Gulley v. Wisdom

• Decision Date: 28 February 1934
• Docket Number: No. 6937.,6937.
• Citation: 69 F.2d 495
• Parties: GULLEY, State Tax Collector, v. WISDOM.
• Court: U.S. Court of Appeals — Fifth Circuit

69 F.2d 495 (1934)

GULLEY, State Tax Collector, v. WISDOM.

No. 6937.

Circuit Court of Appeals, Fifth Circuit.

February 28, 1934.

Chalmers Potter, of Jackson, Miss., for appellant.

Fulton Thompson, of Jackson, Miss., and Hugh V. Wall, of Brookhaven, Miss., for appellee.

Before BRYAN, SIBLEY, and HUTCHESON, Circuit Judges.

SIBLEY, Circuit Judge.

Gulley, as tax collector, acting for the city of Brookhaven under a state law, sought to establish a preferential lien or priority upon the assets of the failed First National Bank of Brookhaven in the hands of its receiver for the city's deposits amounting to $33,162.92. The essential facts are that in March, 1929, the city authorities ordered that the bank be selected as a city depository for one year and until a successor was qualified; the bank agreeing to pay 2 per cent. interest on daily balances. The order made no reference to the giving of security. January 6, 1931, the bank having proposed to pay 2 per cent. interest and to protect the deposit by pledging bonds as required by law to an amount 10 per centum greater than the maximum intended deposits, the city authorities again designated it "an official depository for the term of one year, when duly qualified by law, and until its successor is qualified"; 2 per cent. interest on daily balances being again stipulated. At this time the city had on deposit in the bank some $28,000. By January 12, 1931, the deposit had been increased to $33,162.92. The bank did not pledge any bonds, and on January 12, 1931, failed, having on that day taken in deposits of about $30,000, including $15,000 of cash of which none came from the city, and having suffered withdrawals of $60,000. The receiver got in cash $15,475.50, which was the lowest cash balance on any date, and got some $12,000 from correspondent banks. The deposit in question arose from taxes deposited by the city tax collector. No evidence at all was given as to what sort of funds the tax collector in fact put into the bank at any time, nor what disposition the bank in fact made of any of them. The contention for the city is that its public money under the law of Mississippi is a trust fund and entitled to prior payment; that, if it must be traced, this is successfully done through the presumption that the tax officer collected and deposited only cash, as he should have done, and through the further presumption that the bank set that cash aside and used it last, so that at least the $15,475.50 remaining when the bank closed is to be esteemed the public money. The District Court held against these contentions.

The intent of the National Bank Act as specially expressed in 12 USCA § 194 is that, after the redemption of an insolvent bank's circulating notes is provided for, the remaining claims against it shall receive only pro rata dividends. A claimant who asks more must show a valid lien or title existing before the insolvency of the bank. When, as here, the claim is based on the delivery of money to the bank as a deposit and it is asserted that under the circumstances the bank got no title to the money but took it as a bailee or trustee, the claimant must, as against the receiver and the other claimants whom he represents, show both a right to reclaim in specie the deposited money and that the receiver got that very money or that he got a fund into which the bank had mingled and confused it, and which still contained it when the fund passed to the receiver. Pottorff v. Key (C. C. A.) 67 F.(2d) 833; Hancock County v. Hancock National Bank (C. C. A.) 67 F.(2d) 421. Failing to do this, he fails to show any better right to have the money in the receiver's hands than other claimants have. Whatever may be the varying views of the state courts,¹ this is the established doctrine in the federal courts, and their views must prevail in the distribution of the assets of a national bank, because they are the final interpreters of the federal statute which is part of the supreme law of the land.

The contract with the bank contemplated that the bank should use the deposited money, paying interest on it, and secure it by a pledge of bonds as provided by the Mississippi statutes. Under those statutes, a depository on qualifying by giving security is issued a commission which states the amount of deposit it may accept. Deposits lawfully made in a bank thus commissioned create the relation of debtor and creditor, and the public depositor must look only to its security, standing otherwise as a general creditor. Potter v. Fidelity & Deposit Co., 101 Miss. 823, 58 So. 713; Bank of Commerce v. Clark, 114 Miss. 850, 75 So. 595. A deposit received without qualifying (Bank of Commerce v. Gulfport, 117 Miss. 591, 78 So. 519; Love v. Murry, 135 Miss. 749, 100 So. 277), or in excess of the amount of the qualification (Powell v. Board of Sup'rs of Tunica County, 107 Miss. 410, 65 So. 499, Ann. Cas. 1916B, 1262), falls under Mississippi Code 1930, § 2914: "All money deposited in a bank, or with any depository, by or for a tax collector, or other officer having the custody of public funds, state, county or municipal * * * whether the same be deposited in the name of the officer, as an individual or as an officer, or in the name of any other person, is prima facie public money and a trust fund, and is not liable to be taken by the general creditors of the officer or by the creditors of the depository." The section then directs the bank examiner who takes charge of a failed bank to repay in full such a deposit as far as possible from the first money coming into his hands. The quoted part of this section was at first construed to prevent the title to the public funds from passing to an unqualified bank, so that on tracing them they might be recovered. Fogg v. Bank of Friar's Point, 80 Miss. 750, 32 So. 285; Metcalfe v. Bank, 89 Miss. 649, 41 So. 377. But in Commercial Bank v. Hardy, 97 Miss. 755, 53 So. 395, it was declared unnecessary to trace and that a general preference against all assets was established by the section. This ruling was repeated in Green v. Cole, 98 Miss. 67, 54...