacola was a bank corporation under the laws of the state of Oklahoma; and that at the time of filing a petition in this case, Boy Walcott was the Bank Commissioner of the state of Oklahoma; that the Federal Surety Company was a corporation doing business under the laws of the state of Oklahoma; and that Sherman William Brown was the duly elected and acting cashier of the First State Bank of Pensacola between August 19- *284 and December 29, 1921; and that tbe bond' executed by the Federal Surety Company was in full force and effect up to and including the 29th day of December;, that Joe H. Strain succeeded Roy Walcott as Bank Commissioner; and that O. B. Mothersead succeeded Joe H. Strain and is now the acting Bank Commissioner; and some other minor matters were agreed to that are immaterial to a decision of this case. It is the contention of the plaintiff in error that because of the fact that Brown executed a note to Cook in payment of Cook’s stock, and Cook sold the note to the ■Central State Bank of Muskogee, and that the Central State Bank credited the Pensacola Bank with the amount of said note, and authorized the Pensacola Bank to charge it to the Pensacola Bank with $3,100, that that constituted a violation of section 4119, Comp. Stats. 1921. We are unable to see just what application section 4119 of Compiled Stats, of 1921 has to the questions at issue in this case. Counsel also cites section 4126, Comp. Stats. 1921, which all go to violations of those sections by the officers in making various reports-or various statements or entries in the books of the bank, and it being unlawful for any officer of the bank to borrow directly or indirectly money from the bank in which he is connected, and showing that the officers are guilty of embezzlement or larceny in doing such thing. Of course these sections are only applicable if it is established that iBirown borrowed money from the bank. A short time after the Bank Commissioner took over the First State Bank of Pensacola, be also closed the Central State Bank of Muskogee and took that over, so that at the time of the commencement of this suit, the Bank Commissioner was in possession of the assets of both banks, and why he did not foreclose the mortgage that Brown gave to secure the note to Cook, we have not been able to understand. It seems to us that the' sure and safe way for the Bank Commissioner to collect this note was to foreclose the mortgage given to secure the same. It would have then avoided any question as to the liaibility of Brown or the surety on his bond and in our judgment that was the proper thing for the Bank Commissioner to do, because we do not think that Brown or the surety on his bond can be held in this action. . The transaction between Brown and Cook, and between Cook and the Central State Bank of Muskogee, was made before Brown became cashier and before his bond was executed. There is nothing in that transaction that in any way involved the First State Bank of Pensacola. Brown gave Cook a promissory note for $3,100 and) executed a mortgage on- real estate to secure same and Cook took the note and mortgage to the Muskogee Bank and hypothecated same. It seems from the evidence that the arrangement that the Muskogee Bank should give the Pensacola Bank credit for the amount of the note, and the Pensacola Bank was in turn to give Brown credit for the note, was an arrangement made between the Muskogee Bank and Cook. The Pensacola Bank and Brown had nothing to do with that arrangement. The Pensacola Bank was in no way involved; and after the arrangements, as made, had been carried out, there was no chance for the Pensacola Bank to have lost anything. We do not know whether it was an effort on the part of the Bank Commissioner to protect the Muskogee Bank by suing Brown and the surety company, instead of foreclosing' the mortgage on Brown’s property, but it looks like tile Bank Commissioner could have saved himself a great deal of trouble by foreclosing the mortgage and collecting the note that way, instead of seeking to get the money out of the bond or Brown on a theory which to say the least is very fine spun and attenuated. The trial court heard all of the testimony of the witnesses and made its findings of fact and conclusions of law. We are not able to say that his findings of fact are not supported by the Testimony. On the contrary, we think that his findings of fact are weil supported by the testimony and that his conclusions of law are supported by the law of the case. The attorney for plaintiff in error has seen fit to criticise severely the trial judge, which we think is wholly unjustified and improper, and it certainly does not help plaintiff’s case before this court. The question of the liability of a bank on a guarauty of the payment of the debt- of another has been before the courts of this state, and it has repeatedly held that the bank is liable only where it has derived some benefit from the transaction, and is thereby estopped to plead the ultra vires character of the act of its officers. Crowder State Bank v. Aetna Power Co., 41 Okla. 394, 138 Pac. 302; First State Bank of Ada v. Wowack, 56 Okla. 359, 156 Pac. 207; Bennett v. Gage, 74 Okla. 69 176 Pac. 744. It is conceded that the Pensacola Bank ncilher did nor intended to derive any benefit from the sale of the $3,100 note by Cook to the Muskogee Bank, and there appears *285 no reason why it can be held liable on a contract or guaranty which it had no power to make, especially in view of the fact that Cook, in making arrangements to sell the note to the Muskogee Bank, explained all of the circumstances which showed that neither the Pensacola Bank nor its cashier had the slightest interest in the sale of the note, hut were merely acting in the transaction to accommodate Cook, as stated by Brown in his letter to the Muskogee Bank, dated November 3, 1921. When the sale of the note was completed and the Muskogee Bank placed $3,100 to the credit of the Pensacola Bank, and the latter had placed $3,-100 to the credit of Cook, the rights of the two banks had become fixed, and the subsequent attempt of the Muskogee Bank to charge against the Pensacola Bank’s credit the note which it had previously purchased from Cook, and the later issuance of the certificate of deposit and procuring its Indorsement by the Pensacola Bank without consideration, and the subsequent concellation of the certificate of deposit, could not result in discharging the liability of the Muskogee Bank; to the Pensacola) Bank. The Muskogee Bank still owns the $3,100 note and still owes the Pensacola Bank the $3,-100, and that probably accounts for the fact that the palintiff, as custodian of the assets of the Pensacola Bank, had not, to the time of trial, attempted the foreclosure of the mortgage on Brown’s farm, or to enforce the guaranty of payment made by William Jones Cook. The plaintiff’s whole case is based on a wrong theory of Brown’s liability and the liability of his bondsmen. We think the trial court reached the right conclusion, both in its findings of fact and conclusions of law, and that its judgment should be, in all things, affirmed. By the Court: It is so ordered. Note. — See under (1) 7 C. J. p. 525, § 127 (Anno.) (2) 7 C. J. p. 525, § 127 (Anno).