Bohl v. Carson

after stating the facts as above, delivered the opinion of the court.

Strictly speaking, the only ground which can support the complainant’s bill is that the bank and its successors in title to the note sued on in the action at law are estopped by matter in pais to assert Carson’s liability on the note. That there was no consideration for the note, and that through the bank’s negligence a solvent indorser of collateral notes was released, are both defenses which could have been set up on the law side of the court, and need no interference by a court of equity to make them effective.

No objection was taken to the averments of the bill setting up these defenses, however, and, as a determination of the issues raised on them will throw light on the defense of estoppel, we shall proceed to consider them in their order. And first as to the defense of a want of consideration. If it be true that Carson’s loan of $8,000, February 6, 1882, was a loan to the bank, the credit which the bank gave him, of about $8,000, on June 26th, was a mere repayment of that loan; and there could have been no consideration for Carson’s note to the bank, given then, or a few days later. If, however, the loan was made to Ankeney & Smart, then there is no explanation of the credit which the bank gave Carson, June 26th, except the discount of his note, and the payment to him of the pro*31ceeds. Our attention, therefore, must first be directed to the transaction of February 6th. Ankeney’s evidence is explicit that he borrowed the money from Carson for Smart & Ankeney, and made théir note to him for the amount. Carson’s evidence is by no means as clear. He does say that he understood that he was lending the money to the bank, but he nowhere states that Ankeney told him this in words. He says that, to him, Ankeney was the bank, and that, when he said “I” or “we” “can use the money,” he thought he meant the bank. He concedes, however, that he knew that Smart & Ankeney were engaged in a speculation in coal lands, and that Ankeney said something to him about coal-land securities. While it is true that Ankeney is discredited as a witness by his dishonesty in misusing the credit of the bank, we think that the circumstances of the case so strongly corroborate his statement that Carson’s version cannot be credited. Carson’s remark to Smart, made shortly after the loan, that they were using his money in their coal investment, is hardly consistent with Ms claim that Ms loan was a loan to the bank, unless he thought that Ankeney was pledgin'g the credit of the bank to borrow money for his private investments. If that were his supposition, then he could not hold the bank on the loan, because it was plainly beyond Ankeney’s authority as cashier to use the credit of the bank for such a purpose. Smart’s statement that the Smart & Ankeney note for $8,000 was always called between them the “Carson note” makes another circumstance confirming Ankeney’s story. It is admitted in the bill that Ankeney put this note in Carson’s envelope of private papers on February 6th, when the loan was made. Carson had access to this envelope whenever he chose. Why should Ankeney put such a note there at that time, unless it represented a real transaction? Carson's pass book indicates that a check was drawn by him on February 6th for the $8,000. He produces every voucher but that one. If that were payable to the bank, his case would be clear. If it were payable to. Smart & Ankeney, it would correspond with their note, and establish the" truth of Ankeney’s story. It is significant that in the entry of the charge to Carson is the memorandum “Note,” and that this had been used in previous charges to indicate the drawing of a check to malte a loan upon a note. Carson cannot complain if his failure to produce this voucher, .so important as evidence on this issue, when he does produce all the others for months before and after, weighs against him. The sequel of -June 26th fully confirms Ankeney. The evidential weight of the bank and pass-book entries of June 26th, showing that Carson gave Ms note to the bank on that day, and received a credit of the proceeds of its discount, cannot be shaken by suggestions of Ankeney’s criminal purposes. These entries are so mingled with others made by clerks whose honesty is not impugned that they could only have been made when they purport to have been made. Carson says that he gave the note, at Ankeney’s request, three days after June 26th, and dated it back just to accommodate the bank. Which is more consistent with probability,—that Ankeney should make false entries of the discount of Carson’s note on the faith *32that three days later he could induce Carson foolishly to make, and date back three days, a note for $8,000 to the bank, without consideration, or that, when Ankeney made the entries on the bank’s daily blotter, he then had Carson’s note.? There is but one answer. Finally, the most convincing evidence that the note of Carson was not a mere accommodation to the bank is the fact that he x'enewed it half a dozen times during a period of more than two years. It is not claimed that he thought the bank was using his name to borrow money. What, then, was the nature of the. accommodation to the bank? He does not say. His counsel cannot answer, except to suggest that he was a child in Ankemey’s hands, and did what was asked. That Carson was slipshod in business is doubtless true, but that he was so simple as to go on renewing a note he did not owe, to a bank which made no use of it, we cannot credit. As stated' by the learned judge in the court below, when there is an issue of veracity between the two men, Carson’s unsupported statement is entitled to the greater weight; but when we find inherent improbability in Carson’s story, and every circumstance supporting Ankeney’s, we must believe Ankeney.

We come next to the claim that the bank ought not to recover on the note because it failed to present for payment the coal land mortgage note for $13,000, and to notify the solvent indorser, Samuel W. Smart, of nonpayment, thereby releasing him. Counsel for appellant argues that Samuel W. Smart was a mere trustee, having no interest in the property mortgaged, and receiving no consideration for his indorsement, and that he could not be made liable on the notes. It is not necessary for us to consider this, because we do not think there was any obligation on the bank to present the notes for payment, or to notify the indorser. These mortgage notes were placed by Ankeney in Carson’s private envelope in the vault of the bank as collateral to the Smart & Ankeney note for $8,000. Carson denies all knowledge of their existence. It is not averred either in the bill or the answer, nor does Ankeney anywhere say, that Carson pledged the Smart & Ankeney note and its collateral as security for the payment of Carson’s note to the bank. The Smart & Ankeney note and its collateral were not in the possession of the bank. They were in Carson’s envelope, and constructively in his possession. They were merely a special deposit with the bank, and imposed no obligation on the bank in the matter of collection and protest. It is true that, on several of Carson’s renewal notes, Ankeney had scribbled in pencil, “Coll, to this,”, but, in the absence of any direct evidence that Carson consented, to the use of the Smart & Ankeney note and its collateral to secure his own notes to the bank, we cannot find in this indefinite memorandum proof that he did so. It is probable that, had anything been paid on the Smart & Ankeney note, it would have been applied, with Carson’s consent, to his note to the bank; but he was not under any contract, so far as the evidence shows, to permit such application. The debts represented by the two notes were so connected in their origin that it was natural for Ankeney to regard them as the same debt which he owed as prin*33cipal, and Carson, only as surety. But, in fact and in law, Carson only was liable to tin; bank on Ms note, while Smart & Ankeney were liable on their note to him, but not to tin; hank. Fntil Carson should agree with the hank that the one could be held by the bank to secure the other, there was no connection between the notes which charged the hank with any duty to Carson of collecting the Smart & Ankeney note or its collateral.

Finally, we come to the question of esto])pel. The president and cashier of the hank expressed their opinion to Carson that his note to the bank was without consideration, but declined to return his note to Mm until the confused affairs of the bank had been adjusted. If the note in fact represented a real indebtedness, such an expression of opinion on the part of the officers of the bank could not prevent the bank from subsequently enforcing collection. The board of directors never authorized any one to release Carson from his note, and if they had there would have been no consideration to support it. The bank did assume possession of the Smart & Ankeney note and its collateral; foreclosing the mortgage on the coal lands, and releasing W. M. Smart from liability on the principal note. But nowhere does it appear that these securities were taken by the bank as a consideration for a release of Carson on his note. These securities belonged to Carson, and the bank’s conduct in assuming ownership over them is said to estop it from now maintaining that Carson is liable on his note. That the bank should account to Carson for anything realized by it from his property is dear; but it. might he more difficult to show that there was, in law or equity, any such necessary relation between Carson’s property in the Smart & Ankeney securities, and his liability on his note to the hank, that the bank’s appropriation of the former was inconsistent with the latter, and created the estoppel claimed. Assuming, however, that the hank’s acts in respect to the Smart & Ankeney securities were inconsistent with its right to collect the note against Carson, still we are of the opinion that such acts cannot be made the basis of an estoppel, because they were induced solely by the oft-repeated statements of Carson that he had no interest in the securities, and that his own note was wholly without consideration. These statements were made in the absence of Ankeney, and under the shadow of his then recently revealed defalcations and dishonest conduct. Ankeney has now given Ms evidence. The books of the bank have been critically examined, and we ñnd the fact to be exactly the. reverse of that which Carson stated. To allow Carson to rely, as an estoppel, on. acts of the bank which he induced by unfounded representations, would be to allow him to take advantage of his own wrong. It is true that the bank officers might have found much in their own books and other circumstances to shake their faith in Carson’s denial of Ms liability, but it does not lie in his mouth to say now that they ought 1o have known bettor than to credit Ms story. If the delay in enforcing this liability against him prevents a restoration of his former position, he cannot complain, for he brought it about.

*34The appellant and defendant tender to the complainant, in an amended answer, the mortgage notes, and offer to account for whatever rents may have been received from the coal lands by crediting the same with interest on the note. We think that credit should also be given, with interest from the date of its receipt, for the money which Ankeney sent to Carson for credit upon the note, and which Carson declined to receive, but turned over to the bank. The decree of the district court must be reversed, with instructions to enter a decree enjoining the action on the note unless the plaintiff shall make credits upon the note as above.