Citizens'& Southern Bank v. Fayram

• Decision Date: 28 October 1927
• Docket Number: No. 5080.,5080.
• Citation: 21 F.2d 998
• Parties: CITIZENS' & SOUTHERN BANK v. FAYRAM.
• Court: U.S. Court of Appeals — Fifth Circuit

21 F.2d 998 (1927)

CITIZENS' & SOUTHERN BANK v. FAYRAM.

No. 5080.

Circuit Court of Appeals, Fifth Circuit.

October 28, 1927.

Philip H. Alston, of Atlanta, Ga. (Alston, Alston, Foster & Moise, of Atlanta, Ga., on the brief), for appellant.

Cam D. Dorsey and Chas. B. Shelton, both of Atlanta, Ga. (Dorsey, Shelton & Dorsey, of Atlanta, Ga., on the brief), for appellee.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

BRYAN, Circuit Judge.

This is an appeal from a decree rejecting the appellant bank's claim of right to set off a deposit against the depositor's indebtedness to it, and holding appellant liable to appellee as beneficial owner of the balance of such deposit.

Frederick Fayram intrusted his agent, Ben. D. Watkins, to collect the amount due on a mortgage, with instructions to pay the proceeds to D. C. Erwin for another investment. In pursuance of these instructions, Watkins received a check, payable to himself as agent, for $3,608.06, in satisfaction of the mortgage; but he indorsed the check and deposited it to the credit of Ben. D. Watkins Company in the appellant bank. On December 18 Watkins committed suicide, at which time there remained on deposit to the credit of his company, out of the check he had collected for Fayram, a balance of $3,549.11. On December 22 appellant credited that balance on a note for $61,500, which had not matured, as it was authorized to do by the terms of the note. Erwin was a vice president of the bank, and expected that Watkins would collect the amount due on the mortgage and deliver the check received in payment to him, but he testified that he did not know that the mortgage had been paid until after the deposit of the Watkins Company had been set off against its indebtedness. He also testified that he was an officer in the trust department, and was not in the commercial department, of the bank. There is no evidence that contradicts Erwin's testimony, or shows that he was chargeable with such knowledge or notice as would bind the bank. No new credit was extended after the deposit in question was made. Some checks were honored, as is apparent from the fact that the amount of the deposit was reduced; but the bank did nothing that it would not have done if the deposit had not been made, and so did not change its position to its disadvantage. The decree of the court in favor of appellee is for the balance of the deposit on hand at the time the account was closed.

Appellee's right to recover against the Watkins Company is clear and undisputed. The question is whether the same right exists to recover the balance of the deposit as against the bank, where the bank, although it had no notice...