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U.S. Supreme Court

Thompson v. Sioux Falls National Bank, 150 U.S. 231 (1893)

Thompson v. Sioux Falls National Bank

No. 53

Argued October 24-25, 1893

Decided November 20, 1893

150 U.S. 231


In an action at law against a bank to recover on a cheque drawn and issued by its cashier, if it be admitted that the cheque was obtained without consideration and was invalid in the hands of the immediate payee, the plaintiff must prove either that he was a bone fide holder or that the person from whom he received the paper had taken it for value without notice of defect in its inception.

A bank, knowing that the county treasurer of the county had not sufficient county foods in his hands to balance its official accounts, consented to give him a fictitious credit in order to enable him to impose upon the county commissioners, who were about to examine his accounts. They accordingly gave him a "cashier's check" for $16,571.61, which he endorsed and took to the commissioners. They received it, but refused to discharge him or his bondsmen, and placed the cheque and such funds as he had in cash in a box and delivered them to his bondsmen. The latter deposited the money and the cheque in another bank in the same place, which bank brought suit against the bank which issued the cheque to recover upon it.


(1) That the circumstances under which the cheque was issued were a plain fraud upon the law and also upon the county commissioners.

(2) That their receipt of it and turning it over to the sureties was a single act, intended to assist the sureties in protecting themselves, and was inconsistent with the idea of releasing them from their obligation.

(3) That the question whether the evidence did or did not establish the fact that the county was an innocent holder should have been submitted to the jury.

This was an action brought by the Sioux Falls National Bank, defendant in error, against the First National Bank, to recover the amount of the following cashier's check, issued by an officer of the defendant bank:

"No. 91 Sioux Falls, Dak., Jan. 12, 1886"

" The First National Bank of Sioux Falls"

"Pay to the order of C. K. Howard, Co. Treas., sixteen thousand five hundred and seventy-one and 61-100 dollars."

"$16,571.61. [Signed] W. F. Furbeck, Cash."


Page 150 U. S. 232

Across the face of this was printed "Cashier's check." It was endorsed, "C. K. Howard, County Treasurer."

The complaint alleged in substance that the check was issued for value received, delivered to Howard, endorsed by him, and that "it came lawfully into the possession of the plaintiff, in the usual course of business," on January 13, 1886, and that the "plaintiff is now the legal owner and holder of the same."

The bank answered, admitting the drawing of the check, and alleged in substance that the check did not come lawfully into the possession of the bank in the usual course of business, and that its acquisition by the bank was ultra vires.

The action was begun January 14, 1886, two days after the check was drawn, against the then sole defendant, the First National Bank, and about six weeks thereafter, namely, March 1, an attachment was issued, upon the ground that the defendant had or was about to assign and dispose of its property with intent to defraud its creditors, and levied upon the moneys, notes, drafts, stock, and other assets of the bank, in the aggregate estimated value of over $120,000. Of this property, the sheriff returned or tendered to the defendant, on March 5, all, except assets of the estimated value of $27,541.21, consisting of coin, notes, etc.

The issue of this attachment was followed by the failure of the bank, and the Comptroller of the Currency appointed Thompson, plaintiff in error, receiver, on March 11. On March 31, 1886, the sheriff delivered to Thompson, as receiver, the assets remaining in his hands, in the above amount of $27,541.21. Acting under advice of the Comptroller, on December 28, 1886, the receiver applied to the court for an order substituting him as party defendant in the place of the bank, and the court thereupon made him an additional party. The receiver excepted to the order, claiming the absolute right of substitution.

Upon the trial, evidence was introduced tending to show the following facts: on January 12, 1886, the date of the check, Charles K. Howard was County Treasurer of the County of Minnehaha, an office which he had held for several years, and chanroblesvirtualawlibrary

Page 150 U. S. 233

was having his semi-annual settlement as such county treasurer with the board of county commissioners. From the time of its organization to the date of this settlement, Howard had kept his official deposit as treasurer with the First National Bank of Sioux Falls, of which J. B. Young and H.L. Hollister, down to a short time before the issue of this check, had been president and cashier, respectively, and at the time of this settlement, Young and Hollister, together with C. G. Coats and W. H. Corson, were the sureties of Howard upon his official bond.

Howard was confessedly a defaulter -- that is, he had not funds of the county sufficient to meet his liabilities -- and to enable him to make his settlement with the commissioners, he had applied to the defendant bank for assistance. After he had checked over his accounts with the commissioners, he went to the defendant bank for $16,571.61, the amount needed. He had about $12,000 on hand in a box in the treasurer's vault, which, with the $16,571.61, would balance his accounts. He had nothing deposited to his credit at the bank. To make up the required amount, he gave the bank three drafts upon Chicago, aggregating $15,000, telling the cashier, however, that he had no credit there which would obtain the payment of them. The bank thereupon gave him a deposit book, showing a deposit to his credit of $15,625.01, which he exhibited to the commissioners, who said that no doubt that was all proper, but they would like to have some little further assurance that he had the money. He then went to the bank, procured and exhibited to the commissioners a letter, of which the following is a copy:

"First National Bank, Sioux Falls, Dak.,"

"January 12, 1886"

"The books of the bank show a credit in favor of the county of $15,625.01. If you wish, you have the privilege of examining the books."

"R. J. Wells, P't."

"W. F. Furbeck, Cas."


Page 150 U. S. 234

The board would not make a settlement without the money or a certified check. Howard returned to the bank, and asked the cashier for a certified check, but was refused. The cashier thereupon gave him th a certified check. Howard returned to the bank, and asked the cashier for a certified check, but was refused. The cashier thereupon gave him th