5upply,oflal}i)r and! materfa:ls!oeeessar,'lto this end. ' If persons Wl1G: gjvei.lnboti and materials 'lwererequitedin :everyinstancerto makel<Ul1ttJfuJiiexamination intoi too'conditipn of thecoinpany, 'so as to' So<lvent capacity'.'foll'pa.ylng[iebtsi all of its operations miglii'betbl'Ougbt to a'standstil}/,"Foziothis reason, persoI1S .d:e8:ljng witlla('c(l)tt1pany' to do 'SO, with. the kinow;}edge that the court will see that all 8nchsupplies ,o1Habor· material-, given, and not paid for within a reasonable period before the appointment of a receiver, wiUbe provided for by the court. This period never is beyond six months. But, in exercising this equity, the d6uil't gOO$Upon &:rigerou$ "gro'O'i1a," lukl theref.Ore cautiously, keeping rigidly wit11ln limits. No case can yet be eqlli,ty: tQ the, president of the insolvent company. He knows exactly its condition. He has full !10ticeof, notboun,g tp" f ll mi$. his, setv1 ,a,day,,3tter hI!! ,remlUl;erat1Q:U, !!eemsunce/.'Utln. Itecannotbe included' among ,thatdass ;of:employfSs whoohaveno. means of a.scem:aining w bethel' ashQi't credit t()lf the cqJUpnny is Slife or not. for labor and rnaFosdick v. Schall goes upon the idea that U:lrla1slJ,oulq :twttirst, anylJh,w,g paid from whieh is, diversion ';Bich, s-ppply.: div:ersionof this in this case, it was made by and under the direction of the president himself, and now he cannot complain., In the absence of aU authority for its the c'laim disallowed; and it is so ", ordered.
nOEL v.' CARSON.1
(Circuit Court of AppeaJs, Sixth, Circuit. May 28, 1894.) No. 126.
On an issue as to whether, a note for $8,000 executed by C. to his own OJ;'cier! indorseciPf,him ip blan!t,lj.nd held by a bank, was for a consideration, or, ali! claimed by hIm, was an accommodation for the bank, C. testified that having money in the bank, drawing DO interest, A" the cashier, said "I" or "We" (by which C. said' he understood reference was made to, the bank) "can use" it, and that a loan of $8,000 was made accordiJ:l.gl;v; that; bis asking repaYIllent, A. told him to draw on the bank, which he did .rl)l!e26,th; that, three qaYs later, A. asked him to execute an accommodllti,on note of $8,000 for the bank,antl'dated, June 26th, which he did, the note III question being' the last of tne renewals of it. 'ilt.,wM not clll,i)ned, ho,wevel'",that he thought tile bank was using his ,name to bOl;l'0lYmoney. A., WllO was asa witness by reason of of the bank's money, testified that C. made his loan expressly to hlip' and S;, partnerll in a coal-land !'Ipeculation, and that ,when C. demanded(l'epaymen1(l1e said he had not 'the money, but could procure it for, C., :from the banI, on Co's note. he agreeing tha,t he and S. would ta4e,.l;/lJEl. of it, apd pay the iDtetest on it, and that accordingly, on June2tith; C. executed the, note for $8,000, and A., as cashier, di.scounted placed the pr6ceeds to, the account of C. , A. used in the coalclandspecl1latfon the $8,000 loaned by C., and at tIle sallie time ex -
, Ii; Rehearing i denied.
BOHI. V. CAWlo.,·
.-euted the note of himself and S. to C.. and placed It in an envelope In the -bank vault, where C. kept his private papers. A. testified that C. knew ·of. it at the tiJue. C. ;denied any knowledge of it till two .years later. C. knew of the speculation of A.and S., and S. testified that. a few days.afterthe loan, C. asked him how-It was coming on, and remarked to hini that ·they were using $8,000 of his, C.'s, money in the enterprise. C.'s pass book showed a charge to his account at that time, "Note $8,000." C. pro,duced the bank's vouchers for every other charge against him, covering a ·period of several years, except thIs one. Where the word "note" was used in other charges, the voucher.was a check drawn as a loan on a note. Not only did C.'s pass book shpw'a discount by the bank of his note for $8,000 on June but the bank's books showed such -an entry between entries of the same date made by clerks whose integrity was not questioned. A. also placed in C.'s private envelope in the bank, as collateral security for the note of himseLf and S., notes secured by mortgage on the coal land. C. denied knowledge of their existence. C. was slipshod in busi· ness, his passbook lay at the bank nearly all the time, and it was claimed that he was a child .in A.'s hands. Held, that the evidence sustained the statement of. A., and showed that the note was for a consideration.
BANKS-SPECIAL DEPOSIT-h'AILURE TO PROTEST.
Where a cashier of a bank places his indorsed note in the private en· velope of a depositor, in the vault of the bank, as collateral security for his individual note to the depositor, the bank is not liable for release of the indorser by failure to present the note for payment, and to notify the indorser of nonpayment; the note being merely a special deposit with the bank, and constructively in the depositor's possession.
SAME-EsTOPPEL-OPINJON OF OFFICERS.
'I'hefaet that the officers of a bank whose cashier had recently absconded,believing the statement of one whose note it held that it was merely a note given at the cashier's request for the accommodation of the bank, expresSed an opinion to C. tb.'lt the note was without consideration, will not estop the banl(from showing that there was a consideration, and enforcing the note. Nor is the bank estopped from enforcing the note by reason of the tact that on the statement of C. that the note was without consideration, and that he had no interest in a mortgage in his prl,ate envelope in the bank's vault, executed by the cashier, and purporting to be collateral security to a note of the cashier to C., the bank assumed ownership over it, though. on its being sbown that it was C.'s property, he is entitled to a credit for the amount realized by the bank from it.
'Vhere a bank cashier sent money of his to C., to be applied on his note to C., and C., claiming that neither the cashier owed him, nor he the bank, turned the money over to the bank. he shoUld, on its being shown that he owed the bank and the cashier owed him. be allowed credit Oll his debt to the bank for the amount, with interest from its receipt by the bank.
Appeal from District Court for the Southern District of Ohio. Action by Henry Bohl, agent of the Second National Bank of Xenia, Ohio, against James Carson, on a note. Decree for defend'ant. Plaintiff appeals. Reversed.
Henry Bohl, as receiver of the Second National Bank of Xenia, Ohi(), brought au action against .Tames Carson ou a promissory note dated March 17, 1884, for $8,000, payable four months after date, made by Carson to his own order, and indorsed by him in. blank. Pending the action the debts of the bank were paid. Bohl was discharged as receiver, and was duly appointed by the stockholdel,ll of the bank as agent, in pursuance of the national banking act, and the action was proceeded with in the name of Henry Bohl, as agent. Carson filed an ancillary bill on the equity side of the district court, .seeking to enjoin Bohl from further proceeding in his action at III W, on the
ground that he had an equitable defense to the note, which could not be set ,up in an action at law. set up in theblll to the note were: First, that ,the note WlUl given to the 'bank as a mere accommodation to the ,bank, and not for any dlnsideration; second" that, even If there,'was a consideration for the note,' the; bank had ;had In Its possession, as collateral toritli payment, notes for $18,000, 'wIth a solvent indorser, whom it ,ha,d relea$edfrom liability through negligence in presentment, protest, and notice; andi rthlrd, that the, bank and Its successors In title were by' matter In pais. from seeking to hold the plaintiff, in, any way, liable on the note. The district court found the' equities with Carson, and entered a decree perpetuaIlyenjoinlngBohl, as agent of theblUlk, from further prosecution of his :a.etion at law on the note. This is an appeal by Bohl from that decree. John S. Ankeney was in 1882, and had been since 1864, cashier and chief executlveofficer of the Second National Bank of Xenia.' In 1880 he and one W.. M. ,Smart, partners as Smart & Ankeney, purchased a tract of coal land in Hocking county, Ohio, for about $16,000. ,Neither partner had any capital, but ,Ankeney assumed the task of raising Jt. He secured enough for the ftrstpayment of $8,000, by Indorsing the;ftrm note with his signature as cashien,of his bank,· and, on the faith of the credit of his bank, procured its discount by the Farmers' & Traders' Bank at 'Jamestown, Ohio. The second due in January" 1882, and he obtained the money for it from J. H. Cooper, county' treasurer. Whether this was on his own credit, or on that of the bank,' is disputed. Cooper called for repayment in February, 1882, 'QJld Ankeney was obliged to secure the money elsewhere. Carson, the compllj.illiant and, appellee, had long been a depositor at the Second Natlonal Bank. and intimate with Its officers. Much to his disappointment, the maker of a note held by him for $8,500 had paid It to the bank. This In· creased his deposit accolUlt.ejl,rly In 1882, to about $11,000. He complained to Ankeney that the paymellt ()f the note prevented its earning the illterest he had expected. Ankeney said that he or they could use the money for a few do,ys. Carson replied that tbis would be satisfactory, if he cOll1d have the mOney when he wished it, because he expected to use the money, later on, to purchase a business. A loan was accordingly made. Carson says that he lUlderstood Ankeney, in this conversation, to be speaking for the bank, as i.ts and thathe lent the money, not to Ankeney, but to the bank. ,Allkeney swears that the loan was made expressly to himSelf and Smart, assist i,bem in their coal-land speculation, and that he offered to Carson, lIS security for the loan, some coal-land securities to be thereafterglven him., which ,olfer CaJ;'soIlaccepted. Carson says he knew that Smart & Ankeney ,were engaged in a, coal-land speculation, and admits that Ankeney said something apout coal-land securities as collateral to the loan, which he declined, because he was entirely content with the obligatioll of the bank. He ,says he supposed that, the bank was helping Smart & Ankeney in the coal-land investmellt. Ankeney used $8,000 of Carson's de, ." . posit to repay Cooper·.' It is admitted that at the time Ankeney used this $8,000 he executed a note of SIDart & AJikeney for that amo1lUt, payable to himself, and by him indorsed to the order ot James Carson, and placed this note in an envelope in the vault of the bank, where Carson kept his private papers. Carson denies that he had aIlY knowledge of the existence of this note until two years or more later, after Ankeney had resigned as cashier and had gone west. Ank:eney says that Carson did know· of the note when it was executed. Smart (Ankeney's who wascaIled as a witness for Carson" says that this note was always referred to by himself and Ankeney as the "Carson note." He also says that Carson met him on the street shortly after, its execution, and asked, him how the Smart & Ankeney coal-land investment was getting on, remarking that they -were using $8,000 of his money in the enterprise. This Carson does not Carson was a slipshod business man, and left everything with Ankeney and the bank. His bank pass book lay at the bank almost all the time. The entries in it, covering the period from 1882 to 1884, are nearly ail of them in Ankeney's handwriting. At the date of February 6, 1882, appears this debit to Carson's account, "Note $8,000.00." Carson produces all the bank's vouchers for charges against him in the pass book, 'except the one corresponding with this entry. For a
BOHL V. CARSON.
similar entry of January 6, 1882, llS follows: "Jan. 6. Note T. P. T. $1,060.oo,"-the voucher proves to be a check of Carson to the order of Townsley, the president of the bank, as a loan on Townsley's note. In June, 1882, Carson wished a return of the $8,000 lent by him in the previous February. He says that he applied to Ankeney for it, and Ankeney told him that all he had to do was to draw his check on the bank for the amount. Accordingly, on June 26th, he did draw, his check for $10,000, and it was paid. Ankeney's statement is that Carson applied to him for a repayment of the loan of $8,000, and was told by him that he did not have the money; that, upon Carson's pressing him, he said he could procure the money from the bank for Carson by discounting the latter's note for that amount; that Carson thereupon, on June 26th, made a note for $8,000, payable to himself, and indorsed in blank, which Ankeney, as cashier, discounted, placing the proceeds to Carson's credit on the books of the bank; that he told Carson that he and Smllrt would take care of the note, and pay the interest on it. Carson's statement is that, some three days after he had drawn his check of June 26th, asked him, as an accommodation to the bank, to give his note for $8,000, and date it back to June 26th, which he did; that from time to time he gave renewals of this note to the bank, at Ankeney's request, without any consideration, the last being the note in SUit; that when the note in suit fell due, in July, 1884, he declined to renew it further, although Ankeney· offered him $1,800 in cash to do so. The books of the bank and Carson's Pl1Ss book contain entries dated June 26, 1882, showing a discount by the bank of Carson's note for $8,000, and the payment of $10,000 on his check. The entry of the discount of Carson's note first appears on the daily blotter of June 26, 1882, in Ankeney's handwriting. The entry is preceded and followed by other entries of the same date, in the handwriting of clerks of the bank, whose integrity is not questioned. The entry was transferred to the journal for that date, at the end of the day's business, by one of these same clerks. In July, Carson's note fell due, and it was renewed, Smart & Ankeney paying the interest. On July 31, 1882, Smart & Ankeney executed a mortgage on their coal lands to Samuel W. Smart, a brother of W. M. Smart, Ankeney's partner, to secure notes aggregating $18,000 in .amount, payable to Samuel W. Smart in two years from date. One of these notes, for $5,000, indorsed in blank by Samuel W. Smart, was given to one King, to whom Smart & Ankeney were indebted in that sum. The remaining notes, for $13,000 in all, were similarly indorsed, and were placed by Ankeney in Carson's private envelope in the bank, in pursuance, as Ankeney says, of his promise to Carson to give coal-land securities as collateral for the Smart & Ankeney note for $8,000 executed February 6th. Carson denies any knowledge of these notes, and repudiates ownership of them. They remained in Carson's. envelope in the bank until they fell due, early in August, 1884. They were not presented for payment or protested, so that Samuel W. Smart, the indorser, was released from liability, if, indeed, he could otherwise have been held. In. July, 1884, Smart & Ankeney's coal property ceased to produce coal, and they abandoned their enterprise, selling their equipment and plant. From this, after the payment of certain debts, they realized about $1,800. Ankeney's misuse of the funds and credit of the bank becoming suspected, his resignation followed, and he left Xenia for the west. After his departure the affairs of the bank were found to be in bad condition. His use of the credit of the bank to borrow $8,000 from the Jamestown bank was discovered, and other irregularities. Before Ankeney left Xenia, he took the $1,800 left from the proceeds of the coal equipment and plant to his partner, 'V. M. Smart, and, as he says, told Smart to take it to Carson, to apply on Carson's note to the bank. Smart says Ankeney told him to take the money to Carson, to be used in CllSe the bank ever troubled Carson on his note. When Smart took the money to Carson, Carson said it was not his, and that he wouId not take it; that his $8,000 note held by the bank WllS mere accommodation, without consideration; and that he would have nothing to do with Smart & Ankeney's property. The $1,800 was accordingly turned over to the bank by Carson, who at the -time emphatically disclaimed any interest in the Smart & Ankeney note, which was indorsed to his order, and was found in his bank envelope. Carson had several interviews with the president and the new cashier of the bank at the office of an attorney,
wM'feiPrelilsed the oplnlon,after'hearlngOarSbn'BBtatement,thd tM note the paper It':wpwrltten' on." W. iM;Smart, otSmal"t It DOvaxltln and bad no knowledge ottheftsclU tnibsacUona !ot the firm, expressed 'ihlsoplnlon to tMofilcers of the bank'th It >(llarson/I 1l."Orte. was a mereaecommodatloD note, wltOOut consideration. This oplnltm":WlI$based iwhotlW on Carson'astlJ.tement toblm. ,The bank'ofilce1'8 .ezprQllled'& ,wish not to' hOld! "Carson If! the '.ote: was merely an accomllloda· 1;lont"8'11idmadekDown'thelr ,bellet lnCarson's:verslon 'of the, facts;, but, though several times requested by him to do so, they declined to return to himl hUj:note nnW, they!had adjusted the atralrs of the bank."The board of directors of the bank ne\"er authorized the1l." officers to '·deliverup the nowOl"to release It. Upon (i)anon'sre1'wJal to take them as ,hiS, the baillt aswmed"the ownership of the' mortgage notes and .the Smart .&'Ankenet note for $8,000, In order to protect Itself agalnst!ossby Ankeney. Inconsideration ,ot the assignment to It 'of 'the $5,000 mortgage note wh1eh W. M."Sai&rt'procurea from .Kl:ngand traniltel"l'ed to the bank, the bank releasedWl )(;;SIbart on the smart & Ankeney note, and then proceeded; t:o:for\eclose tbe'<'\vhole $18,000 mortgage on 'the coal lands. ,A 'smalll'ent bit8 been recelved'by the bank from the coal lands down to the tlmeot'thla:ault. 'In his amended answerrthedetendant below averred that the Course ot ;thebankin respect of the mortgage. notes and the rents trom the .coal llUidlJl was taken' through' Ignorance'ithat Carson owned the notes, and otrered,tocredlt the. value 'of the· same ,on $8 note Insult, or to do In ,any other way that .might be deemed just. The Carson note re'malned In the' baqk trom 1884untll ,1888, 'when the receiver was appointed. ,Biefound'the note,ln the bank vault, and '>deDlanded. payment of 'the ,same from the maker. This wasreti1sed, and suit :lWas brought.
Little & Spencer, J. B. FOl'1lker, and L. C. Black, for appellant. I?arlingtonllnd .for }":Before TaFT· and :DURTON, Circuit JUdges, and SEVERENB" , J)i!3bict Judge.
, ' T.AF'1', Oircuit Judge,anel'stating,the facts as above, delivered the the court. . '. . ' , : Strictly speaking, .the, o'flly ground which 'can support the com· ''PHlinant's bill is that the bank and in title to the note sued, on in theactioD, at law:are estopped by matter in pais to 'lllilsert CarSon's liability on, the there was. no considera· tionfor the note, and that through the: :bank's negligence a solvent of' collateral inotes was released, are both defenses which ,have been set ttP of the court, and need no: interference by a court of equity to. make them effective. ',No objection was taken to the a:te1'ments of the bill setting up "'these and, as a,.determination of the issues raised will 'throw on the of estoppel,we shall pro-eeed to consider, them'in order. And first as to the defense 'of! a want of consideration. If it be true that Carson's 100in of '.$;900; February 6, bank, the credit which , bank gave p.hn, ()tabont $8,000" oi(J,une 26th,was a mere reo ",payment of that loan; ,and there could'bave been no,oonsideration for Carson's note totb,e,bank,given . then, or a few days later. the loan',.wlfsmade to & Smart, then' there is DO explanation of the,ct¢ditwhich tqeJ,la,nk gave Carson, June 26th, ,except the discount of, his note, and the paymentto him of the pro-
Our attention, therefore, must first be ,directed to the transllction of February 6th. Ankeney's is explicit that he borrowed the money from Carson for Smart & Ankeney, and made their note to him for the amount. Carson's evidence is by no meanS.81S clear. He does say that he understood that. hewlls lend.; ing the money ·to the bank, but he nowhere states that Ankeney told him: this in words. He says that, to himl Ankeney was thebllnk, and that, when he -said "I" or "we" "can use the money," he thought he meant the bank. He concedes, however, that he knew that SmaJ;i & Ankeney were engaged in 'aspecullttion in coal lands,. and that Ankeney: ;said something to him about coaJ.land securities:. While. it i$. true that Ankeney is discredited as a witness by his dis·' honesty in .misusing the credit of the bank, we think that thecir· cumstances of the case so strongly corroborate his statement that Cavson's .¥ersion 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·his claim that his loan was.. a loan to the bank, unless he thought that Ankeney waS' pledging 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 au· thority 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 cir· cumstance 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 Feb· ruary 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 indicdtethe drawing of a check to make 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 befOl'e and after, weighs against him. The sequel of .June 26th fully confirms Ankeney. The e,idential weight of the bank and pass-book entries of June 26th, showing that Carson gave his 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 otbers 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
FEDERAL REPORTER,' 'vol.
that three days later heoould induce Gax'Son foolishly to make, and date back three days,anote for $8,000 to the bank, without consideration, or made the entries on the bank's daily blotter, he thenlnad Carson'snotel? There is but one ewer. Finally, them()8t convincing "evidence that·· the note of Oarson was not a mere ,accommodation to ithe bank is the fact that he renewed iihalf 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, totheb8.J1k? Redoes not say. His counsel cannot answer, exceptto,suggest that· he was a chUd'in Ankeney's hands, and did whatwastasked. That Oarson was:slipshod in busiDess is doubtless true"butthat he was so simple as to go on renewa note he did not: owe, to a bank which made no use of it, we cannot credit. As stated by the leamedjudge in the court below, when there is an issuaof veracity between the two men, Carson's unsupported statement, is entitled to the greater weight; but when we find inherent improbability in Garson's story,' and every circum. stance supporting Ankeney's, we must believe Ankeney. We come next to thefclaim that the bank ought riot to recover on the note because itfwled to present for payment the coal land mortgage note for 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, hav· ing no interest in the property mortgaged. and receiving no consideration for his indol\sement, and that he could not be made liable on the notes. It is not necessary for us to consider this, 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 privafe 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 poJ:lsession. 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 Car· son.consented to the use of the Smart & Ankeney note and its collater:!l 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 as the same debt which he owed as prin. Ankeney to regard
cipal, and Carson only as surety. But, in fact and in law, Carson only was liable to the bank on his note, while Smart &. Ankeney were liable on their note to him, but not to the bank. Until Carson should agree with the bank that the one could be held by the bank to· secure the other, there was no connection between the notes which charged the bank with any duty to Carson of collecting the Smart & Ankeney note or its collateral. Finally, we come to the question of estoppel. The president and cashier of the bank expressed their opinion to Carson that his note to the bank was without consideration, but declined to return his note to him 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 anyone 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 foreclosing the mortgage on the coal lands, and releasing W. M. Smart from liability on the principal note. But nowhere 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 clear; but it might be 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 bank, that the bank's appropriation of the former was inconsistent with the latter, and created the estoppel claimed. Assuming, however, that the bank'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 his evidence. The books of the bank have been critically examined, and we find 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 his liability, but it does not lie in his mouth to say now that they ought to have known better than to crf'dit his 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. v.63F.no.1-3
and '.defendllJ!.t tender· to the complainant, in an and ,offer to account for whatever rentsj,may have been r.eqeived from· the coal lands by crediting the same .witb.interest on the note. We think that credit should also be given, with interestfrom the dateofit$ receipt, for the money which Ankeney sent ,to Carson for credit upon the note, and whicllC;l>rson'declined,w:,receive, but turned over to the bank. district court must be reversed,,:with instructions The decree: th.e action on the note unless ,the plainto enter tiff shaILmakec;Jredits the note as above.
OVER et a1. v. LAKE ,
:ilJRtE & W. R. ,. ,
co. et al.
(Oircuit Court,D. Indiana.
Where, in an action agaillsta' railroad company for goods destroyed in trjj.llsit, the insurance companies, whichba.ve become, subrogated to the eqUitable rights, are joined with the owner, who has the full lega.l title, so as 'to defeat the right of the ,ra1lroad to a removal of .the legl!-l cause of action to the federal court on' grounds of diverse citizenship, the federal court will separate the lega1:cause of action, and will not allow the joinder of parties having only equitai:Jle claims to defeat the right of removaL
This was an action by Charles H. Over and others against the Lake Erie & Western Railroad. Company. The action was removed from the state court by defendant. On motion to remand. R.yan & Thompson, & Harding, and R. W. Barger, for plaintiff. Miller, Winter & Elam, W.· E. Hackedorn, and John B. Cockrum, for defendant. BAKER, District Judge. This is an action to recover judgment for damages to the amount of $75,000 for the alleged negligent destruction by fire of property owned by Charles H. Over, a citizen of the state of Indiana. At the time the property was destroyed, it was insured in his favor, in the sum of a1;lout $38,000, in several dif· are citizens of the state of ferent insurance companies, two of Illinois, of which state the railroad company is a citiz.en. After the of the property the insurance companies severally paid the amount of their respective policies to Over, who gave to each qompany a written assignment of a part of his claim for loss 'against the railroad companY,the amount so assigned being equal . to the amount paid by each company to him. Over and the insurexcept one,! then b,t.'Qllght ..suit in the state court, ance as joint parties and owners of the claim for loss, against the rail· road company and the insurance company which had declined to become a plaintiff. One of the plaintiff insurance companies and