Douglas v. First National Bank

By the Court. Berry J. The referee’s conclusion that there was due from the bank to Wm. K. Rogers a balance upon deposit account of $5,061.60, is based upon findings that the item of $5,061.60, entered July 12th, 1866, was improperly debited, and the item of $5,061.60, entered Aug. 1st, 1866, was properly credited to said Rogers. In our judgment, there is no evidence in the case, which has a reasonable tendency to sustain the referee in arriving at this result. The testimony is flatly contradictory ; but, upon any rational construction of it, we are entirely clear that both items should be allowed to stand in the account as entered, or that both should be rejected. In either case, the result would be that the account would be balanced and the bank owe nothing. Much of the apparent difficulty in this case will disappear, if it be borne in mind that the real question to be solved is, not how the bank kept the deposit account, nor whether it was kept correctly and properly, but whether the bank was in fact indebted to Rogers. If the bank in fact owed Rogers nothing, the plaintiff has no cause of action, no matter how the bank kept its accounts. [38] From the testimony returned, it, appears that there were two theories as to the origin and nature of the two items referred to. one, disclosed in the testimony of W. K. Rogers, the other, in that of L. S. Follett, the bank’s cashier. Rogers’ theory is, that the account belonged to himself; that the debit of $5,061.60 was an attempt upon the part of the bank to pay, out of his said account and without his consent, a note dated Aug. 14th, 1865, held by the bank against his brother, Samuel Rogers; that the-'credit of $5,061.60 represented a note dated Aug. 1st, 1866, and executed by himself for Samuel Rogers, as principal, and for himself as surety, which was given “ to take the place of, and to evidence the same debt as,” the former note; that there were, in fact, no proceeds from the latter note, and no authority 'given to pass the same to his (W. K. Rogers’) credit. It is hardly necessary to say that, upon this theory, neither of the items was properly in the account. Follett’s theory is, that the account belonged to Samuel Rogers, or, if it did not, that the conduct of W. K. Rogers had been such as to authorize the bank to treat the account as belonging to Samuel Rogers; that, therefore, it was proper to debit in the account the amount of the note of Aug. 14th, which was overdue and unpaid, and thereby to pay the same; that the note of Aug. 1st, was a discount note, taken by the bank upon an application for a loan by Wm. K. Rogers, who requested the amount of the same to be placed to the credit of Samuel Rogers; that it was entirely independent of the note of Aug. 14th; that the credit of $5,061.60 represents the “proceeds” of the note of Aug. 1st, and that it was therefore a proper subject of credit in the account. Upon this theory both items were properly in the account. As before observed, whichever of these theories is correct, the plaintiff cannot recover; since by one both items are permitted to stand in the account, and by the other both are rejected. [39] Now, the testimony of every witness in the case goes to support one or the other of these theories; but the referee, as appears from his report, has framed a third theory. He finds in substance and effect that the account was the property of Wm. K. Rogers; that the debit of $5,061.60, which represented the principal and interest of Samuel Rogers’ note of Aug. 14th, was improperly charged in the account; and that the credit of $5,061.60 was “correct and proper, so far as appears in this action.” What the origin of the credit item was, or what it represented, the referee does not find. The referee’s theory, as will be observed, is consistent with neither of the theories before spoken of, and therefore it is not supported by the testimony of any one of the witnesses in the case. The referee must have found, in accordance with the testimony of Rogers and against the testimony of Follett, that the account belonged to Wm. K. Rogers, and that the debit was improperly entered in the account; and he must have found, in accordance with the testimony of Follett and against the testimony of Rogers, that the credit was properly entered in the account, because it represented, (as Follett testified,) the proceeds of a discount note, quite independent of the note of Aug. 14th, and did not, (as Rogers testified,) represent a note given simply “ to take the place of and to evidence the same debt as” Samuel Rogers’ note of Aug. 14th. As both Rogers and Follett claim to testify from personal knowledge, and of such matters, and in such manner, as to leave but little doubt that, if the testimony of either was false as to material facts, it was wilfully false, and as their testimony is the principal testimony in the case, it is apparent upon reflection that no theory can reasonably be sustained, which is based upon testimony of Rogers contradicted by Follett, and also, and as essentially, upon testimony of Follett, contradicted by Rogers. And yet there is no [40] other basis, in our judgment, upon which the referee’s theory can rest. For several reasons, and especially for tine reason that the case will go back for a new trial, we deem it best to leave this branch of the case without further comment. One or two questions of law were argued at bar, which it is expedient to consider with reference to a new trial. The defendant urges that the bank, (as is found by the referee,) not being aware that the deposit account belonged to William K. Rogers, had the right to charge the note of Samuel Rogers as a debit in said account. This note was made and matured several months before the deposit account was opened. It was not, then, taken by the bank with any reliance upon the deposit account as a fund from which it was to be paid, or by which it was to be secured, and as the deposit account is found to have been the property of William, the effect of charging the note of Samuel against it, (if the charge were allowed,) would be to divest William of his property in the account to the extent of the amount of the note This could not be done without the consent of William, express or implied, or unless the bank, misled by his conduct and believing the deposit account to be Samuel’s, carried the note, and suffered it to .remain uncollected, relying upon the deposit account for its payment, and, in- consequence of such reliance, has been prejudiced. Salters vs. Everett, 20 Wend. 268; Wilson vs. Smith, 3 How. (U. S.) 769; Bank of Metropolis vs. N. E. Bank, 6 How. (U. S.) 212; McBride vs. Farmer’s Bank, 25 Barb. 657. Another point made on the oral argument on behalf of deJ-idan" was that William K. Rogers, and of course the plaintiff as his assignee, is precluded from maintaining this action, because the demand, which is the cause of action here, should have been interposed as a counter-claim in the action brought [41] against-Kogers by the defendant in 1867, upon tbe note of August 1st. The provisions of sec. 72, ch. 60, Pub. Stat., which required such interposition, are not found in the General Statutes, and were not, therefore in force in 1867, when the action referred to was brought Order denying a new trial reversed.