Fifth National Bank v. Iron City National Bank ( 1899 )

The Iron City National Bank of Llano began, early in April, 1894, doing business with the Fifth National Bank of San Antonio, and made with it large deposits against which it drew from time to time in the usual course of business between banks.

In May, 1894, W.O. Richardson, as cashier of the Llano bank, directed the cashier of the San Antonio bank to charge the account of the Llano bank with the amount of two notes which Richardson owed the San Antonio bank. In accordance with this direction, the San Antonio bank charged the account of the Llano bank on May 25, 1894, with $5018.65, that being the balance due on said notes, and at the end of the month, as was shown to be customary with banks, sent the Llano bank a detailed statement of the account between them for the month, as it had done at the end of the previous month, showing amounts deposited in the San Antonio bank to the credit of the Llano bank and the various charges made by the former against the latter during such month, among which charges appeared said $5018.65 as having been made in payment of said notes. This statement showed a balance due the Llano bank, which it drew out a few days afterward.

May 21, 1896, the Llano bank brought this suit against the San Antonio bank to recover said $5018.65 on the ground that Richardson had no authority to direct the application thereof to the payment of his individual notes. The San Antonio bank pleaded that the Llano bank was estopped from denying such authority in its cashier, Richardson. From a verdict and judgment against it, the Llano bank appealed to the Court of Civil Appeals, which court reversed and remanded the cause on the grounds, (1) that the trial court erred in giving certain charges; (2) that there was no evidence sustaining the defense of estoppel; (3) that the judgment was not warranted by the evidence.

The San Antonio bank has brought the case to this court upon writ of error, upon the ground that said holding that there was no evidence sustaining the plea of estoppel practically settles its case, alleging that it will be unable to produce any other evidence on another trial. This presents the question of law as to whether there was any evidence in support of such plea. When the notes were settled as above indicated they were returned to Richardson by the San Antonio bank, together with collateral securing the same, consisting of thirty shares of the capital stock of the Llano bank, of $100 each, belonging to Richardson. The statement sent as aforesaid was found months afterwards in the vaults of the Llano bank, where such papers were usually kept by it, and it had thereon the "O. K." of its bookkeeper and certain figures by him showing the balance in the San Antonio bank which was drawn out as aforesaid. From these facts the jury might have found that the statement was received by the Llano bank a few days after it was sent. The rule of law is well settled that it became its duty to examine same within a reasonable time and notify the San Antonio bank if it questioned the authority of Richardson to have said notes charged to its account, as it appeared from the face of said statement had been done; and that its failure to do so will estop it from denying such authority if such failure has operated to the prejudice of the San Antonio bank. Weinstein v. Bank, 69 Tex. 38; Bank v. Morgan, 117 U.S. 96; Kissam v. Anderson, 145 U.S. 435; Burton v. Burley, 13 Fed. Rep., 811; Armstrong v. Bank, 83 Fed. Rep., 556. It is conceded that no notice was given until this suit was filed after Richardson had been indicted and became a fugitive from justice; but the point upon which the Court of Civil Appeals held the proof of estoppel fatally defective was that it did not tend to show that the San Antonio bank was in any way prejudiced by the failure to give notice. In this we think they erred. Had the notice been promptly given when the statement was received, the San Antonio bank might have been able (1) to show by Richardson, who continued for months thereafter to be such cashier, that he in fact had such authority, whereas it is now compelled after a lapse of two years to submit to the testimony of the other officers of the Llano bank (117 U.S., supra); (2) to have, by legal proceedings or moral suasion, in some measure protected itself against loss. It may be conceded, as contended by the Court of Civil Appeals, that Richardson owned no property, and yet it can not be said as a matter of law that by prompt and prudent action the San Antonio bank could not have obtained from him anything. Debts are often collected from persons who really owe more than the value of their property. In this instance a garnishment might have reached said returned collateral, or Richardson, through pride or for the purpose of preventing an exposure and probable prosecution and loss of his position as cashier, might and probably would have been able to have secured or repaid the money or part thereof. "It is not necessary that it should be made to appear, by evidence, that benefit would certainly have accrued to the bank from an attempt to secure payment from the criminal." * * * "As the right to seek and compel restoration and payment from the person * * * was in itself a valuable one, it is sufficient if it appears that the bank, by reason of the negligence * * * was prevented from promptly and, it may be, effectively exercising it." 117 U.S., supra.

As the cause must be tried again, we do not deem it proper to say more. The issue of the estoppel must be submitted to the jury.

We are of the opinion that the Court of Civil Appeals correctly held that the trial court erred in the charges given. We express no opinion as to the correctness of its said ruling that "the judgment is not warranted by the evidence," because it has the power to reverse on the ground that in its opinion the evidence is not sufficient, and this court has no power to review their action on such question of fact. It is only where that court goes further, as it did in this case, and holds that there is not any evidence for the jury that this court can review its ruling, and then only to the extent of determining the question of law whether there is any evidence. This we have done above, but do not do more. Therefore the judgment of the Court of Civil Appeals reversing and remanding the cause for insufficiency of the evidence will not be disturbed, and its opinion is approved as to the incorrectness of the charge but is disapproved in so far as it holds that there is no evidence upon the issue of estoppel.

Judgment of Court of Civil Appeals affirmed, and cause remanded to be tried in accordance with this opinion.