Vansandt v. Hobbs

ELLISON, J.

This is ah action of trover for the conversion of a note of $750. The judgment in the trial court was for plaintiff.

It appears that the note was given May 31, 1895, to the Bank of Archie by J, C. Twitehwell and J. N. Hardin for $750 borrowed money. Afterwards, on July 20, 1895, this defendant, who was president of the bank, gave his check to the bank for the amount of the note and interest and it was turned over to him by the bank cashier. At this time the bank was insolvent, the state bank examiner having examined into its condition on the nineteenth of July, defendant receiving notice on the twenty-first of proceedings to close and for the appointment of a receiver, and the appointment was made on the twenty-third. This action is instituted by the plaintiff as receiver of the bank, he being the successor to the one first appointed.

When a stranger to a note takes it up from the holder the *632 transaction will bo deemed a purchase and not a payment, nothing more appearing. Swope v. Leffingwell, 72 Mo. 348 ; Campbell v. Allen, 38 Mo. App. 27 ; Campbell v. Roeder, 44 Mo. App. 324 .

This defendant was such stranger to the note and when he gave his check to the bank cashier and received from him the note, it may be conceded that it would have been a purchase, but for the force of the laws of 1805, p. 120, which declares that no bank cashier shall have the power to sell or hypothecate any of the bank’s notes until such power and authority shall have been conferred by the board of directors. The authority was not given. The transfer by delivery thus made to defendant by the cashier was Aroid and did not have the effect of making defendant the OAvner thereof.

It is suggested by defendant that the law of 1895 was not in force or effect until July 8, 1895, and that it could not apply to this transaction since this note was executed in May preceding the law. It is true the note Avas executed before the laAV took effect, but this transaction occurred several days after the law became obligatory. The law Avas a regulation of the power of banking officers and it affected their poAver and not the contract represented by the note. It affected their power or authority of disposal of the then existing assets of the bank. The point as to the law being retroactive has no proper application to such case.

It follows from the foregoing that the note remained the property of the bank and that defendant’s act in taking it into his possession and holding it adversely to the bank Avas a conversion for Avhich he is liable.

But there is a complicated statement of facts connected Avitli the transaction which defendant claims changes its nature. Defendant, besides being president of the bank, Avas treasurer of a building and loan association, which had agreed to make a loan of $2,000 to Twitchwell and Hardin. *633 And the check he gave for the note was signed as treasurer. The loan could not then be consummated and these parties needing a part of the money borrowed of the bank, gave the note in controversy, as has been stated. Defendant, after getting possession of the note in the manner stated, held it until some weeks later when he turned it in to the building and loan association and took credit for the amount thereof as treasurer. That association then, in making the $2,000 loan to Twitchwell and Hardin, deducted the amount of their note winch such association had thus obtained from defendant as treasurer.

~\Ve can not see how these matters can affect the main-question. The bank loan to Twitchwell and Hardin was not connected with the building and loan transaction. The note belonged to the bank and the property in the note, as we have pointed out, has never been changed from the bank.

It is stated that the bank represented by this receiver can not recover the value of this note without returning to defendant the amount of his check which he gave the cashier for it. Of course when one repudiates a transaction as unauthorized, he must return what he received. But hero the defendant did not pay money into the bank. He checked on an account already in the insolvent institution. He can be placed in statu, quo by having his account stand with that institution just as though he had not given the check. In other words, if he is compelled to pay the value of the note to this receiver, he will be restored to his account against the bank without its being diminished by the check. This result is j ust and equitable. Defendant ought not to be allowed an advantage over other creditors. A judgment in his favor would give him such advantage. His being president of the bank and necessarily aware óf its condition at the time of this transaction, but adds to the justness of the result in the trial court.

*634 The case has been elaborately briefed and many propositions of law have been advanced by the respective counsel which are correct, but, in our opinion, the case turns on what we have here written.

The judgment is affirmed.

Smith, P. J., concurs; Gill, J.j absent.