Chapman v. First Nat. Bank of Sipe Springs

275 S.W. 498
CourtCourt of Appeals of Texas
DecidedDecember 8, 1924
DocketNo. 6819.
StatusPublished
Cited by8 cases

This text of 275 S.W. 498 (Chapman v. First Nat. Bank of Sipe Springs) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chapman v. First Nat. Bank of Sipe Springs, 275 S.W. 498 (Tex. Ct. App. 1924).

Opinion

BDAIR, J.

The commissioner of banking having taken over the property and assets of the Desdemona State Bank & Trust Company for liquidation, filed' this suit against the First National Bank of Sipe Springs, Tex., an insolvent bank, and against E. C. Aikens, Jr., its receiver, primarily on a note for the sum of $3,091.49, executed by the said Sipe Springs Bank to the Desdemona Bank, bearing date February 1, 1921, due April 1, 1921, reciting “value received,” and bearing two credit indorsements, as follows: “Paid 5/24/21, $700.00, H. H. Simmons”; “Paid 5/25/21, D. F. T. $600.00. H. H. Simmons.” He also sued on two other notes, one for the sum of $500, dated at Sipe Springs, Tex., January 1, 1921, due 90 days thereafter, and payable to the order of the First National Bank of Sipe Springs signed by H. O. Nabors; and the other for the sum of $600 dated at Sipe Springs, Tex., December 20, 1920, payable to the First National Bank of Sipe Springs, due March 7, 1921, signed by B. C. Nabors and Lewis B. Williams, and both of which n'otes were alleged to have been pledged as security for the principal note in suit.

Appellees, in addition to a general demurrer and a general denial, among other defenses, filed a sworn plea of want of consideration for the execution of the principal note in suit. By way of special answer and cross-action it was alleged that, when the principal note in suit was given, the insolvency of the maker, First National Bank of Sipe Springs, was well known, and the probability of its immediate closing was foreseen by the officers and agents of both the Sipe Springs Bank and the Desdemona Bank ;• that the transfer and assignment of its four notes, aggregating $3,800, to the Desdemona Bank as collateral security for said note was void as constituting an illegal preference by virtue of the United States' banking laws; that two of these notes so assigned were the two last declared upon by appellant herein, and one was a note of W. L. Allen, dated at Sipe ■ Springs, January 1, 1921, due July 1, 1921, for $1,400, and the other was a note of H. H. Simmons, dated February 15, 1921, due March 15, 1921, for $1,300, which last note was alleged to have been collected by the Desdemona Bank and the proceeds credited on the principal note in suit as set forth by appellant in his petition; that by reason of such wrongful possession and illegal transfer of these collateral notes the sum of $1,300 collected on the. H. H. Simmons note constituted a trust fund; that at all times subsequent to the collection of the $1,300 and prior to the closing of the Desdemona Bank, and at the time the appellant, commissioner of banking, took over the property and assets of said bank for liquidation, there was in cash on hand in the vault of the bank, and in other banks to its credit, sums in excess of the $1,300, representing the proceeds of the said Simmons note, from which appellees were entitled to recover of the commissioner the *500 $1,300 as a trust fund, and were entitled to have it declared a prior and preferential claim against the assets of the bank so in his hands for liquidation.

Appellees’ prayer was that appellant take nothing by his suit on the principal note, and that it be canceled, and upon their cross-action prayed that the transfer and assignment of the collateral notes be declared null and void as an illegal preference, and for title and possession of them and for judgment against such of the makers as were before the court, and further prayed for judgment against appellant for the sum of $1,300, the amount collected on the Simmons note, and that same be declared entitled to priority of payment by reason of its being a trust fund.

By supplemental petition appellant prayed, in the event it was found that the H. H. Sim■mons note on'which had been collected $1,300 was illegally transferred to the Desdemona State Bank & Trust Company, that he have judgment for the principal, interest, and. attorney’s fees on the principal note in suit without allowing the credits thereon indorsed.

The case was tried to the court, a jury being waived', and judgment was rendered generally against appellant and for appellees on their cross-action substantially as prayed for. Affecting appellant’s right of recovery upon the principal note in suit, among other facts found by the trial judge, was a finding that it was executed without consideration. This finding is attacked by appellant. The following is a substantial statement of all the facts as found by the trial judge on the issue of a want of consideration of the note: The Eirst National Bank of Sipe Springs and the Desdemona State Bank & Trust Company were correspondent banks, and discounted paper for each other. ’ On May 8, 1920, the Sipe Springs Bank rediscounted to the Desdemona Bank a note for the sum of $3,000, executed by A. O. Newman, of date April 29, 1920, and due August 29, 1920, and indorsed by George F. Blethen; the Sipe Springs Bank indorsing without .recourse. Shortly before maturity this note was sent to the Sipe Springs Bank for collection, and charged against said bank on the books of the Desdemona Bank. It was not paid on presentation, and a new note for $3,000 was taken on September 16,1920, due four months after date, payable direct to the order of the said Desdemona State Bank & Trust Company, signed, “Majestic Theatre Company, by Geo. F, Blethen, Manager.” This renewal note was forwarded to the Desdemona-Bank, and the Sipe Springs Bank charged the note back to the Desdemona Bank. Shortly before maturity of this renewal note it was sent for collection to the Sipe Springs Bank, and the amount of the principal, $80 interest, together with a $11.49 existing overdraft, aggregating $3,091.49, were charged and carried on the books of the Desdemona Bank against the Sipe Springs Bank as an overdraft. The note was sent for collection about February 1, 1921, and was not collected, and was carried as an overdraft on the Desdemona Bank’s books until March 8, 1921. On this date the Sipe Springs Bank committed acts of insolvency, and the cashier, foreseeing the fact that the bank must close, communicated with Mr. Steakley, cashier and director of the Desdemona Bank, relative to the situation. Steakley was one of the organizers of the Sipe Springs Bank, and was a director from the "tim,e of its organization until January, 1921. Steakley immediately upon receiving this information went to Sipe Springs and interested himself in the matter of the alleged overdraft so carried by the Desdemona Bank against the Sipe Springs Bank. He requested S. D. Pottinger, cashier of the Sipe Springs Bank, to execute the principal note in suit. Pottinger, being uncertain of the legality of his doing so, or his authority for doing so, referred Steakley to the board of directors, who were then in session. Steak-ley went back where the directors were meeting, and in a short time returned, and told Pottinger that it was all right with the directors for him to execute the note, which he did, signing, “First National Bank Sipe Springs, Tex., by S. D. Pottinger, Cashier.” At this time he also transferred the four collateral notes, aggregating $3,800, assigned as security for the principal note in suit. Pot-tinger never after said time had any information that his execution of the note was not all right, with the board of directors. There is no other testimony as to this. Two days later the Sipe Springs Bank went into the hands of the comptroller. The appellees pleaded under oath a want of consideration for the note.

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Bluebook (online)
275 S.W. 498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chapman-v-first-nat-bank-of-sipe-springs-texapp-1924.