Union Electric Light & P. Co. v. Cherokee Nat. Bank, 10985.

• Decision Date: 28 January 1938
• Docket Number: No. 10985.,10985.
• Citation: 94 F.2d 517
• Parties: UNION ELECTRIC LIGHT & POWER CO. v. CHEROKEE NAT. BANK OF ST. LOUIS et al.
• Court: U.S. Court of Appeals — Eighth Circuit

94 F.2d 517 (1938)

UNION ELECTRIC LIGHT & POWER CO. v. CHEROKEE NAT. BANK OF ST. LOUIS et al.

No. 10985.

Circuit Court of Appeals, Eighth Circuit.

January 28, 1938.

James E. Carroll, of St. Louis, Mo., for appellant.

Ruby M. Hulen, of St. Louis, Mo., for appellees.

Before GARDNER, SANBORN, and THOMAS, Circuit Judges.

GARDNER, Circuit Judge.

This is an appeal from a decree dismissing a bill of complaint by which appellant sought a preference in payment from the assets of the appellee, an insolvent national banking association. The bank and its receiver were defendants below and are the appellees here. We shall refer to the parties as they were designated in the lower court.

The bank did business at St. Louis, Missouri. Prior to January 18, 1933, plaintiff had carried a general deposit or checking account with the defendant. About that time it ceased depositing any funds in the bank, but had left in its account about $1,300. This was at a time when many of the smaller banks were suspending business or closing their doors. On January 18, 1933, the president of the bank wrote plaintiff, stating that he had observed that plaintiff had discontinued making deposits and expressed the hope that the bank might look forward to a redepositing in the account. About January 20th, the treasurer of plaintiff went to the bank, taking with him a draft of an agreement which he proposed to submit to the bank. The president of the bank explained that due to the general bank crisis then existing, many of the bank's customers in the vicinity where plaintiff maintained a branch store and branch office would take notice of the fact that plaintiff had discontinued transacting business with it and this would have "an effect on the people, and the bank wanted to guard against any pressure and runs on the bank." Plaintiff's treasurer, following some discussion as to the terms upon which plaintiff might resume its relations with the bank, showed the bank president a copy of the written agreement which he had brought with him, and there was some conversation relating to payment or transfer of the deposit to plaintiff. Concerning this plaintiff's treasurer testified: "He (the bank's president) mentioned that there were a number of ways that could be brought down. He suggested that the most convenient thing for them would be by way of cashier's check. I told him we would have no objection to cashier's check, provided it would be understood that that represented our funds, that that was merely a method of getting our money to us."

A slight modification was made in the proposed agreement and as finally executed by the bank, with the approval of its board of directors, it provided that the plaintiff appointed the bank as its agent, "to collect and/or receive for the Company's account all sums of money due or payable to the Company from its agents, employees or debtors. * * * All funds so received by the Bank shall be promptly accounted for and remitted to the Company, in cash or exchange. The agent Bank's usual collection charges for its services in making such collections shall be paid promptly by the company upon statements rendered by the Bank.

"In the event of the agent Bank's failure to account for any funds received by it for the Company's account, the said funds shall be and remain the property of the Company, and if for any reason such funds cannot be identified all other assets of the Bank shall be impressed with a trust for the amount thereof, and the Company shall be entitled to a preferred claim upon such assets. The funds received by the agent Bank shall not be considered as a deposit with the Bank by the Company, and the Bank shall have no right or title with respect thereto. The funds, so received by the Bank as agent, shall not be subject to checks drawn by the Company. * * *

"The Company's funds held by the agent Bank shall at all times be kept separate as a special fund and never commingled with other funds of the Bank, nor shall the Bank at any time use, loan or borrow the same in any way.

"It shall, however, not be necessary for the Bank to keep the identical money received for the Company's account on hand, but moneys of an equal amount must always be maintained on hand as funds held by the Bank as agent belonging to the Company, and a special account thereof evidencing such fact shall at all times be maintained on the books of the Bank.

"Remittance of the proceeds of all collections made for the Company's account, whenever made by draft or check or by credit upon the books of another bank to the Company's credit, shall not be considered paid or returned to the Company until received by the Company in money, or by the actual and unconditional credit to the Company, upon the books of such other bank. * * *"

The balance which the bank had on deposit at the time of the execution of this agreement was withdrawn by check, and thereafter the general plan was followed of delivering to the bank cash of plaintiff, the deposit being evidenced by a special form of receipt in substantially the following form:

"Cherokee National Bank of St. Louis

"The Cherokee National Bank of St. Louis hereby acknowledges receipt of the items listed below and accepts the same as agent for Union Electric Light and Power Company, a corporation, under agreement dated January 24, 1933, and now on file, and agrees to transmit said items to said Company promptly in accordance with the terms and conditions of said agreement."

Then follows statement of the deposit, showing the nature of same, whether currency, silver, gold, or coupons.

Following the execution of the agreement, plaintiff's treasurer wrote to the manager of the branch store of plaintiff, who had charge of the funds for that establishment, advising him of the terms of the contract under which the company would make deposits with the bank. In this regard the instruction states:

"Accordingly Cherokee branch store may resume delivery of cash to...