Kennedy v. Otoe County National Bank

Maxwell, J. In the year 1875, an action was commenced in the district court of Otoe county against the plaintiff in error and O. H. Irish, to recover the sum of $2,000 and interest, upon a promissory note, of which the following is a copy: [63] “ $2,000. Nebraska City, June 23d, 1873. “ On demand, I promise to pay to O. H. Irish, or order, two thousand dollars, at the Otoe county National Bank, with interest at the rate of 12 per cent per annum, for value received. “ EL Kennedy.” On the back of the note were several endorsements of payments of interest. The note on the day after its date was transferred to the defendant in error. The plaintiff in error answered the petition of. the defendant in error, alleging that he received no consideration for said note whatever, and that the defendant in error was not an innocent purchaser or holder thereof; that said note was made as an accommodation note, to enable Irish to purchase certain additional shares of stock in the bank of the defendant in error, and that the cashier'of said bank had agreed to carry said note; that he was led to believe that he had nothing to fear therefrom, as the stock would pay said note if it became necessary, and that the dividends.would pay the interest thereon; that the object of purchasing additional shares of stock was to enable the then cashier, and his friends, to control the bank, and elect Irish president thereof; that being induced by these representations, and being willing to accommodate said parties, and upon no other consideration he executed the note in question, and delivered the same to Irish for the purpose of being endorsed and delivered to the defendant in error, upon the understanding and agreement hereinbefore set forth; that at the time of delivering said note to Irish, he (Irish) delivered to plaintiff in error twenty shares of the stock of said bank, to be held by him as security against liability on his part upon said note, of all of which facts the bank, had full knowledge; that afterwards the bank requested the plaintiff in'error to deposit said shares in said bank for safe keeping, agreeing that said shares should be held by it for the purpose of securing said note; that plain [64] tiff in error relying upon said representations deposited said shares in said bank, that the bank disposed of said stock and appropriated the proceeds thereof to its own use, and that no' part thereof has been applied to the payment of the note. The plaintiff in the court below filed a reply to the answer, denying all the allegations of new matter therein contained. It appears from the testimony in the case that Kennedy, prior to the time of the execution and delivery of the note in controversy, had another transaction with the defendant in error, whereby he purchased twenty shares of the stock of the bank, giving his note therefor to the bank. This stock appears to have been purchased by him at the request of, and apparently as an act of friendship for, Metcalf, the cashier of the bank. It is claimed by the plaintiff in error, that the note in controversy, although payable to Irish, was in fact to be delivered to the bank as a part of the first transaction. In our opinion the proof entirely fails to sustain this view of the case. Kennedy, on cross-examination, testified as follows: Q. lie (Irish) said to you, did he, that he wanted the note to buy stock with? A. That was it exactly; that was the conversation. Q. Was that the conversation about the time you gave the note ? A. At the date of the note. That was the conversation on that occasion and on previous occasions. Q. That he wanted the note to buy stock with? A. Yes, sir. Q. Do you know what he did with that note? A. Nothing, only what was afterwards developed. Q. At the time you signed the note, you are positive he gave you the stock right there and then — handed it over to you? [65] A. Yes, sir, certificates of stock. Q. You don’t know whether he bought this stock? A. No, sir. Q.' Nor how he paid for it? A. No, sir. It also appears from the testimony that the note was signed and the stock delivered to the plaintiff in error in Omaha. The plaintiff in error also testified that the original transaction with the bank, whereby he had purchased and held 20 shares of bank stock, was terminated and his- note cancelled on the 24th day of June, 1873, the same day, as appears from the testimony, the bank discounted the note in controversy. It also appears from the testimony of Benjamin D. Ashton, teller and bookkeeper of the bank, that the note in controversy was discounted by the bank on the 24th day of June, 1873, and the amount thereof placed to the credit of Irish, who drew the same out by cheeks on the bank. -In this Ashton is fully corroborated by the cashier. There is. an entire failure of proof to show that the twenty shares of stock left in Kennedy’s possession as security for the payment of the note were ever delivered to the bank by Kennedy or any one for him, or that the bank, sold the same or any portion thereof. The representations of the president of a bank, made in transacting its. business, are admissible in evidence against the bank; but statements made by him away from the bank, in-reference to matters in which the bank has no interest, are not admissible. Like other agents, a bank president must act within the scope of his authority in order to bind his principal; unless his acts are ratified. In Merchants Bank v. Rudolf, 5 Neb., 527, it was held that statements made by a cashier, at casual interviews away from the bank, as to payments having been made upon its securities, were not binding upon the [66] bank. We think that decision states the law correctly, and is applicable to this case. Erom a careful examination of the entire record, we are satisfied that justice has been done in the case. The judgment of the district court is therefore affirmed. Judgment affirmed.