120 Ky. 776 | Ky. Ct. App. | 1904
Opinion by
Reversing.
This is an action by the Western Bank of Louisville, Ky., against the estate of its late president, Anton F, Coldewey, to recover damages for about
It appears that Anton F. Coldewey had been the president of the bank since its organization, some 40 years ago, until his death, in April, 1900. The capital stock of the bank was, for many years before the death of Anton F. Coldewey, $250,000, and the surplus something over $50,000. The bank had a board of directors who met monthly as a body to consider the affairs of the institution. The board w'as an active one in the management of the business affairs of the bank, so far as they were brought to its attention. The by-laws provided for an advisory committee, and the custom prevailed from the beginning to the death of President Coldewey to have an advisory committee from this board, the president being ex officio one of its members. The other two were taken in rotation, serving for one week out of each month; there being eight other directors beside the president. This advisory committee was required to meet, and did meet, when the bank was open for business and when there was business necessitating it, every morning at 11 o’clock in the banking house of appellant. Their duties included their examining
Anton E. Coldewey received a salary of $2,000 per year from the bank as its president. He was the active head of the institution, participating personally in the daily management of its business affairs. It was he who laid before the advisory committee the paper that was to be passed upon by them. Notwithstanding the facts above enumerated, he did not tell them at any time that his son was being permitted to overdraw his account so extensively, or at all; nor did he bring to the attention of the committee a number of notes given by his son to the bank without security, which were credited upon his over
That certain of- the directors, including the president, overdrew their accounts at times, and that other persons were allowed to overdraw their accounts at times, is not material here. The practice in a bank of allowing its customers to overdraw their accounts without prearranged security is a matter at least to be determined by the governing body of the bank, its board of directors, or if the board sees proper to delegate that matter, and does delegate it to its president or cashier, then by those officers. (Pryse v. Farmers Bank, 17 Ky. Law Rep., 1056, 33 S. W., 532; First National Bank v. Reese, 25 Ky. Law Rep., 778, 76 S. W., 384.) But if the practice as a business' course is allowed by the bank at all, whether by direct action of its board of directors, or whether by its cashier or president under the authority delegated to them by the board of directors, the propriety of allowing particular overdrafts is one that addresses itself to the business judgment and discretion of-the officers having that matter in charge. If they act prudently and honestly, they will not be held responsible for losses that occur from it. On the other hand, if ('they allow the funds of the bank to be so appropriated by a customer or customers who are known to be insolvent, or whose assets or business would not justify a prudent person similarly situated to extend them” such credit, they will be liable to the bank as for a neglect of their duty, where loss results from it.
We might stop this case here on the facts; for, even
A matter is pleaded in defense by way of estoppel against the bank, which is, that on September 12,1900, William G. Coldewey made a deed of trust to Gustave D. Coldewey of all the assets of August Coldewey & Co. and of his individual assets, including his share in his father’s estate, in trust for the payment of his business creditors, and that the bank, together with other business creditors of August Coldewey & Co., then agreed, in consideration of that conveyance, not to sue William G. Coldewey, but to look only to the assets so conveyed to the satisfaction of its claims against William G. Coldewey, and that by this conduct the bank had estopped itself from making any claim against Anton F. Coldewey for losses by his breach of trust as president. Before a matter can operate as an estoppel in pais, it must be shown that the party pleading it has been prejudiced in some right of his by the act complained of; that he would have done something which he could have done, but for the act; or that he was induced to do something that he would not have done, ■ but for it. It is not shown in this case that Anton F. Coldewey’s estate was injured in any way by the matter pleaded as an estoppel. Suppose William G. Coldewey, being insolvent, had determined or threatened to avail himself of the Bankrupty Act, and was induced to forego that in the bank’s favor by the agreement of the bank not to sue him upon these debts for a definite time, as it is charged. How could that have injured Anton F. Coldewey’s estate? In the first place, making the. deed of assignment did not prevent Wil
Again, if the bank derived any benefit or advantage from the assignment and the collateral agreement, that advantage went to reduce William G. Coldewey’s indebtedness to it, and to the extent that it did reduce that indebtedness Anton F. Coldewey’s liability to the bank was correspondingly reduced. Therefore, instead of being a detriment, it was an advantage to Anton F. Coldewey’s estate that the agreement was made. There was no privity between Anton F. Coldewey, William G. Coldewey, and the bank in this matter. William G. Coldewey was bound to the bank upon his implied contract to repay it the money had and received by him. Anton F. Coldewey was bound to the bank for his tort, wherein he, in neglect of his duty, or in fraud, suffered his son to withdraw the funds of the bank, without consent of the board of directors or the advisory committee, and without collateral or other security, whereby the bank sustained the loss. This is not such a relation as that a release of one of the parties bound would release the other. (Brannin v. Loving, 82 Ky., 377, 6 Ky. Law Rep., 328.)
It may be true, as claimed by appellees, and as
The judgment of the circuit court to the contrary is reversed and cause remanded, with directions to enter judgment in conformity with this opinion.
Petition for rehearing by appellee overruled.