82 F. 961 | 9th Cir. | 1897
after staling the case as above, delivered file opinion of the court, as follows:
The assignment of errors contains some 59 specifications, but the principal one to be considered by this court, the determination of which will go far in disposing of many of the remaining ones, is the 1st, to wit:
“That the court erred in giving any instructions whatever to the jury, except an instruction to find a verdict for defendants for the sum of .¶; 16,021.70, for the reasons that there was no evidence' whatever in said cause tending io show any right of the plaintiff to a verdict in said cause against said defendants or either of them, and that, the evidence in said cause required the jury to'íind a verdict for defendants for tlie sum of SI6.021.70, together with interest thereon at the legal rate.”
This assignment of error raises the question whether there was any evidence tending to show that the plaintiff was entitled to the verdict. However, preliminarily, and before considering this assignment of error, two oilier assignments of error (Nos. 35 and 36), relating to the admission in evidence of two depositions, may with propriety be disposed of. It is contended, under these two assignments, That the notice» given of the taking of the depositions of Edward Burns and Dumont Clarke, two witnesses on behalf of the plaintiff bank, was not: reasonable' in point of time, and that the certificate of the notary public was fatally defective, in that it talk'd to certify that sue-1; notary was not., at the time of the tailing of such depositions, of counsel or attorney to either party, and was not interested in the event of the cause1. The evidence of these two witnesses was of great, importance to the plaintiff bank, and its suppression would have withdrawn from the consideration of the jury evidence witliout which it is difficult to see how they could have found a verdict in favor of the plaintiff bank. With respect to the reasonableness of the time, notice was given by the attorneys for the plaintiff bank at Hpokane to tin* attorneys for the defendant bank and the receiver, on February 29, 3896, that the testimony of Edward Burns and Du-mont Clarke, residents of the city of New York, would be taken, under the provisions of sections 863, 864, and 865 of the Revised Stat
With respect to the claim that the certificate of the notary public is fatally defective in the particular above indicated, it is enough to say that the certificate, as it appears in the printed transcript of record, contains the following statement: “That I am not of counsel nor interested in any manner whatever in this cause.” This would seem to comply substantially with the provisions of section 863 of the Revised Statutes. Donahue v. Roberts, 19 Fed. 863; Coal Co. v. Maxwell, 20 Fed. 187; Stewart v. Townsend, 41 Fed. 121; 1 Fost. Fed. Prac. (2d Ed.) p. 512, § 286. The action of the lower court in denying the motion to suppress the depositions, and in admitting them in evidence, was, we think, correct and proper.
Reverting to the 1st assignment of error, it is hardly necessary to observe that the function of this court, in reviewing a case upon a writ of error, is not to try the case de novo, but simply to ascertain whether there was sufficient evidence to go to the jury. Pleasants v. Fant, 22 Wall. 116, 122; Commissioners v. Clark, 94 U. S. 278, 284; Elliott v. Railway Co., 150 U. S. 245, 246, 14 Sup. Ct. 85;
There is no question as to the fact that the plaintiff bank, the American Exchange National Bank of New York, advanced the sum of $50,000. It is contended by the plaintiff bank that the evidence shows that this sum was advanced or placed to the credit of the First National Bank of Spokane Falls; while it is claimed on the other hand, by the defendant bank and F. Lewis Clark, its receiver, that the evidence tends to show that the money was advanced to the directors of the bank upon their individual responsibility. The jury, by their verdict, necessarily adopted the view that the money had been advanced to and drawn by the defendant bank, and not by the directors individually. Were they justified in so finding, and were the rulings and instructions of (he court in this respect correct? It appears from the evidence that the plaintiff and defendant banks were at the time of the loan, and had been for some time previous, corresponding banks; that from the fall of 1890 to 1892 the defendant bank had had some three or four runs which had embarrassed it very much, almost compelling it to close its doors on two or three occasions; that in the fall of 1891 Mr. Horace L. Cutter, the cashier and one of the directors of the bank, had occasion to take a trip East; that, before going, he talked with several of the other directors about the advisability of making arrangements with some of the bank’s Eastern correspondents to allow the bank, in case of an emergency, an overdraft all the way from $25,000 to $100,000; that while no express and specific authorization to incur a loan for the bank appears to have been given by the board of directors to Cutter, as its cashier and one of the directors, nevertheless, in pursuance of the conversation had as stated, Cutter, while in New York City, called at the place of business of the American Exchange National Bank of New York, and had an interview with its vice president, Mr. Dumont Clarke, and its cashier, Mr. Edward Burns, relative to a loan or advance of $50,000 or $100,000 should his bank need such a sum. The testimony of Cutter, who was called as a witness for the defendant bank, as to the arrangements he effected to secure the loan, is briefly as follows:
“Q. Did you have any conversation with the said Clarke and Burns in the city of New York, in the fall of 1801, relative to the loan of fifty or one hundred thousand dollars? A. I did. Q. Now, you may state, Mr. Cutter, in detail, as fully as you can, such conversation. A. In the fall of 1891 — I think it was in the fall of 1891 — 1 was in New York City, and called at the American Exchange National Bank, and had an interview with Mr. Clarke, the vice president of the hank, and Mr. Burns, 1he cashier, relative to a loan of fifty or a hundred thousand dollars. I said at the time that I did not desire to use the. credit of the hank, but that certain of our directors, who owned the majority or most of the stock of 1he hank, would give their individual liability therefor. Upon my going there the following day, they told me that we could have it. It was then arranged that the fifty thousand dollars or the loan we might take would he placed to the credit of the First National Bank of Spokane on special account by the giving of this individual liability of the directors. * * * Q. You may state wliat was said in the conversation on the second day to which you have alluded, in connection with the credit upon which this loan was made. A. It was simply to he placed to the credit of the First National Bank of Spo*966 kane on special account, on the individual liability of the members constituting the board of directors.”
Edward Burns, cashier of the American Exchange National Bank of New York, called for the plaintiff bank, testified:
“Q. Will you please state fully the conversation that you bad with Mr. Gutter in October, 1891V A. Mr. Gutter and the president and myself talked for some lime in regard to the matter of loaning him fifty or one hundred thousand dollars. The principal part of the conversation related to the maimer in which it would be loaned, and this was for the reason that Mr. Cutter stated that he was unwilling to let his printed statements go forth in his community showing him a borrower of money. He wished therefore the loan to be arranged in such a way as to avoid making this statement. We showed him how the loan could be made so that he could have a credit on our books, and yet not need to print on his statement the rediscounting of any of his bills receivable, the method which we told him of being as follows: We to charge the First Spokane special account, say, $50,000, and credit the First National Bank account, (the genera* account) $50,000. This would give him the $50,000 to draw against, on his regular account on his books. This would really show as against him, as an item due to banks. When I say ‘this,’ I mean the $50,000 would appear on his books as an item due to banks. Q. Give what Mr. Gutter said in the connection. A. Gutter was entirely satisfied with this plan, as it covered the very point he wanted to cover, as it afforded a plan to enable him to borrow without showing it as rediscounted paper on his statement. The plan which we proposed to Mr. Cutter was one which was used in many cases by banks which had the same object in view as that mentioned by Mr. Gutter; that is, the avoidance of printing bills rediscounted on the statements which they would be called upon from time to time to make by the comptroller. Q. State whether at that interview you did agree with Mr. 'Cutter to make any loan, and, if so, on what terms. A. We did agree to loan the First National Bank of Spokane $50,000 against the guaranty of his board of directors. The rate was made as low as one and one-half per cent., on account of an understanding that was had that the money was needed chiefly as a balance with us.”
Mr. Dumont Clarke, vice president of tbe plaintiff, bank, testified as a witness on its be'half, as follows:
“Q. Will you state fully the conversation then had with Mr. Gutter? A. The conversation was in relation to an accommodation which he desired or might desire. He wanted to place it in a shape that it would not appear upon any statement that he might render to the comptroller, as hills rediscounted for his bank. It was then suggested that we might make for him, as we did occasionally for some others, a special account; and, in case of his desiring accommodation, we could charge that special account, and credit his general account. In his statement it would then appear as due to banks. He was to give us as security, in case he needed such accommodation, a guaranty signed by his board of directors, or a major portion of them. Q. Did you have any talk with him as to a loan, or the amount of a loan, your bank should make when called upon? A. ITe wanted from fifty to one hundred thousand dollars. Q. What did Mr. Gutter say, if anything, in regard to this plan of borrowing money? A. The arrangement suited Mr. Gutter entirely.”
In pursuance of this arrangement, the evidence tends to show that the sum of $50,000 was placed to the credit of the First National Bank of Spokane, and the monthly statements, designated as “Plaintiff’s Exhibit 1” and “Plaintiff’s Exhibit 5,” and the vouchers accompanying the same, designated “Plaintiff’s Exhibit 8,” tend to establish the facts that on the 9th day of November, 1892, the defendant bank was given a credit of $50,000 on the books of the plaintiff bank, and that thereafter, between said 9th day of November, 1892, and the 26th day of July, 1893, inclusive, the latter being tbe date when the defendant
- It is a significant fact that through all these1 charges and credits, where it appeared that Prickett held the $50,000 as trustee for the di rectors who signed the note therefor, and then advanced it to the defendant bank in payment of $50,000 of the increased capital stock, the plaintiff bank did not know Prickett as trustee of this money. It had not advanced or agreed to advance the money to Prickett. as trustee. On the contrary, its contention all through the trial was that the money had been placed to the credit of, and loaned to, the defendant bank, and not to the directors individually, and that the directors’ note was simply a collateral security', — a “guaranty note.’' The evidence tends to show that it dealt with, and only with, the defendant bank in the regular course of business as a corresponding bank. The money was not drawn by Prickett as trustee oi* otherwise, but by the defendant bank in the regular course of business. The $50,000 was never in the possession or under tin; control of Prickett as trustee or otherwise;; for, the first time credit was given by the plaintiff bank ivas on November 9, 3892, which was over a month after Pricketfs account as trustee with his own bank had been closed out, on October 3, 1892. Moreover, this was some nine months after Prickett was first, credited, on the books of the defendant, with the sum of $50,000 as trustee, viz.
“First National Bank.
“Jas. N. Glover, Prest. H. W. Fairweatker, Vice Prest. Horace L. Cutter, Cashier. F. K. McBroom, Asst. Cashier.
“Spokane, Wash., Jany. 28th, 1892.
■“$50,000. For value received, we promise to pay to the-American Exchange National Bank of New York City, or order, in gold coin of the United States of America, any and all-sums of money which the said American Exchange National Bank of New York City may loan or advance to the First National Bank of Spokane, Washington, or on its account, to the amount of fifty thousand dollars, and*969 with ini west, on such loans and advances from ihe time the same are made respectively. at; the rate of six per cent, per annum; said payment to he made by us on demand, said advances or overdrafts being made at our special instance and request, and upon the faith of this understanding, and this obligation shall always apply xo the balance of the First National Bank of Spokane, Washington, indebtedness or liability to said American Exchange National Bank oí New York City, after deduction of all payments made before demand thereon.
••[Signed] .Tames N. Glover.
••[Signed] Horace L. Cutter. ’
“ISigned] ’ J. B. IMcketfc.
“[Signed] II. W. fairweather.
“I Signed] T. Monaghan.”
Aside from the terms of this instrument, it. is a significant fact that Cutter, while denying in his testimony that the note was intended as a guaranty for the loan to the bank, speaks of the note as a guaranty note in a let ter sent by Mm to the plaintiff bank, inclosing the note in question. That part of the letter introduced in evidence, and marked “Exhibit A,” is as follows:
“Spokane, Wash., Tail. 28th, 1802.
“Eclward Burns, Esq., Cas. American Exch. Natl. Bank, New York City — Dear Sir: I inclose herewith individual guaranty note of the directors of this bank, $50,000, being' R> of the line arranged with your people when T was last in your oily (Oct., 1891), to be credited as suggested by yon to our special account, and applied on our active account as required. We do not know that we shall have occasion to use this, but thought best to have it with you in case we find it to our advantage to do so. * * * Horace D. Cutter, Gas.”
in answer to this letter, E. Bums, cashier of the plaintiff' bank, sent tne following reply (Exhibit E):
“New York, Feb. Ctli, 1892.
‘Horace E. Cutter, Esq., Casin'., Spokane Falls, Wash. — Dear Sir: Your favor of the 28th ult. received, with inclosure, guaranty of the directors of your bank, which we file away for use whenever yon get ready to call upon us. * * * E. Burns, Casin'.”
Cutter, in his testimony, claimed that he had used the word “guaranty'" inadvertently. The jury undoubtedly gave such weight to this statement as they saw fit. T1 is unnecessary to refer to other evidence introduced in this connection. The jury, as stated, returned a verdict in favor of the plaintiff bank, thereby necessarily finding that the loan was made to the bank, and not to the directors individually. But it was not only necessary that: the plaintiff bank should have made the loan to the defendant bank, and not to the directors individually; but Cutter, ¡he one who negotiated the loan or advance, must have had authority to do so from the board of directors, or else his unauthorized acts in tiiat direction must have been ratified by the board of directors.
As was said in Bank v. Armstrong, 152 U. S. 346, 350, 14 Sup. Ct. 574, which is a case of striking similarity to that at bar:
“It may be conceded that the New York bank acted upon the theory that the loan was to the Ohio bank, and took the notes and certificates of stock as collateral. But: the liability of the Ohio bank is not a necessary consequence of such a concession. Ii lias further to be shown, that the Ohio bank was really a party to the transaction, either by having authorized Harper to effect the loan on its behalf, or by having ratified ills action and having1 accepted and enjoyed ihe proceeds of the discount.”
“Q. Did you have any talk with Hr. Gutter, in connection with other members of the board, after lie came back, as to what he had done in that direction? A. Yes, sir; I think I remember of some little conversation with Hr. Cutter after lie returned from New York, from his trip, in reference to the results of his trip. Q. .Well, what did he report about that? A. Mr. Cutter stated to me that he had arranged with the American Exchange National Bank to get fifty thousand dollars, and that in case of an emergency they were to extend it to a hundred thousand. I think I asked him the question on what kind of terms he got it. He said they agreed to allow us the use of that amount of money, and charge us a very reasonable interest — I forget now just what the interest was, — at any time that we used it, and for such amounts as we used, only. Q. What security did he say they demanded, if any? A. At that time he did not mention any security at all. Q. Well, did he afterwards? A. Well, as my recollection serves me, — of course,'I could not have told the date, — but there was a note came along after a bit during the winter season (the winter of ’92,— ’91 and ’92); the note that this seems to be a copy of,, or the original note, perhaps, — üie original, I guess. And he then stated that they had required a note of the directors, — a directors’ note; and stating, of course, at the same time, that in case we did not use the money, that we would have no interest to pay; and upon that representation we signed this note that is here. That we did not require it as a bank at that time. We did not require any money, because we had plenty of money of ,our own at that time, but this arrangement, as 1 understood it, was, as I stated before, was simply to guard against trouble in case we needed money, had a run or frustration of business affairs, so that wo required a little assistance, we were to have it.”
Mr. H. W. Fairweather, a director and vice president of the bank, testified:
“Q. Do you remember the time when Hr. Cutter went to New York, in ’91,— fall of ’91? A. Yes. Q. What conversation, if any, did you have with him, either before or after, about his mission to New York, and especially with the American Exchange National Bank of that city'-? A. Oh! We talked the matter over with Hr. Cutter, to see if we could raise some money. He thought he could, with our Eastern correspondents at St. Paul, Chicago, and elsewhere. Q. Whom do you mean by ‘we’? A. Well, that is the directors, — the board,— at an informal meeting. We were usually all in there, and we would just say, ‘Let’s have a meeting.’ That would be call for it, — personal notice. That is the .way most of our meetings were held. Q. Well,- for whom were you expecting to get money, or trying to get money, arranged to get money? A. For the bank. Q. Well, what did Hr. Cutter tell you about the result of his mission to New York after he returned? A. Oh! When he came back, he said he had arranged for a fifty thousand dollar option or overdraft, in case we required it, with the American Exchange National Bank, and he had asked for a hundred, and possibly might reach a hundred. * * * Q. When, if at all, was. it brought to your attentiofi that any sort of security should be advanced? A. Oh! Not until some time the following January. Q. Well, what was the occasion at that time? A. I think Mr. Cutter then said he had promised a director’s note as a sort of guaranty for this fifty thousand dollar overdraft, and that he had asked for it, and they had asked for the note.”
Mr. Cutter, while denying that he had any previous authorization from the board of directors to incur a loan for the bank, admits that, when he returned, he apprised the directors of what he had done, and subsequently secured their signatures to the guaranty note. It is true that there is no record of the minutes of any meeting in which
“Even, therefore, if it be conceded that it was within the power of the board of directors of the. Fidelity National Bank to borrow $200,000 on time, it is yet obvious that the vice president, however general his powers, could not exercise such a power unless specially authorized so to do; and it is equally obvious that persons dealing with the bank are presumed to know the extent of the general powers of the officers. Without pursuing this part of the subject further, we think it evident that Harper had no authority to borrow this money, and that the bank cannot be held for his engagements, even if made in behalf of the bank, unless ratification on ilie part of the bank be shown. It is scarcely necessary to say that a ratification, to be efficacious, must be made by a party who has power to do the act in the first place, — that is, in the present case, the board of directors; and that it must be made with knowledge of the material facts. There is not the slightest evidence shown in this record that the board of the Fidelity National Bank, by any act, formal or informal,, undertook to ratify Harper’s action in the premises, or that they over had any knowledge of the transaction.”
Bringing tlie present case within the rule of ratification laid down in the case just cited, we think there was sufficient evidence of a ratification to call for the judgment of the jury. The fact, also, that the defendant bank used the money, drew on it in the usual course of its business between the two banks, would tend to bring the case within the doctrine recognized in the case just cited, “that a corporation may become liable upon contracts assumed to have been made in its behalf by an unauthorized agent by appropriating and retaining, with knowledge of the facts, the benefits of the contrae.)s so made in its behalf.” See, also, Bank v. Patterson, 7 Cranch, 299; Bank v. Dandridge, 12 Wheat. 64; Zabriskie v. Railroad Co., 23 How. 381; Gold Mining Co. v. National Bank, 96 U. S. 640; Gas Co. v. Berry, 113 U. S. 322, 327, 5 Sup. Ct. 525; Pennsylvania R. Co. v. Keokuk & H. Bridge Co., 131 U. S. 371, 381, 9 Sup. Ct. 770. While the evidence in some respects may not be as strong and sali«factory as might be desired, still, in our opinion, there was sufficient to go to the jury, and their verdict should not be disturbed. The action, of the court below in declining to instruct the jury to find for the plaintiffs in error was therefore proper, and is not error. This disposes of the 1st assignment of error.
The 30th assignment relates to the refusal of the court to instruct the jury that, unless all of the members of the board of directors were present or no tilled to be present, any action taken by the board in connection with the S5Q,0QQ loan would not be binding on the bank, without the further qualification subjoined that, If any member of the board of directors was absent and beyond the reach of notice within a reasonable time, a valid meeting of the board' might bo held without his being present, or without his being act tally notified, so long as -i quorum of the board were present or were notified. The court explained to the jury that the,by-laws of the company, as introduced in evidence, did not, nor did the law, prescribe the kind of notice; that a good notice might be given by a writing specifying the time anti place and object of the meeting, delivered to or sent by mail to each of the directors, or a messenger,might be sent to notify the directors to meet, or they might notify each other of the time and place of meeting, oi* if the directors had a stated time for meeting, which they all knew about, a meeting held at that time and that place would be deemed a meeting of which all had notice; and if it was the regular custom, pursued for a, number of years, for the direr (ores to hold a meeting and transact the business of the bank at the banking house during business hours whenever a sufficient number were present, that custom would carry wit Si it a notice to each of the directors of a meeting to be hold within the business hours of the bank for transad ing the banking; business, and whenever a sufficient number were there assembled, and look action upon the business of the bank wiihin the powers of the board of directors, it would be deemed a meeting held, of which all the members, of the board had notice. These remarks accorded with the evidence in the case about the manner in which the meetings were held, and appear to be proper and correct. It appeared that Cyrus Happy, one of the directors of the defendaut bank, ’'•"as not present at some of the meetings?,, and that lie was absent from the state during the month of May, 3833, shortly before the bank closed its doors.
Dillon, in Ms work on Municipal Corporations (2d Ed.) p. 319, § 209, says:
“All corporators are presumed io know of the days appointed by the charier, statute, usage, or by-laws for the tiaasaclion of particular business; and hence no notice of such meeting for the transaction of such business is necessary, or for the traiwicUon of the mere ordinary affairs of, tin; corporation on such days: yet, if it is intended io proceed to any other act of importance, a novice is necessary, tito same as at any other time.”
Section 201. “A notice, when necessary, must, if practicable, be given io every member who has a right to vote.”
See, also. Thomp. Corp. § 3938; 17 Am. & Eng. Enc. Law, p. 85; Paola & F. R. Ry. Co. v. Commissioners of Anderson Co., 16 Kan. 308; Bank of Middlebury v. Rutland & W. R. Co., 30 Vt. 159, 170; Waite v.
“The board of directors hold meetings at the banking house of said corporation as often as seems necessary, or at such times as they shall by resolution designate. The president shall preside at such meetings. A majority of the number of directors shall constitute a quorum, and by a vote representing a majority of the number of directors may transact business and determine any proposition.”
The evidence clearly showed that it was the custom of the directors to hold meetings whenever they deemed the same necessary; that they generally held informal meetings during business hours whenever there was a sufficient number to constitute a quorum. It is not pretended that any of the directors were not aware of this custom. Under the evidence as presented, we fail to find any error in the refusal of the court as above indicated.
The assignments of errors from and including the 11th to and including the 57th (excepting, however, the 35th and 36th) relate to ill * admission and injection of evidence. We fail to detect any material error committed by the court below in any of its rulings in this respect. The evidence, admitted over the objections of the plaintiffs in error, which is assigned as error, related to, and was introduced for the purpose of showing, the true state of facts surrounding the arrangements which were made for this loan or overdraft; also, to show a previous authorization or a subsequent ratification of Gutter’s acts in relation thereto. The evidence so admitted was, in our opinion, competent, relevant, and material. The rulings of the court in rejecting the evidence indicated by the several assignments were proper and correct.
Assignments of error numbered 35 and 36 have already been considered by us. They related to the admission of the depositions of the witnesses Clarke and Burns.
The 57th and 59th assignments of error were practically decided by the first assignment. The 57th relates to the refusal of the comí: to grant a nonsuit, and the 59th is that the verdict was contrary to law and the evidence. There does not appear to be any 58th assignment of error.
For the reasons given above, the judgment of the court below should be affirmed; and it is so ordered.