Rainey v. Jackson

JENNINGS, J.

Appellant is the Superintendent of Banks of the State of California, and as such took possession of the property and business of the California Savings and Commercial Bank of San Diego on July 24, 1930. Among the assets of the bank which came into appellant’s possession was a promissory note dated May 19, 1930, payable August 18, 1930, in the principal sum of $25,000, signed by respondent. The evidence shows that no payments either on principal or interest had been made on the note. The complaint filed by appellant is in the usual form employed in actions of the character here instituted. Respondent’s answer pleaded entire lack of consideration and that the note was executed solely for the accommodation of the bank

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at the request of its president, I. I. Irwin. The trial court found that there was no consideration for the execution of the note; that it was given with the intention of accommodating the bank and was not given for the purpose of deceiving bank examiners or to work a fraud on the public; that the execution of the note was procured through fraudulent misrepresentation of I. I. Irwin, president of the bank. From the aforesaid findings the court drew the conclusion that appellant was not entitled to recover from respondent and rendered judgment accordingly.

A brief statement of the facts developed by the evidence may assist in clarifying the problem presented by the appeal herein. On February 29, 1928, I. I. Irwin, president of the California Savings and Commercial Bank of San Diego, proposed to respondent, a stockholder in said bank, that the latter should go through with the formality of purchasing the safety deposit department of the bank. The reason advanced by Irwin for the proposal thus made was that the bank was keeping open its safety deposit department throughout the twenty-four hours of each day and that the San Diego Clearing House Association refused to clear the bank’s checks because the bank’s action in keeping open its safety deposit department for the full twenty-four hours in each day constituted a violation of a rule of the Clearing House Association which forbade such action. Respondent demurred to the proposal thus made on the ground that he did not have the money with which to make the purchase and had no desire to acquire the safety deposit department of the bank. Respondent was then assured by Irwin that no money was required for the consummation of the scheme; that the money ostensibly necessary would be advanced to respondent by the bank; that respondent would execute his note for the amount representing the purchase price of the safety deposit department and would return to the bank the money advanced to him; that there would be no obligation upon him to pay the note, as the money would always be held available at the bank to offset his note. Upon the aforesaid representations, respondent accepted the proposal. He executed a note for $25,000 payable to the bank. His account with the bank was credited with the sum of $25,000 on the same day and on this date he drew his check for