author: MOURSUND, J.

text:
    BEXAR COUNTY v. LINDEN.
    (No. 6070.)
    (Court of Civil Appeals of Texas. San Antonio.
    June 15, 1918.
    On Motion for Rehearing, July 1, 1918.)
    1. District and Prosecuting Attorneys <&wkey;5(l) — Compensation.
    Omission in Acts 33d Leg. c. 121 (Yemon’s Sayles’ Ann. Civ. St. 1914, arts. 3881-3883, 3887, 3889, 3893, 3897, 3898) p. 246, of the language relating to district attorneys theretofore appearing in Rev. St. 1911, art. 3881, did not destroy all legislation fixing a maximum compensation to be retained by district attorneys.
    2. States ¡&wkey;119 — Public Funds — Use— “Municipal Corporations” — Grant by State-
    A county is a “municipal corporation” within Const, art. 3, § 51, providing that the Legislature shall have no power to make a grant of public money to a municipal corporation.
    [Ed. Note. — For other definitions, see Words and Phz-ases, First and Second Series, Municipal Corporation.]
    3. States &wkey;119 — Grant—'“Public Money.”
    Fees of office received by district attorney out of state treasury under the provisions of Code Cr. Proe. 1911, arts. 1118, 1119, 1132-1134, are “public money” within the meaning of Const, art. 3, § 51, prohibiting the making of a grant of public money to municipal corporations and others, but commissions on forfeitures of bail bonds deducted under article 1193 are not “public money” within such provision.
    [Ed. Note. — For other definitions, see Words and Phrases, Fhst and Second Series, Public Money.]
    4. States <&wkey;119l — “GRANT”—Public Money.
    Acts (Sp‘. Sess.) 25th Leg. c. 5, in so far as it provides for payment to the county of surplus fees received by district attorney from the state treasury makes a “grant” of public money to a municipal corporation in violation of Const, art. 3, § 51.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Grant.]
    5. Statutes <&wkey;64(l) — Partial Invalidity.
    When part of an act has been held unconstitutional and the remaining portion comes up for consideration, the presumption is generally against it, and it will not be sustained unless that which remains is complete in itself and capable of being executed in accordance with the apparent legislative intent, wholly independent of that which was rejected.
    6. District and Prosecuting Attorneys <&wkey;5(2) — Compensation—‘ ‘Fees. ’ ’
    The word “fees” in Rev. St. 1911, art. 3883, relating to limitation of compensation of district attorneys, includes commissions on forfeited bail bonds.
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Fees.]
    7. District and Prosecuting Attorneys &wkey;>5(4) — Compensation — Fees — Expenses.
    Under Rev. St. 1911, arts. 38S9, 3897, as amended by Acts 33d Leg. c. 121, all fees collected by a district attorney in which the county is entitled to share beyond a certain limit are to be equally charged with salaries and expenses allowed under the law.
    8. District and Prosecuting Attorneys <&wkey;5(G) — Compensation—Actions against County — Voluntary Payment.
    In action by district attorney against a county to recover fees paid into the county treasury, evidence held to sustain finding that such fees were paid under duress.
    9. Counties &wkey;>216 — Action against County — Limitations — Pleading — Naming County.
    Where, taking petition as a whole, it was plain that a suit was against a county, action was begun by proper sez-vice thereof within the statute of limitations, although the name of the county was omitted in the introductory paz-agraph.
    10. Interest <&wkey;39(4) — Payment to County —Duress.
    Where district attorney made payments of fees to county under duress, he was entitled to interest from time of the payment, and not merely from the time of demanding return of the money.
    11. Interest <&wkey;l — Equity.
    In equity, interest is allowed in order to afford compensation, and is given or withheld as under the circumstances of the case appears just.
    12. Counties <&wkey;228 — Action against County-Costs.
    In action against county where different officers were made defendants, and judgment was had against the county, it was error to tax against the county costs incident to making defendants other than the county parties- to the action.
    Appeal from District Court, Bexar County; J. T. Sluder, Judge.
    Action by W. O. Linden against Bexar County and others. Judgment for plaintiff, and defendant county appeals.
    Reformed and affirmed.
    Lewright &' Douglas, of San Antonio, for appellant. W. C. Linden and Joe H. H. Graham, both of San Antonio, for appellee.
   MOURSUND, J.

.W. O. Linden sued Bexar county, its county judge, county commissioners, and county auditor, to recover $6,919.23, alleged to have been paid to the county treasurer of- said county by him as district attorney under the excess fee statute, it being alleged that the statute, in requiring the payment of excess fees to the county treasurer is unconstitutional. Bexar county, in addition to asserting its right to the excess fees so paid by plaintiff, filed a cross-action, seeking to recover of plaintiff $2,818.12, alleged to be still due and unpaid on plaintiff’s excess fee account. Upon trial, without a jury, judgment was rendered for plaintiff against Bexar county for the sum sued for, with interest, dismissing the other defendants at the cost of the county, and against the county on its cross-action:

Mr. Linden, while district attorney of Bex-ar county, paid into the county treasury, on February 19, 1915, as excess fees, $5,056.47, and on February 14, 1916, the further sum of $1,863.23. If the county is entitled to the excess fees, Mr. Linden still owes the excess of those collected during the latter portion of his tenure in office; his theory being that the sum is $2,651.50, while the county auditor estimates it at $2,81S.12. If the expenses should he deducted from the total amount of excess fees, the auditor is right. If plaintiff is entitled to one-fourth of the excess before deducting expenses, plaintiff is right.

Bexar county liad more than 38,000 population according to the census of 1910. Plaintiff made written demand of Bexar county for the repayment of the two sums so paid by him as required by law, and for the cancellation of the claim of the county for further sums. In the two sums paid by plaintiff into the treasury there was included the sum of $780, received by him as commissions on forfeited bail bonds. The remainder constituted fees of office received by him out of the state treasury under the provisions of articles 1118, 1119, 1132, 1133, and 1134 of the Code of Criminal Procedure. It appears that in the money retained by plaintiff, which the county is seeking to recover, there is included an item of $20, received as commission on a forfeited bail bond. Article 5, § 21, of the Constitution, provides that district attorneys shall receive an annual salary of $500 and such fees, commissions, and perquisites as may be provided by law. Prior to the passage of chapter 5 of the Acts of the Special Session of the Twenty-fifth Legislature, which is the first act in which a limit was undertaken to be fixed as to the compensation of certain officers, including district attorneys, the Legislature had provided for certain fees to be paid the district attorney, and had also prescribed the method to be pursued in order to obtain payment thereof out of the state treasury. See Articles 1131-1134, Code Criminal Procedure 1911. The said act, known as chapter 5, Acts Sp. Sess. 25th Leg. 1897, has the following caption:

“An act to fix certain civil fees to be charged by certain county and precinct officers, and to fix and limit the fees and compensation of clerks of the district court, district attorneys, county attorneys, sheriffs and constables in felony cases, to be paid by the state, and to fix the compensation of assessors and collectors of taxes, and to limit and regulate the compensation of the sheriff, clerk of the county court, county judge, district and county attorney, clerk of the district court, assessor and collector of taxes, justices of the peace and constables, and to prescribe penalties for the violation of this act, and to repeal all laws in conflict herewith.”

Sections 1 and 3 of the act, taken together, provide what fees the district or county attorneys shall receive, in counties in which there have been cast 3,000 votes or over, and section 3 has been carried into the Code of Criminal Procedure without reference to section 1, as article 1118, with an additional provision relating to anti-trust suits, with the origin of which we are not concerned in this case. Section 10 of said act provides:

“That hereafter the maximum amount of fees of all kinds that may be retained by any officer mentioned in this section as compensation for services shall be as follows.”

Then follows a provision fixing the amount to be retained by named officers, which applies to all counties, except those for which a different rule is prescribed; then follows a provision as to counties with 25,000 inhabitants ; then follows the provision relating to counties containing a city of over 25,000, or in which there are as many as 37,500 inhabitants, as to wliich it is provided that the district attorney shall receive an amount not exceeding $2,500 per annum, inclusive of the $500 allowed by the Constitution and paid by the state, and that in addition each officer should receive one-fourth of the fees collected by him. Section 11 of the act provides for a report to the district court, by the officers, of fees, and that:

“All fees collected by officers named in section 10 of this act during the fiscal year, in excess of the maximum amount allowed and of the one-fourth of the excess of the maximum amount allowed for their services, and for the services of their deputies or assistants hereinafter provided for, shall be paid to the county treasurer of the county where the excess accrued.”

The act in question repeals all acts in conflict therewith. At the same session of the Legislature, by chapter 15, section 10 of said chapter 5 was amended, but the change did not affect district attorneys. In the Revised Statutes of 1911, section 10 of said act was divided into many different articles, beginning with No. 3881, and article 3883 is the one which applies to Bexar county, it being a county containing a city of over 25,000 inhabitants and the county having a population in excess of 37,500. That part of section 11 providing for payment of excess into the county treasury is brought forward as article 3889. In 1913 the Legislature (chapter 121,. Regular Session) amended articles 38S1, 3882, 3883, 3889, and other articles. It omitted district attorneys from article 3881, and made the following changes in article 3883, viz.: A slight change as to population of counties to which it relates; changes in the amounts allowed some of the officers other than district attorneys; the provision giving the officers, in addition to the sum mentioned, one-fourth of the excess of the fees collected, was omitted. Article 3889 was amended so as to provide that each officer should, out of the fees of his office, first pay the amount allowed him “under the provisions of this chapter, together with the salaries of his assistants or deputies”; that if such fees exceed the amount necessary for such purpose, the difference shall be deemed excess fees, and the officer should retain one-fourth thereof; that all amounts received by such, officer as fees of Ms office, besides those which he is allowed to retain “by the provisions of this chapter, shall be paid into the county treasury of such county.” Article 3897 was amended so as to require a monthly report by each officer of expenses other than those for salaries of assistants or deputies, and provides that:

“The amount of such expense shall be deducted by the officer, in making each report, from the amount, if any, due by him to the county under the provisions of this act.”

Appellee contends that the omission by the Legislature in the act of 1913 (page 246, Reg. Sess.) of the language relating to district attorneys theretofore appearing in article 3881,, in effect destroyed all legislation fixing a maximum compensation to be retained'by district attorneys. His theory is that, as article 3S81 is the only one which expressly describes the amount to be retained as the maximum amount, the provisions in articles 3882 and 3883, stipulating the amount to be allowed the officers therein mentioned, cannot be held to fix such amount as the maximum amount as to district attorneys. The Senate and House Journals fail to disclose what prompted the Legislature to strike out of article 3881 the words relating to district attorneys, which appears to. have Éeen done by the amendment to the original bill. On page 771 of the House Journal we find where an amendment was adopted, wMch we take to be the one in question, although it refers only to line and page of me original bill. The amendment was probably adopted on the theory that there would be no excess in counties such as are described in article 3881. But, whatever may have been the motive actuating the Legislature, there is nothing in tlxe .journals indicating that by striking out such words it was intended to destroy the law in so far as it prescribed maximum compensation for district attorneys in' counties falling within the classes described in articles 3882 and S8S3. When article 3883 is considered in connection with the language used in amended article 3889, it is clear that the amount named in article 3883 is prescribed as the maximum compensation, aside from the one-fourth of the excess fees allowed by article 3889. If there was any doubt, the caption of the original act and the first sentence of section 10 thereof would require a construction that article 3883 as amended was intended to prescribe the maximum compensation, there being nothing in the history of the legislation indicating a contrary intention. The same Legislature wMch made the omission in article 3S81 thereafter, in amending article 3903, referred to articles 3881 to 38S6 as fixing maximum salaries. See Acts 1913, p. 286 (Vernon’s Say les’ Ann. Oiv. St. 1914, art. 3903). We conclude there is no merit in the contention that after December 1, 1914, the date when said act of 1913 became effective, the statutes no longer contained any provision fixing a maximum of fees to be retained by district attorneys.

Section 51 of article 3 of the Constitution provides:

“The Legislature shall have no power to make any grant or authorize the making of any grant of public money to any individual, association of individuals, municipal or other corporation whatsoever.”

As originally adopted, said section had a proviso to the effect that it should not be construed to prevent the grant of aid in case of public calamity. As it now reads, the only proviso is one relating to Confederate soldiers and sailors. Appellee contends that said section prohibits the Legislature from directly or indirectly granting money to counties, and that the legislation in question in this suit undertakes to grant public money to counties. Appellant urges: (1) That a county is not a municipal corporation, and therefore the Legislature could grant public money to counties; (2) that the legislation does not constitute a grant such as is contemplated in said section 51; (3) that the money which the county is to receive by virtue of such legislation is not public money within the meaning of the Constitution; (4) that if the construction that the money was given or granted to the county would make the legislation unconstitutional, the statute should be construed as appointing the county trustee to receive the funds.

In view of the fact that the committee appointed by the constitutional convention to prepare the article on “Municipal Corporations,” by its first section (article 11, § 1) provided that the several counties are recognized as legal subdivisions of the state, and throughout the article made provision for the conduct of municipal affairs of counties as well as cities, it appears that the framers of the Constitution regarded counties as municipal corporations. For instance, in section 6¡, the curfrent expenses of county government are referred to as expenses of “municipal government.” It is also perhaps worthy of notice that by enacting section 8 of said article expressly authorizing donations of land to counties and cities on the Gulf Coast, the constitutional convention showed, not only that it regarded counties apd cities as in. the same class when it came to matters of state aid, but also that it regarded it as necessary to confer express authority to donate land. As the creation of counties was provided for by another committee which prepared article 9, it appears that there could have been no use in enacting section 1 of article 11 except to expressly recognize counties as municipal corporations to be considered with and provided for in connection with cities and towns. We are also of the opinion that section 3 of article 11 and section 52 of article 3 indicate that counties, cities, and towns were all considered as falling witMn one class of corporations. Again in section 55 of article 3 reference is made to “any county or other municipal cor-potation.” Wien tie Constitution is considered. as a wiole, and tie evident desire oi preventing tie Legislature from donating public money or tie credit of tie state is borne in mind, it is clear tiat tie framers tiereof, by tie words, “municipal or otier corporation wiatsoever,” used in section 51 of article 3, intended to proiibit grants to counties as well as to cities, towns, and private corporations. No discrimination was made between counties and cities on tie Gulf Coast as to donations of land, and no reason can be urged wiy they would probably have made any distinction with respect to tie grant of public money. We conclude that the Legislature has no power to grant public money to counties.

Tie money which tie statute directs to be paid into the county treasury, in so far as it is money obtained by tie' district attorney out of the state treasury, was public money within tie meaning of said section 51. Commissions on forfeitures of bail bonds, which are deducted by him under the provisions of article 1103, Code of Criminal Procedure, do not constitute public money within the meaning of said section. Tarrant County v. Butler, 35 Tex. Civ. App. 421, 80 S. W. 656. The money, retained as commissions, never reaches the treasury of the state and never bears the impress of state money.

AVe are unable to see any sufficient reason for holding that the legislation does not constitute a grant within the meaning of said section 51. If there was any intention to recognize and discharge an obligation of the state to the counties to which the act applies, such intention is not disclosed in the act. Appellant suggests that the Legislature would have authority to make a direct appropriation to counties to meet any equitable adjustment of the expense of administering the criminal laws, and that, if this be so, then it must follow that the arrangement for meeting this same end automatically through the law of avepage as applied to that expense in the larger counties, as embodied in the excess fee provision, is only a just and fair provision for taking care of the expense of administering the criminal laws. There is no merit in the suggestion. The act does not purport to deal only with fees of officers whose duty it is to enforce the criminal laws, nor does it impose any extra burdens on any of the favored counties, or purport to make any adjustment. The theory of an adjustment rests on the presumption of inequality in the burdens of government, which presumption cannot be indulged. It is evident that if such a theory could be entertained any direct grant by the Legislature to a city or county could be sustained on the presumption that some kind of an inequality existed as to the burdens of government, whereby an equitable obligation rested upon the state to reimburse the municipality.

AYe consider the fourth contention also to be untenable. If the language, “shall be paid into the county treasury," should be construed in this case to mean “shall be paid into the county treasury to be held in trust for the state,” then it would mean the same thing as to fees collected and paid in by other officers, which fees have not become public money. If the Legislature had intended any such thing, it would have found adequate language in which to express the intention. The fees paid out of the state treasury constitute only a small part of those taken into consideration in enacting the law, and it was doubtless deemed appropriate that the excess fees collected by officers of a county should become the property of the county. The fact that the district attorney, although elected for one county, is a state officer, and that the excess of fees collected by him from the state treasury should go to the state, was doubtless overlooked. We cannot give the language the meaning contended for without adding thereto something which we feel sure the Legislature did not have in mind, and which would conflict with its real intention, and we therefore conclude that a grant to the county, to have and to hold as its own, was meant by the language in question.

In view of the foregoing conclusions, we hold that the provision requiring the payment into the county treasury by district attorneys of the excess fees paid them by the state is in violation of said section 51, article 3, of the Constitution, and therefore void. This conclusion may appear not to be in harmony with what was said in the case of Clark v. Finley, 93 Tex. 171, 54 S. W. 343, but it must be borne in mind that in that case the provision in question was not attacked by pointing out in the pleading the particular provisions of the Constitution which were thought to have been violated, and that the court held the question could not arise in the absence of a showing that an officer had collected fees in excess of those authorized to be retained by him.

This brings us to the consideration of the effect of the invalidity of the provision hereinbefore considered. It is true that one of the main purposes of the law was to limit the compensation of the officers named therein, and that the provision fixing a limit upon the compensation of district attorneys may be said to be, in a way, separable from the question as to what is to be done with the excess, but it is also apparent that, if it be held that the statute limits him as to the amount of fees he can retain out of public money, it follows that he would hold the excess of such fees in trust for the state. The Legislature did not intend for the state to retain title thereto, or else it would doubtless have provided that it would never be paid out of the treasury, and if holding the limitation as to amount valid has the effect of making the excess the property of the state, we would by so holding be justly chargeable with judicial legislation. When part of an act has been held unconstitutional, and the remaining portion comes up for consideration, the presumption is generally against it, and it will not be sustained unless that which remains is complete in itself and capable of being executed in accordance with the apparent legislative intent, wholly independent of that which was rejected.- Lewis’ Sutherland on Stat. Const. (2d. Ed.) § 298. In section 305 the author quotes with approval the following:

“It would seem that the provisions of the statute held to be constitutional should-be substantially the same when considered by themselves as when taken in connection with the other parts of the statute held to be unconstitutional; or, in other words, where that part of a statute which is unconstitutional so limits and qualifies the remaining portion that the latter, when stripped of such unconstitutional provisions, is essentially different, in its effect and operation, from what it would be were the whole law valid, it would seem that the whole law should fall. The remaining portion of the statute, when thus stripped of its limitations and qualifications, cannot have the force of law, because it is not an expression of the legislative will. The Legislature pass an entire statute, on the supposition, of course, that it is all valid and to take effect. The courts find some of its essential elements in conflict with the Constitution, strip it of those elements, and leave the remaining portion mutilated and transformed into a different thing from what it was when it left the hands of the Legislature. The statute, thus emasculated, is not a creature of the Legislature; and it would be an act of legislation on the part of the court to put it in force.”

Applying these rules, we hold that the statute, in so far as it undertakes to limit the district attorneys as to fees obtained from the state, is void, and that Bexar county was not and is not entitled to collect from him any excess of such fees.

All of the money paid to Bexar county by plaintiff came out of the state treasury, except $780, consisting of commissions on forfeited bail bonds. The Legislature could require such money to be paid to the county, and it is insisted in behalf of the county that the court erred in permitting plaintiff to recover such sum. On the other hand, appellee contends that the language used in article 3883 does not include commissions, and that therefore the county was not entitled to collect the same from him, even if the statutes in question were valid. In view of the fact that the caption of the original fee bill designates the act as one to limit and regulate the compensation of the named officers, and of the language of the act, it is clear that the word “fees” was used in the broad sense in which it is often used, namely, as including the percentage allowed by law on sums of money received or collected. That the word, “fees,” when descriptive of fees of office, is susceptible of such broad meaning is sustained by authority. 19 Cyc. 464, note 57; Pittsburg v. Grenet, 238 Pa. 567, 86 Atl. 462; Smith v. Dunn, 68 Cal. 54, 8 Pac. 625. To hold that it was not used in that sense in the act in question would be to ascribe to the Legislature an intention to favor officers who receive commissions, and to’ leave very uncertain the compensation which they were to receive. We, therefore, conclude there is no merit in appellee’s theory. We recur, therefore, to the question whether appellee had any right to recover said sum of $780. Appellant relies upon an expression contained in the opinion in the case of Clark v. Finley, supra, as follows:

“If it were unlawful so to appropriate the state’s revenue, it would be deemed that the surplus which was paid to the use of the counties was paid from fees collected from private parties.”

This indicates an opinion that the legislation may be legally applied to funds not derived from the state, but the application of such a rule presents questions of practical difficulty. If the officer receives more than enough fees from individuals to pay his salary and the expenses allowed under the law, it seems plain that there would be a surplus to which the county would become entitled. We can probably go further, and say that the law is valid in so far as it prescribes that an officer who receives more than the maximum stated therein, regardless of whether it be received from the state or individuals, must account to the county for the excess in so far as it represents funds derived from individuals. This would not mean that if the fees derived from the state exceed the maximum amount, three-fourths of all fees derived from individuals would go to the county, for that would in effect be judicially legislating to the effect that all expenses must be taken out of fees derived from the state, and that fees derived otherwise shall bear no part of such burden. Articles 3889 and 3897, as amended in 1913, provided in effect that the fees of office collected in any year are to be charged with the salary of the district attorney and his assistants; then with one-fourth of the sum then remaining, which one-fourth is also retained by the district attorney; then with the expenses incurred in the conduct of the office; and that the remainder is to be paid into the county treasury. In order not to make any judicial changes in the law, but to apply it as it reads, in so far as it can be done without violating the Constitution, we believe that all fees should be charged with the proportionate part of the deductions made from the total receipts for the year, and that the county would be entitled to receive such portion of the commissions as remains after charging same with thoir proportionate part of the deductions for the year. During the year beginning December 1, 1914, the receipts amounted to' $8,240, and the remainder, after deducting the items above named, was $2,499.30. The commissions amounted to $780, and the proportionate part thereof to which the county became entitled was therefore, according to our es tímate, the sum of $236.58. To this there should be added the further sum of $4.92, the county’s portion of the commission on the Washburn bond, collected during the year beginning December 1, 1915. The judgment is erroneous to the extent of the aggregate of these two sums. This conclusion has been arrived at with considerable doubt, and the theory adopted has not been advanced in the brief of either party. In fact, in the briefs it is taken for granted that the county is entitled to all of the commissions or none, and counsel present their contentions, without favoring us with a discussion of the theories on which the contentions rest.

Appellant contends that each of the payments made by appellee was a voluntary one, and therefore not recoverable. Appellee pleaded duress, and the judgment of the court carries with it a finding that the payments were not voluntarily made.

The testimony of appellee shows that he made the first payment under the following circumstances: The appellee believed the statute requiring him to pay the excess to the county to be unconstitutional, and failed to make payment until after he had been informed in the grand jury room by the foreman that an indictment had been voted against him and would be presented, unless within a certain number of days he paid into the treasury the sum then due according to the provisions of the statute. He informed the foreman that he considered the law invalid, but that indictment would automatically remove him from office, regardless of whether the Court of Criminal Appeals reversed a conviction, and under the circumstances he would make the payment under protest. He testified that the second payment was made after the assistant district attorney in charge of grand jury work had informed appellee that either the county judge or county auditor, or both of them, had reported to the grand jury his failure to make payment, and the grand jury had been asked to indict; that said assistant district attorney told him that unless the money was paid the grand jury would indict. Ap-pellee made no formal protest at the time of paying either sum into the treasury. After he went out of office he filed this suit. He testified in effect that he did not want to risk an indictment while in office because a conviction would operate as a removal from office. In view of articles 6028 and 6030, R. S. 1911, it appears that appellee erred in believing the conviction would operate as a removal, but this we believe is immaterial. He believed, and upon good grounds, that his failure to pay the sums would result in his removal from office. There is also a controversy between appellant and appellee as to whether a felony statute or a misdemean- or statute would have been invoked by the grand jury. Appellee refers to article 107, Penal Code, which in plain terms makes the failure to pay over money a felony, while appellant refers to article. 118, taken from Acts 1907, p. 120, and by the codifiers extended to matters appearing in article 115, not included in said act, but taken from section 2, c. 5, Acts of 1897, as amended on page 50 of Acts of 1907. The portion of article. 115 relied on by appellant is embraced in article 3889, R. S. 1911, hereinbefore referred to, which article was amended by the act of 1913, page 246, and such amendment, in connection with article 3897, as amended in the same act, makes a material difference in the duty of the officer, in that he is permitted to deduct the expenses of his office in determining the amount payable to the county. In view of this legislation, it appears that the portion of article 115 upon which an indictment would necessarily have been predicated under article 118 was repealed by implication from and after December 1, 1914. This controversy is also immaterial, we believe, for it appears that the trial court was justified, from the evidence, in finding that appellee believed he would be indicted on a felony charge, and that removal from office would follow, if he did not make the payments, and that he had no adequate means of immediate relief other than that of making the payment, and that this situation caused him to make such payments. This is an unusual case, and we can only apply to the facts the general rules laid down by text-writers and judges concerning duress as applied to the payment of money. Elliott on Contracts, § 144; Ruling Case Law, title, Duress; 22 L. R. A. (N. 8.) note, p. 868. Appellant contends that as to the second payment, at least, no sufficient showing of duress was made. It is true that appellee did not wait for the grand jury to vote an indictment and to send for him, but he knew that the grand jury was under no duty of sending for him, and it is hardly probable that it would do so, where the matter was presented as a second offense. We conclude that the evidence is sufficient to sustain the court’s finding that neither payment was a voluntary one.

Appellant urges that appellee’s cause of action as-to the sum of $5,056 paid into the treasury is barred by the statute of limitation of two years, the contention being based on the theory that Bexar county was not made a party to the suit until April 18, 1917, more than two years after the sum was paid to the county. The original petition contains the following introductory paragraph :

“Comes now W. 'C. Linden, plaintiff, and complaining of the county judge of Bexar county, J. R. Davis, and the four county commissioners, Jake Rubiola, Chris X. Gutzeit, J. H. Covington, and Jacob Klaus of Bexar Co., and of Van H. Howard, Co. Auditor, W. C. Linden, hereinafter styled plaintiff, and alleges.”

It then sets out the facts, and alleges that Bexar county is liable to plaintiff for the sums paid. The prayer is for judgment against Bexar county for the amount sued for, and that the county and its officials be enjoined from demanding payment of the sum claimed by them to be due by plaintiff. The petition was indorsed: E. 0. Linden v. County of Bexar. This petition was filed February 19, 1917, and citation issued the same day for all of the defendants, except Bexar county. On February 20th, a citation was issued for Bexar county, and served on February 21st, by delivering a copy to the county judge. The first amended original petition was filed on April 18, 1917, and on April 19th another citation was issued for Bexar county. It is apparently taken for granted by the parties that in the introductory paragraph above copied, Bexar county was omitted, although the wording thereof is such that it might plausibly be contended that the words, “of Bexar Co.,” were intended to name Bexar county as a defendant just as were the words, “and of Van Howard, Co. Auditor,” to make the county auditor a party. But, taking it as true that the name of the county was omitted in said paragraph, it appears from the petition as a whole that the suit was one against the county, and the prompt issuance of citation thereon was procured. We hold that the suit against the county was filed on February 19, 1917, arid therefore overrule the contention as to limitation.

It is further urged that the court erred in awarding appellee interest from the respective dates of the payments made by him, the contention being that as plaintiff made no demand on the county until February 19, 1917, interest should only have been allowed from that date. A diligent investigation of the authorities on the question fails to convince us that the court erred in allowing interest. There are cases in which payment has been made under mistake of fact or law in which interest has only been permitted from date of demand. Ruling Case Law, vol. 15, § 25, and authorities cited in support thereof. But we also find that where taxes were illegally demanded and paid under protest interest was allowed from time of payment. County of Galveston v. Galveston Gas Co., 72 Tex. 509, 10 S. W, 588; In re O’Berry, 179 N. Y. 285, 72 N. E. 109. In equity, interest is allowed in order to afford compensation, and is given or withheld as under the circumstances of the case appears just. This case is not one of mistake of law, strictly speaking, for appellee believed the statute to be unconstitutional, but did not feel that he could afford to depend upon such opinion to the extent of risking a felony prosecution and the probability of temporary or permanent removal from office. His rights are predicated upon the theory that he was coerced into making the payments. The county did not pursue its remedy of a suit on his bond, but used the instrumentalities for the enforcement of the criminal laws, and thereby secured the payment to it of the sums sued for, by appellee. No distinction can, under our decisions, be predicated on the fact that the suit is against a county. County of Galveston v. Gas Co., supra; Comanche County v. Burks, 166 S. W. 470. We conclude that under the facts of this case it cannot be held that the court erred with regard to time from which interest should be allowed.

The court erred in taxing the costs against appellant incident to making the defendants other than the county parties to the suit.

The judgment will be reformed by deducting from the sum of $5,056.47 the sum of $236.58, and so as to award the county the sum of $4.92, due as its portion of the commission on the Washburn bond collection, which sum, for the sake of convenience, will be deducted from the sum of $1,863.23. Interest will be computed on the amounts thus obtained from the respective dates when the payments were made to the county to the date of the judgment of the trial court and judgment rendered for plaintiff for the aggregate amount, with interest thereon at the rate of .6 per cent, per annum from the date of judgment of the trial court. The costs of making the defendants other than the county parties to the suit are adjudged against appellee. Except as to the small sum due on the Washburn commission, above mentioned, the county will take nothing by its cross-action. As thus reformed, the judgment will be affirmed.

Reformed and affirmed.

On Motion for Rehearing.

Our’ attention has been called to inaccuracies in the figures stated in our original opinion as the proportionate portion of the $780 and the $20 commissions which we awarded to the county. The part of the $780 fee to which the county is entitled is $236.58, and of the $20 fee is $4.92. The figures will be changed in the original opinion to correspond to the above amounts, and the judgment corrected in similar manner.

The motion for rehearing is overruled.
      'Tfnr other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: BUCK, J.

license: Public Domain

text:
    HARWOOD v. FT. WORTH NAT. BANK.
    (No. 8852.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    May 18, 1918.
    Rehearing Denied June 22, 1918.)
    1. Corporations c=s=>430 — Officers—Powers —Adverse Interests.
    It is a general rule that an officer whose interests are adverse cannot bind the corporation except as to innocent parties, nor are acts of manifest bad faith on the part of the officer binding on the corporation, and strangers who participate in such wrong against the corporation may not profit thereby.
    2. Banks and Banking «&wkey;309 — Acts ok Officers — Questions fok Juey.
    In action by savings bank receiver to recover from national bank proceeds of drafts drawn in plaintiff’s name at the direction of its president, which proceeds were received and applied on a claim against the president individually, evidence held to present jury question whether defendant’s officers were charged with knowledge that such president had not arranged to take up the drafts and that his acts in regard thereto were unauthorized.
    3. Ooepoeations &wkey;>426(7) — Acts ok Officers — Ratification.
    The assent or approval of a corporation to acts done on its account may be inferred in the same manner that the assent of a natural person may be, and where a corporation, with full knowledge of the unauthorized act of its officers or agents, acquiesces therein, it thereby ratifies them, especially where the acquiescence results in prejudice to a third person.
    4. Estoppel <&wkey;119 — Questions foe Juey.
    In action by a savings bank receiver to recover from national bank proceeds of drafts drawn in the name of the savings bank, used by the national bank in discharge of individual liability of the president of the savings bank to it, it being disputed whether the acts of the president were beyond his powers, the question whether the receiver was estopped to recover from the national bank by failure to pursue other assets of the president of the savings bank held, under the evidence, for the jury.
    Appeal from District Court, Tarrant County; Ben M. Terrell, Judge.
    Action by Brown Harwood, as receiver of the Ft. Worth Savings Bank & Trust Company of Ft. Worth, against the Ft. Worth National Bank. Judgment on peremptory instruction for defendant, and plaintiff appeals.
    Reversed and remanded.
    Flournoy, Smith & Storer, of Ft. Worth, for appellant. Ross, Ross & Alexander and Slay, Simon & Smith, all of Ft. Worth, for appellee.
   BUCK, J.

The receiver of the Ft. Worth Savings Bank & Trust Company of Ft. Worth, hereinafter called Savings Bank, filed this suit to recover of the Ft. Worth Natiqnal Bank $50,000, with interest, 'the proceeds of two certain drafts of date April 10, 1914, drawn in the name of the Savings Bank on funds of said last-named bank in the hands of correspondent banks named as drawees in said drafts, and made payable to the Ft. Worth National Bank, which drafts and the proceeds thereof were by defendant received and applied on a claim of liability of E. E. Baldridge, president of the Savings Bank, individually, to the Ft. Worth National Bank. The petition alleged that the drawing of the drafts and the use of the proceeds thereof constituted a fraudulent appropriation of the funds of the Savings Bank for the use of Baldridge, that there was no consideration to the Savings Bank for said use, and that the Ft. Worth National Bank had both actual and constructive notice that the pay-. ments so made out of the funds of the Savings Bank were without authority and not binding on the Savings Bank, and said $50,-000, under the circumstances, represented money had and received by the Ft. Worth National Bank for the use and benefit of the Savings Bank. Defendant pleaded a general denial, estoppel, stale demand, ratification, laches, and that it was and became, upon the receipt of said drafts, a holder in good faith and for a valuable consideration without notice of any infirmity in same. From a judgment, upon peremptory Instruction, in favor of defendant, the plaintiff has appealed.

The facts are largely undisputed. About January 1, 1912, Baldridge became president of the Waggoner Bank & Trust. Company, whose name was by charter amendment subsequently changed to the Ft. Worth Savings Bank & Trust Company. It was engaged in the business of inviting and receiving savings deposits, lending money on notes and securities, rediscounting its paper through banking correspondents, borrowing money, and, in a limited degree, carrying on a general banking business. The Savings Bank had and kept a regular' set of books, such as banks usually keep. There were other stockholders in the bank, but just exactly who they were or how much stock they owned at the time of this transaction is not made very clear in the statement of facts. However, it is agreed that at this time, and for some time prior to April 10, 1914, and up to the closing of the bank, July 3, 1915, Baldridge owned practically all the stock, and was the actual manager of and controlling authority in the bank’s affairs. Some time before this T. M. Presley had been made vice president, and A. C. Alexander cashier, by Baldridge’s direction, but these two in fact did not exercise. and did not attempt to exercise any controlling authority. Their services were largely of a clerical nature, and they were under the direction of Baldridge in the exercise of their official functions, he being the dominating influence in the management of the affairs of the bank.

The appellee had been for some time before, and was at the time of and subsequent to the transaction in question, the clearing agency of the Savings Bank, which latter was not a member of the Clearing House. All checks on the Savings Bank were charged by the Clearing House to appellee, and the latter later presented them to the Savings Bank for payment. In January, 1914, representatives of the appellee, acting for it, entered into an arrangement with Baldridge, then president of the State National Bank, a banking corporation of Ft. Wealth, by which it was agreed that the appellee should take over the liquidation of the State National Bank, on terms specified, for the protection of the shareholders and depositors of the latter bank, and as a consideration for such undertaking Baldridge agreed to transfer to persons identified with the ownership and management of the appellee bank all the capital stock of the Savings Bank, under a plan by which enough of the assets of the Savings Bank to protect the depositors, the deposits being estimated at about $800,000, would be transferred to the new control, and out of the remainder Baldridge was to compensate himself for his stock so to be transferred. The appellee was to declare a dividend, out of its undistributed surplus earnings, to its stockholders, and invite its stockholders to invest this dividend in Savings Bank stock. Steps were taken by appellee’s director to put this plan into effect, and at the request of Baldridge the directors of appellee agreed to increase its capital stock by an addition of 1,000 shares, at par value of $100, and this new stock should be sold to Baldridge and his associates in the State National Bank at $320 a share. Under this agreement Baldridge paid for 425 shares of appellee’s new stock at $320 a share, and the liquidation of the State National Bank was in progress on April 10, 1914. In January, 1914, Baldridge was elected a vice president of the appellee bank, and held this position on the date when the drafts in controversy were drawn, he resigning therefrom April 22, 1914. One of the leading inducements to the appellee to undertake the liquidating agency was the transfer of the Savings Bank stock, charter and assets. Appellee desired to have a savings department in connection with its regular-banking business, and the patronage gained from the purchase of a savings bank already established was deemed of considerable value. The appellee agreed to advance money at once to pay the depositors of the State National Bank, to pay the expenses of the liquidation, etc. After appellee’s directors had accepted the liquidation of the Stare National Bank, Baldridge concluded he did not want to transfer the Savings Bank stock, charter, etc., and asked to be relieved of that part of the contract. After some delay, and with some reluctance on the part of some of appellee’s officers and directors, an agreement was finally reached by which Baldridge was permitted to keep the stock, charter, etc., of the Savings Bank, and to pay appellee in .consideration thereof the sum of $50,000. The deal, under the changed contract, was consummated on April 10,1914. At this time certain of the officers of appel-lee bank went to the building where the Savings Bank operated, and there agreed to accept Baldridge’s last proposition, and to accept the $50,000 in lieu of the surrender of the Savings Bank’s stock. The meeting was held in a room or balcony overlooking the counting house or offices where the business of the Savings Bank was conducted. Upon the consummation of the agreement, Baldridge called T. M. Presley from his duties below, and instructed him to draw two drafts, of $25,000 each, upon two corresponding banks, one on a New York bank, and the other on a St. Eouis bank, and also to draw on the Savings Bank a draft in favor of the State National Bank of Ft. Worth for some $299,000. These drafts were prepared by Presley, who signed them as vice president of the Savings Bank. The $299,-000 was a payment by the Savings Bank for the new building erected by the State National Bank, for which bank the appellee had agreed to undertake liquidation. The two $25,000 drafts were in payment of the $50,000 which the Ft. Worth National Bank had agreed to accept in lieu of the transfer of the Savings Bank stock, charter, etc. These drafts were handed by Presley to the cashier of appellee, who was one of the several officers of appellee present at the conference. These three drafts were drawn upon the funds of the Savings Bank by an officer acting for that bank. No instructions were given by Baldridge at the time as to what entries should be made on the books of the Savings Bank with reference to these drafts, and the two $25,000 drafts were carried on the books as cash items until some time in June, when under Baldridge’s direction, they were charged to the charter account of the Savings Bank. This charter account was one kept by the Savings Bank, on which the value of the charter was entered in the sum of $10,500. With this additional entry of the $50,000 item on this account, the value of the charter was made to appear to be $00,500. No entry was ever made on Bald-ridge’s personal account as the result of this transaction, and the entries stood as so entered on the charter account when the Savings Bank closed its doors, and when Baldridge committed suicide, the day after, on, to wit, July 4, 1915, and when the receiver was appointed. The two $25,000 drafts were dejiosited with appellee bank and collected in due course. At the time of the transaction detailed above Baldridge was regarded by all the officers and directors of appellee, and by the other officers of the Savings Bank and by the public generally, as being a man of wealth, probably worth some $800,000 above his liabilities, with holdings of a diversified nature, bank stock, ranches, cattle, etc. His business integrity was regarded as of the best. No one connected with the transaction, save perhaps Baldridge himself, had actual knowledge of any intent on Baldridge’s part to misappropriate any of the funds belonging to the Savings Bank, or that he was insolvent, or that he would not adjust matters by paying for the two $25,000 drafts. Presley did not know at the time for what purpose these drafts had been drawn, nor that they were drawn in payment of Baldridge’s personal obligation. No inquiry was made by any of appellee’s officers or directors as to why the drafts were drawn in this way or as to whether Baldridge had paid for or made arrangements or was financially able to pay for said drafts. Tliey regarded the drawing of the drafts as regular, and did not question the bona fides of Baldridge’s acts until shortly before this suit was filed. At this time Baldridge was one of the vice presidents of the appellee, and had an office and desk in the appellee’s bank building, and the two banks were conducting their business within a few doors of each other. Ap-pellee’s officers believed at the time that the Savings Bank was entirely solvent. It had a large number of depositors. It had been customary in banking circles in Ft. Worth for years for officers of banks to draw drafts on the funds of the banks with which they were connected in payment of their personal indebtedness, but, of course, by making the proper arrangements for the purchase of such drafts out of their personal funds or by their personal obligations. In Kitchens v. Teasdale Com. Co., 105 Mo. App. 463, 79 S. W. 1177, it was held that the existence of such customs would, not affect the legal consequence that a payee of drafts so drawn, who knew that the funds were to be applied in payment of the bank officers’ personal debts, would be liable to repay the same to the bank.

As a matter of fact, as disclosed by later investigation, Baldridge at this time was very heavily in debt. While he owned and controlled extensive properties, much of it was covered by mortgages. On April 10,1914, Baldridge’s personal account with the Savings Bank showed an overdraft of $440,000. The Reid Cattle Company, in which Bald-ridge was largely interested, and whose ranch .was located in Ector county, .owed the Savings Bank at this time $134,000, the notes representing which • indebtedness were signed by Reid and Baldridge. Bald-ridge finally sold as his own the lands comprising this ranch, and the Reid Cattle Company was left without known assets with which to satisfy this indebtedness. The Ward Cattle Company, whose notes were indorsed by Baldridge, owed the Savings Bank some $121,643. These notes were discounted to the Savings Bank for $117,000, and Baldridge got the proceeds less the discount. One of the notes was eventually paid by charging it to Baldridge’s personal account. The W. H. Lyons note for $92,508, secured by a mortgage on some cattle, was another item which the books of the Savings Bank listed as an asset, but which proved to be worthless, and was later charged to profit and loss. Baldridge collected the proceeds from the sale of the cattle upon which a mortgage was held by the Savings Bank to secure this note, placing such proceeds to his own credit. Another concern in which Bald-ridge was interested, to wit, Godair, Bald-ridge & Bursey, had an overdraft. At this time the Savings Bank’s indebtedness exceeded the actual value of its assets by about $400,000. Baldridge, it appeared after his death, was insolvent on April 10, 1914, to the extent of some $700,000, though he consummated some rather large deals subsequently to the above date, and up to the time of his death maintained the reputation of being a man of considerable means. Since this appeal is from a judgment following a peremptory instruction, it is our duty to give effect to certain phases of appellant’s evidence about which there may be some conflict. If the evidence presented issues of fact, which should have been submitted to the jury, the trial court erred in giving the peremptory instruction.

The first assignment is directed to action of the trial court in giving the peremptory instruction in favor of defendant. The first proposition under this assignment is to the effect that an officer of a corporation cannot act for and bind the corporation in a transaction where his interests are adverse to those of the corporation, and notice of his personal interest in such transaction is notice to the other party of his want of authority, and requires inquiry to be made by such party, independent of the acts of such officer, to ascertain as certain the authority under which the officer acts. The uncontro-verted facts show that the officers of appel-lee who consummated the deal with Bald-ridge and accepted the drafts knew that the drafts were, drawn on the Savings Bank’s funds, and knew that such drafts were being used in payment of Baldridge’s individual obligation. They did not have any actual knowledge of Baldridge’s insolvent condition, nor of the insolvent condition of the Savings Bank, nor that Baldridge at the time had an overdraft with the Savings Bank in any amount, or that Baldridge had not made or would not make arrangements with the Savings Bank to purchase and pay for said drafts out of his individual funds. No one connected with the appellee made any inquiries or investigation as to these matters, either at this time, or before the drafts were collected, or thereafter. They just never questioned the good faith or regularity of the transaction.

It is a rule of general application that an officer whose interests are adverse cannot bind the corporation except as to innocent parties. Tenison v. Patton, 95 Tex. 284, 67 S. W. 92; Scott v. National Bank, 97 Tex. 31, 75 S. W. 7, 104 Am. St. Rep. 835; San Antonio St. Ry. Co. v. Adams, 87 Tex. 125, 26 S. W. 1040; 10 Cyc. p. 912. Nor are acts of manifest bad faith on the part of the officer binding on the corporation, and strangers who participate in such .wrong against the corporation may not profit thereby. 10 Cyc. 911, and authorities cited. In addition to the general rule of agency that every person dealing with an assumed agent is bound, at bis peril, to ascertain tbe na-. ture and extent of tbe agent’s authority, it would seem tbat where, in a particular transaction, knowledge is brought to tbe third party that the agent has an interest adverse to that of tbe principal, or is using tbe funds, property, or credit of bis principal for tbe benefit of tbe agent himself, it is sufficient to put such a third person on notice of want of authority on the part of the agent to bind the principal. 2 Mechem on Agency, § 1728. In U. S. Fidelity & Guar. Co. v. Adoue & Lobit, 101 Tex. 379, 137 S. W. 648, 138 S. W. 383, 37 L. R. A. (N. S.) 409, Ann. Oas. 1914B, 667, where a guardian, who embezzled some $12,000 of bis ward’s estate, deposited $5,000 of his own money to bis own account in tbe bank, and obtained from tbe bank a loan of $7,000, credited to his personal account, and then received from tbe bank a certificate of deposit for $12,000 to him as guardian, and later, upon a surrender of the certificate of deposit, bad his personal note to the bank in the sum of $7,000 canceled, and received credit to bis personal account in the sum of $5,000, which amount was checked out, it was held that the bank was liable, for tbe full amount, to tbe bonding company which had made tbe guardian’s bond on the faith of tbe certificate of deposit issued by tbe bank, and which bonding company had, upon tbe guardian’s subsequent defalcation, been required to satisfy the bond. Good faith on the part of tbe bank was found by the trial court, and tbat there was no agreement that said $12,000 should be left on deposit, and that there was no actual knowledge on tbe bank’s part of tbe guardianship existing, neither did the hank profit by the transaction, no interest having been charged for the $7,000 loan. See, also, Moore v. Hanscom, 101 Tex. 293, 106 S. W. 876, and 108 S. W. 150; Lamson v. Beard, 94 Fed. 30, 36 C. C. A. 56, 45 L. R. A. 822; Gale v. Chase Bank, 104 Fed. 214, 43 C. C. A. 496; Hier v. Miller, 68 Kan. 258, 75 Pac. 77, 63 L. R. A. 952; Rochester Co. v. Paviour, 164 N. Y. 281, 58 N. E. 114, 52 L. R. A. 790; De Baca v. Higgins, 58 Colo. 75,143 Pac. S32, L. R. A. 1915B, 1091. In De Baca v. Higgins, supra, the Supreme Court of Colorado held that, even though tbe president of a bank owned all of its stock, yet be was trustee for the depositors, and the bank would not be bound where he bad used its funds to discharge his individual debts, unless such act was authorized or ratified. Tbat as the president was the only one connected with the bank having knowledge of the misappropriation his silence or acquiescence would not operate as a ratification of bis wrongful act. Here, as in the instant case, there was no contention of any actual fraudulent participation on tbe part of tbe person to whom the funds of the bank were paid. The court found absolutely good faith as a matter of-fact, but held that such party was charged by law with notice of the actual facts, in tbat in payment of the individual debt of tbe president such Iverson had accepted a certificate of deposit and a check and a draft on the bank’s funds. The court said:

“An agent is not vested with autbority to appropriate the funds of bis principal to pay his debts, and therefore a creditor of a bank official receiving a draft or other obligation of the bank, which the officer represents, in payment of his individual obligation, which show upon their face that they were issued by himself, is advised that thereby the officer is appropriating the assets of the bank to pay his individual indebtedness, and is therefore liable to the bank for the funds so received; or the obligation is nugatory in his hands, unless he establishes that the bank official was authorized to issue such obligations, or his act has been ratified by the bank” (citing cases).

In Lamson v. Beard, supra, where tbe president of a bank as such drew drafts on tbe bank’s funds in payment'of bis personal obligation, it was held tbat tbe payees were put upon inquiry as to tbe president’s au-tbority to draw tbe same for his own benefit, which inquiry tbe payees should have made of tbe directors, though they were not charged with tbe duty of investigating the bank’s books to ascertain whether tbe president had reimbursed tbe bank. In tbe intant case we are of the opinion tbat the uncontroverted facts tend strongly to show that tbe officers of tbe Ft. W.orth National Bank, by reason of what occurred at the time, as well as by reason of their general knowledge of the conditions existing in regard to the affairs and management of tbe Savings Bank; were charged with knowledge tbat Presley in drawing the drafts in question was acting under' tbe direct autbority of Baldridge, and was not exercising any independent discretion, and tbat in all probability, as Presley testified, Presley did not know for what purpose the drafts were drawn; tbat, in directing Presley to draw the drafts upon tbe funds of tbe Savings Bank, Baldridge was in effect drawing such drafts himself, in payment of bis own obligation. We must presume tbat, if inquiry bad been made of Presley, Alexander, or tbe other resident directors, they would have told tbe truth, and would have stated to tbe inquirer that Bald-ridge bad not in fact purchased tbe drafts with bis own funds, and bad not made any arrangements with the Savings Bank so to do. Hence, as we view it, tbe case before us is not different in law and effect from what it would have been if Baldridge himself had drawn the drafts, and we will so treat it, and discuss the principles of law involved upon that theory.

In Gale v. Chase Nat. Bank, 104 Fed. 214, 43 C. C. A. 496, in which Lamson v. Beard is cited with approval, the court held tbat a cashier of a bank, as such, has no autbority to issue cashier’s drafts to bis own order in payment of bis individual debts, and a creditor accepting such drafts so drawn takes the risk of such lack of authority; and, to warrant the conclusion that he had implied authority so to do from the directors, a settled course of business covering years must be shown in which the officer had exercised such authority. An officer of a bank is not presumed to have authority to bind the bank in a transaction involving his personal interests and liability, and one who seeks to bind the bank must prove actual authority before he can prevail. Bank v. Parmalee, 95 U. S. 557, 24 L. Ed. 490; Moores v. Bank, 111 U. S. 156, 4 Sup. Ct. 345, 28 L. Ed. 385; Hier v. Miller, 68 Kan. 258, 75 Pac. 77, 63 L. R. A. 952; 1 Moore on Banks and Banking, pp. 211 and 234.

Appellee cites a number of cases in support of the contention that it was not charged with notice of any want of power in Presley to issue these drafts for the purpose for which they were used, among which are Goshen National Bank v. State, 141 N. Y. 379, 36 N. E. 316; Phillips v. Bank, 140 N. Y. 556, 35 N. E. 982, 23 L. R. A. 584, 37 Am. St. Rep. 596; Bank v. Peck, 180 Ind. 649, 103 N. E. 643; Pemiscot County Bank v. Ward Co., 135 Tenn. 426, 186 S. W. 598; Swift v. Smith, 102 U. S. 442, 26 L. Ed. 193; Armstrong v. Bank, 133 U. S. 433, 10 Sup. Ct. 450, 33 L. Ed. 747.

In the Goshen Bank Case, perhaps the strongest in appellee’s favor, the New York Court of Appeals held, in an opinion by Justice Peclcham, now on the United States Supreme Court, that the bank could not recover from the state the proceeds of a draft drawn by the cashier in payment of his individual taxes, the receiving officer of the state having no knowledge of the fraudulent use of the bank’s funds for this purpose. There the learned judge said:

“We think the question as to whether the state was a holder of the draft for value or not does not arise in this case. Murray, as county treasurer, was behind in his payment of the taxes due from Orange county to the state. In order to discharge his obligation, he transmits the draft in question. The state, through its officer, receives it, and presents it to the bank upon which it is drawn, and that bank pays it; and the state, having received the money, thereby discharges the obligation of Murray, and the taxes due from Orange county are thereby paid. The transaction is done, and it cannot be that the drawer of the draft that has thus been paid can open up the whole, and claim to recover back the money which the state received in payment of the taxes due it. If the cashier, instead of sending this draft, had taken the money directly from the bank, and paid the same in satisfaction for the amount due for the taxes, I think no one would contend that the bank could recover it back from the state on the ground that the act of the cashier (who was also county treasurer) in taking the money was a fraud upon it, or even a felony, and that the state had parted with no value at the time of the receipt of the money.”

Perhaps the Goshen Bank Case may be differentiated from the one before us in several particulars, two of which may be mentioned, to wit: (1) It does not appear to have been a judgment upon peremptory instruction. It was an appeal from an award of nothing on a claim filed by the bank with the State Board of Claims. While we have not access to the New York act creating this board, and defining its powers and limitations, yet the general rule must be recognized that the sovereign state cannot be sued or held liable in the courts of justice save in such cases as it has itself consented to be made liable. Locke v. State, 140 N. Y. 480, 35 N. E. 1076. (2) The draft in the Goshen Bank Case was sent to a distant creditor; here it is delivered to a payee directly. This distinction is perhaps recognized in Lamson v. Beard, supra. In the instant case there appears no reason if Bald-ridge had the necessary funds to his own credit in the Savings Bank, with which to pay the $50,000, that he should not have given his personal check on the Savings Bank, rather than to use the medium of bank drafts drawn on the New York and St. Louis banks.

But if the Goshen Bank Case cannot be differentiated from the instant case because of the difference as to the facts and circumstances, then we think that in effect the Goshen Bank Case has been overruled by later decisions of the New York court. Ward v. City Trust Co., 192 N. Y. 61, 84 N. E. 585; Rochester & Charlotte Turnpike Road Co. v. Paviour, 164 N. Y. 281, 58 N. E. 114, 52 L. R. A. 790, and other cases cited in Lanning v. Trust Co., 137 App. Div. 722, 122 N. Y. Supp. 485. In the last case it is said:

“One who receives from an officer of a corporation its money or property in payment of his personal debt does so at his peril, and if the person receiving the same knows, or facts are presented which, if acted upon, would disclose, that such officer was thereby appropriating the funds of the corporation, he is liable ■ to it for the amount so received [citing authorities]. The defendant knew it was receiving a check' of the corporation in payment of Twining’s individual indebtedness. Does the fact that it was not signed by Twining, but by another officer1, under the facts and circumstances here presented, take the case out of the general rule? I think not.”

In Ward v. City Trust Co., supra, the president of a corporation delivered to the defendant a check payable to the order of the corporation, indorsed by himself as president, in payment of the individual debt of himself and another officer. The court, in reversing a judgment for defendants, said:

“The effect of such notice was to put the trust company upon inquiry to see whether it was about to accept money from one to whom it did not belong in payment of its own claim. The presumption arising from the face of the check was that it belonged to the Hartman Company, and that its president had no right to use it to pay his personal debt. The purpose of the law in exacting inquiry under such circumstances is to see whether the apparent situation is the actual situation; or, in other words, whether facts exist to rebut the presumption.”

In Lamson v. Beard, supra, it is stated that “unusual and special authority” was given the cashier in the Goshen Bank Case to sign the draft on the bank’s funds in payment of his personal indebtedness. In Gale v. Chase Nat. Bank, supra, the federal Circuit Court of Appeals construes the Goshen Bank Case as being one showing that the cashier had express authority to draw his own order upon the bank’s funds upon the same terms as he would for a customer who had paid therefor.

In the Tennessee case of Pemiscot Bank, supra, also relied on by appellee, the court recognized the rule that a bank officer is, in the absence of express authority, without power to bind his corporation by a draft drawn on its funds in payment of his personal debt, for there the court said:

“A cashier, as such, has no implied power to draw such drafts in his own favor, or in favor of a creditor in payment of his own debts; and a person who accepts a draft, drawn by a cashier, payable to himself or used in payment of the individual indebtedness of himself, is put on notice that the fiduciary is discharging his own obligation with the funds of his principal, the bank, and the recipient is not to be treated as an innocent holder of the draft or its money product, and may be called to account for the proceeds by the bank.”

This last-cited case questions the Goshen Bank Case holding as an announcement of a general rule, even in New York, and refers to later New Xoyk cases, one opinion, being by Judge Peekham himself, seeming to limit the holding in Goshen Bank Case to the peculiar facts there shown.

Without further prolonging the discussion upon this one issue, the majority of us, at least, are of the opinion that the court erred in giving the peremptory instruction for the defendant, and that, unless the facts sustained defendant’s plea of estoppel, judgment should have been rendered for plaintiff. The evidence upon this issue does not seem to have been fully developed. At the time of trial Noah Harding, who was active vice president of the Ft. Worth National Bank at the time of the transaction in controversy, and who had been appointed liquidating agent for the State National Bank, was dead. He had been one of the representatives of the Ft. Worth National Bank in the negotiations between it and Baldridge, and was one of the officers of said bank who was present at the time the deal was consummated by the issuance of the two drafts in the aggregate sum of $50,000. Baldridge was dead. Thus death had claimed perhaps the two principal parties in the negotiation. The evidence is not very clear as to who constituted the directors, other than Baldridge, Presley, and Alexander, of the Savings Bank at the time of this transaction and up to the time of the death of Baldridge. Nor is it shown to a satisfactory definiteness whether said directors, other than the three mentioned, knew of the nature of the transaction, and that Baldridge had in fact used the funds of the Savings Bank to pay his individual debt, or that the amount of said drafts had been charged on the books of the Savings Bank to the charter account. It is further somewhat' uncertain as to whether a directors’ meeting of the Savings Bank was called or had during the some 16 months intervening between the transaction in question and the closing of the bank.

The assent or approval of a corporation to acts done on its account may be inferred in the same manner that the assent of a natural person may be, and it is well settled that where a corporation, with full knowledge of the unauthorized act of its officers or agents, acquiesces in and consents to such acts, it thereby ratifies them, especially where the acquiescence results in prejudice to a third person. It would seem that in order for acquiescence to amount to ratification, without knowledge of the unauthorized act, it should generally appear that the party dealing with the unauthorized officer or agent should have been prejudiced, damaged, or misled thereby. 7 Ruling Case Eaw, § 666. But it is said in Hammond v. Hopkins, 143 U. S. 250, 12 Sup. Ct. 427, 36 L. Ed. 145, Mr. Chief Justice Fuller, speaking for the Supreme Court:

“No rule of law is better settled than that a court of equity will not aid a party whose application is destitute of conscience’, good faith, and reasonable diligence, but will discourage stale demands, for the peace of society, by refusingto interfere where there have been gross laches in prosecuting- rights, or where long acquiescence in the assertion of adverse rights has occurred. The rule is peculiarly applicable where the difficulty of doing entire justice arises through the death of the principal participants in the transactions complained of, or of the witness or witnesses, or by reason of the original transactions having become so obscured by time as to render the ascertainment of the exact facts impossible.”

In Fifth National Bank v. Iron City National Bank, 92 Tex. 436, 49 S. W. 368, by direction of plaintiff’s cashier, defendant applied plaintiff’s deposit to payment of such cashier’s personal debt to plaintiff, and, returning him the note so paid and collateral held to secure it, sent plaintiff, at the end of the month, a statement showing such application of its deposit. To this application no complaint was made by plaintiff until nearly a year later, when suit was brought for the money so misapplied, at a time when the cashier was insolvent and had become fugitive from justice. The Supreme Court affirmed the judgment of the Court of Civil Appeals for the Fourth District, which court had reversed the judgment of the trial court overruling plaintiff’s plea that the defendant was estopped from denying the authority of its cashier to apply funds belonging to- the defendant bank, and deposited with the plaintiff bank, to the payment of- the cashier’s individual obligation. After stating that, upon the application! of the deposit of the defendant to its cashier’s individual debt, plaintiff returned to said cashier the collateral securing his note, and also £ent to the defendant hank a statement showing said application of the funds, which statement was later found in the vaults of the defendant bank, with its booltkeeper’s “O. K.” on it, the court says:

“The rale of law is well settled that it became its (defendant’s) duty to examine same within a reasonable time and notify the San Antonio bank if it questioned the authority of Richardson to have said notes charged to its account, as it appeared from the face of said statement had been done; and that its failure to do so will estop it from denying such authority, if such failure has operated to the prejudice Qf the San Antonio bank.”

It was contended there, as here, by appellant, that the defaulting officer was insolvent, and that the bank which had accepted the check in payment of the cashier’s personal indebtedness could not have recovered against the cashier. The court discussed this phase of the ease in the following words:

“It may be conceded, as contended by the Court of Civil Appeals, that Richardson owned no property, and yet it cannot be said as a matter of law that by prompt and prudent action the ,San Antonio Bank could not have obtained from him anything. Debts are often collected from persons who really owe more than the value of their property.”

It was said in Seale v. Baker, 70 Tex. 283, 289, 7 S. W. 742, 744 (8 Am. St. Rep. 592):

“Directors of banking corporations occupy one of the most important and responsible of all business relations to the general public. By accepting the position and holding themselves out to the public as such, they assume that they will supervise and give direction to the affairs of the corporation, and, impliedly, contract with those who deal with it, that its affairs shall be conducted with prudence and good faith. * * * It is the duty of directors to know the condition of the corporation whose affairs they voluntarily assume to control, and they are presumed to know that which it is their duty to know, and which they have the means of knowing.”

The testimony of R. E. Harding, at the time of the transaction assistant cashier of appellee bank, and at the time of suit the vice president thereof, supports appellee’s contention that had it been notified by the directors of the Savings Bank that the application of the latter’s funds to the payment of Baldridge’s obligation was not authorized, that appellee could have, in part at least, recouped itself for any loss sustained out of funds of Baldridge on deposit in the Ft. Worth National Bank, and out of property, including the Erath county ranch, owned by Baldridge. We think the record discloses a condition of evidence that would have authorized and required the court to submit to the jury the question of estoppel pleaded by defendant.

For the reasons stated, the judgment of the trial court is reversed and the cause remanded for further proceedings not in conflict with this opinion.

Reversed and remanded.
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