Akin v. Jones

• Decision Date: 17 January 1894
• Citation: 27 S.W. 669,93 Tenn. 353
• Parties: AKIN v. JONES et al.
• Court: Tennessee Supreme Court

27 S.W. 669

93 Tenn. 353

AKIN v. JONES et al.

Supreme Court of Tennessee.

January 17, 1894

Appeal from chancery court, Maury county; A. J. Abernathy Chancellor.

Action by A. N. Akin, trustee, against W. J. Jones and others creditors of the Bank of Columbia, for a settlement of the trust. From a decree adjudging certain priorities complainant and defendants J. W. Manier & Co. appeal. Affirmed on defendants' appeal, and on complainant's appeal reversed.

Sam Holding, E. H. Hatcher, and Geo. T. Hughes, for complainant.

J. C McReynolds, for defendants.

McALISTER J.

The question presented in this record, stated in general terms, is whether the holder of two certain checks, drawn by the Bank of Columbia prior to making a general assignment, is entitled to payment in full out of certain funds in the hands of the assignee of said bank, or whether said check holder is merely a general creditor of said bank, and, as such, only entitled to a ratable share in the distribution of its assets. It appears from the record that on the 17th October, 1891, the Bank of Columbia made a general assignment for the benefit of its creditors. The trustee named in the deed having declined to serve, A. N. Akin was duly appointed, and has been administering the trust. The present bill was filed by the trustee against the creditors of said bank for the settlement of all matters growing out of said trust, and for the adjudication of all questions of priorities.

The defendants J. W. Manier & Co. are merchants, doing business in Nashville, and on about September 29, 1891, inclosed to the Bank of Columbia a draft on Massey & Son, of Lipscomb, Tenn., for the sum of $137.20, drawn by Manier & Co. to their own order, and indorsed by said firm to the Bank of Columbia for collection. Massey & Son, the drawees of said draft, on the 15th of October, 1891, gave their check on the Bank of Columbia in payment of said draft, which overdrew their account in said bank in the sum of $102.12. It appears that Massey & Son had to their credit in said bank, at the time of drawing the check, the sum of $35. The draft was canceled by the bank, and delivered up to Massey & Son. Manier & Co., in their letter inclosing the draft for collection, had directed the bank to remit the proceeds in New York exchange. On the 16th October, 1891, the Bank of Columbia sent to Manier & Co. its check on the Merchants' National Bank of Louisville, covering proceeds of draft on Massey & Son. Manier & Co. received said check October 17th, and immediately telegraphed to the Merchants' National Bank of Louisville to know if this check would be paid, and were informed that it would not be paid. It appears that on the same day the Bank of Columbia made a general assignment for the benefit of its creditors. Manier & Co. on same day returned this check to Bank of Columbia, informing its cashier they would claim payment in full out of the assets of said trust. It further appears that at the time Manier & Co received the draft on the Merchants' National Bank of Louisville, Ky., there was to the credit of the bank of Columbia in said Louisville bank something over $2,250. All drafts drawn on the Louisville bank by the Bank of Columbia subsequent to October 14, 1891, were refused payment when presented. Some time after the assignment, the Merchants' National Bank of Louisville, with the assent of the trustee of the Bank of Columbia, but without the knowledge of Manier & Co., paid out of the funds to the credit of the Bank of Columbia such drafts as had been presented to it, in the order of presentation, until the whole fund was exhausted. The telegram sent by Manier & Co. to the Merchants' National Bank was received, and payment of their check refused, before the presentation of many of the drafts which were afterwards paid. No offer has been made to pay the draft held by Manier & Co., and there are now no funds with which to pay it to the credit of the Bank of Columbia in the Louisville bank. It further appears that, after the affairs of the bank of Columbia went into the hands of the assignee, Massey & Co. paid their overdraft, amounting to $102.12, in full to said assignee. This is a full statement of facts appearing in the record with respect to the check on the Merchants' National Bank of Louisville given by the Bank of Columbia to Manier & Co. for the proceeds of their draft on Massey & Son.

The other claim of Manier & Co. is based upon the following statement of agreed facts: It appears that on or about September 8, 1891, Manier & Co. inclosed to the Bank of Columbia, for collection, the note of W. K. Stephens, dated July 3, 1891, payable to the order of Manier & Co., and due October 1st thereafter, for the sum of $195.95. The bank was directed to remit the proceeds of the note to Manier & Co. in New York exchange. On the 13th of October, 1891, W. K. Stephens, the maker of this note, paid it by an overdraft on the Bank of Columbia. At the time his check was given, the account of Stephens was overdrawn in the sum of $1,100, and had remained overdrawn since May 31, 1891. On the 13th October, 1891, the Bank of Columbia sent to Manier & Co. their check on the Importers' & Traders' National Bank of New York for the sum of $195.45, with the advice that it was given for the amount collected on the Stephens note. This check was received in due course of mail by Manier & Co., and at once forwarded by them to New York, and presented for payment. Payment was refused, and thereupon the check was protested and all proper notices given. Manier & Co. immediately notified the trustee for the Bank of Columbia, and made claim on him for the full amount of the check. As already stated in connection with the Massey & Son draft, the Bank of Columbia, on the 17th of October, 1891, made a general assignment for the benefit of its creditors. It further appears that, when the check was presented to the Importers' & Traders' National Bank of New York, there was to the credit of the Bank of Columbia in the New York bank sufficient funds to meet it. Subsequent to the presentation of defendants' check, the Importers' & Traders' National Bank paid to the trustee of the Bank of Columbia the balance to the credit of said bank, and this amount the trustee now holds, as a separate fund, subject to the orders of the court in this case. It should be stated that, after the affairs of the bank went into the hands of the assignee, it was ascertained that Stephens' account was overdrawn on October 16th (the last day the bank transacted business) in the sum of $1,400, and that it had been overdrawn more than $300 since July 31, 1891. The assignee, acting upon the advice of counsel, afterwards compromised and settled Stephens' overdraft, realizing something more than 50 per cent. of same which went into the trust fund.

Upon the foregoing facts, the chancellor decreed, viz.: First. That Manier & Co. had the right to repudiate the check on Louisville given by the Bank of Columbia in payment of the Massey & Son draft, in violation of instructions to send New York exchange. Second. That in respect to the amount of Massey & Son's overdraft on the Bank of Columbia, to wit the sum of $102.12, which was made by paying to the said bank the draft of Manier & Co. on Massey & Son, and which was collected by the trustee of said bank after its failure, as to this amount, Manier & Co. were entitled to be paid in full, and in preference to the general creditors of said bank. Third. But as to the sum of $35, which Massey & Son had on deposit when they gave their check to the bank for the draft of Manier & Co., and which, therefore, the bank actually received before its failure, as to this amount Manier & Co. were not entitled to be paid in full in preference to the general creditors of said bank, but were only entitled to receive their pro rata. Fourth. That, as to the Stephens collection, Manier & Co. accepted the check on the Importers' & Traders' National Bank in payment of said collection, but that said check was not an equitable assignment pro tanto of the funds of the Bank of Columbia in the hands of the New York bank, and which afterwards came into the hands of the trustee of the Bank of Columbia; and that, therefore, Manier & Co. were only general...