Morgrage v. National Bank of California

JAMES, J.

This action was brought to recover damages for the alleged conversion of fifteen thousand shares of the capital stock of a certain oil company. The appeal is from a judgment entered in favor of the defendant, and is presented on the judgment-roll and a bill of exceptions.

In August, 1910, one C. B. Miner was engaged in business as a stock broker in the city of Los Angeles and a banking account was carried with him on the books of defendant. Miner had, during the time that he carried the account with defendant, been a depositor of a large amount of money. Between the first and the eleventh days of August he had deposited with defendant bank the sum of $156,919.02. On the

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morning of August 12, 1910, his cash credit balance was $5,651.84. At noon on the same day checks had been received by the bank, drawn against the account, aggregating the sum of $21,241, which checks were held to await a deposit to cover. At about two o’clock on that day Miner offered for credit drafts drawn by him, accompanied by certificates of stocks, and some checks drawn to his order. There were four of these items, aggregating $15,739.05, which amount was passed to his credit. At the end of that day the credit had been exhausted by the payment of checks issued by the depositor. As a matter of fact, of the $15,739.05 credit given on August 12th the amount of $12,420 was made up of items which were not

bona fide,

but fraudulent, which fact was not discovered until later. On August 13th, in the forenoon, a new deposit credit was given Miner for items presented on that day, amounting to $20,651.25. That was the last transaction had with the bank by Miner, who immediately absconded and was not thereafter heard from. Among the items included in the credit of $15,739.05 given on August 12th was one for the sum of $4,837.50, which was represented by draft drawn by- Miner on one Gartland at San Francisco. Attached to this draft were the certificates representing the stock which it is alleged by appellant was improperly converted to the use of defendant. In receiving the draft for collection, according to the customary mode of doing business with Miner, the bank did so with the agreement that if the draft was not paid when presented, the amount thereof should be charged back to Miner in his account, and if he failed or refused to reimburse the bank the stock of the oil company should then be resorted to by the bank to secure such reimbursement. A transfer of the certificates of stock had been indorsed in blank by the persons to whom the stock had been issued, and they were presented in that form by Miner to the bank when he deposited the draft. It is admitted that the bank, if it had no notice of any other ownership than that presumed from the blank indorsement, could rightfully assume that Miner was the owner thereof, and if it parted with value relying upon that presumption, the title that it might secure in a proceeding taken for the purpose of subjecting the stock to the satisfaction of the debt arising upon the nonpayment of the draft, would be a good title, even though Miner was not the real owner, but, as the fact was, had