Allen Dudley & Company v. First National Bank of Omaha
| Decision Date | 29 January 1932 |
| Docket Number | 27931 |
| Parties | ALLEN DUDLEY & COMPANY v. FIRST NATIONAL BANK OF OMAHA: FIRST STATE BANK OF LARAMIE, APPELLANT: RALPH BROKAW ET AL., APPELLEES |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Douglas county: FRANCIS M DINEEN, JUDGE. Affirmed.
AFFIRMED.
Syllabus by the Court.
Where a bank has innocently taken drafts from a depositor who was not the true owner thereof, and applied the same upon a debt due it from such depositor, but has not changed its position in any way on account of the taking of such drafts, equity and good conscience require that the bank should account to the true owner for the proceeds of such drafts.
Appeal from District Court, Douglas County; Dineen, Judge.
Action by Allen Dudley & Co. against the First National Bank of Omaha and others, impleaded with the First State Bank of Laramie, Wyoming, wherein Ralph Brokaw and others intervened. From the judgment rendered, the impleaded defendant appeals.
Affirmed.
Finlayson Burke & McKie, for appellant.
Kennedy, Holland & DeLacy and McConnell & Pence, contra.
Heard before GOSS, C. J., DEAN and EBERLY, JJ., and RAPER and RYAN, District Judges.
This was an action instituted by Allen Dudley & Company, a live stock commission firm of Omaha, to enjoin the First National Bank of Omaha from paying to the appellant, First State Bank of Laramie, Wyoming, the proceeds of a draft made payable to the latter bank and collected from the plaintiff, Allen Dudley & Company, through the First National Bank of Omaha, upon the ground that others claim an interest in the proceeds of the draft. The appellant, appellees and others were made parties defendant. The appellees, Ralph Brokaw, Edith Brokaw and Rosenlieb & LeBeau, filed a petition of intervention, in which they claimed the proceeds of the draft in the amount of $ 1,970, as proceeds of cattle which they had sold to the defendant Dwight O. Herrick. The contest was solely between the interveners, who for convenience will be referred to as the appellees, and the appellant, First State Bank of Laramie, Wyoming, as to who was entitled to the $ 1,970.
There is practically no dispute in the evidence as to the facts in the case, except as to the knowledge of the appellant's officers as to the source of the money in question. The appellant is a banking institution, organized and existing under the laws of the state of Wyoming, with its banking house at Laramie, Wyoming. The appellees in this case, Ralph Brokaw, Edith Brokaw and Rosenlieb & LeBeau, are ranchmen and cattle raisers, living approximately fifty miles northwest of Laramie, Wyoming. Dwight O. Herrick is, and was for many years prior to November 16, 1929, a cattle buyer and ranchman, living in Laramie, Wyoming, and the owner of a ranch upon which he ran cattle, located twenty-four miles west of Laramie, Wyoming, and it also appears quite clearly from the evidence that he was on November 16, 1929, and had been for some years insolvent.
The record discloses that the defendant, Dwight O. Herrick, had been indebted to the appellant in approximately the sum of $ 26,600 for several years, which indebtedness had been renewed from time to time and on which very little had been paid in the fourteen years it had been running. This indebtedness was evidenced by notes and a chattel mortgage on certain cattle belonging to Dwight O. Herrick.
It is further shown by the record that on or about the 18th day of November, 1929, Dwight O. Herrick had a balance in his checking account with appellant of approximately $ 2,779.56; that, on the 15th day of November, 1929, Herrick purchased some cattle from one Ole Ericksen, a resident of Albany county, Wyoming, and gave as a down payment therefor a check in the sum of $ 500. This check was presented to the appellant and paid on November 16, 1929. On this same day Herrick purchased some cattle from the appellees for the sum of $ 2,170.29, which sum was to be paid to the appellees at Rock River, Wyoming, upon delivery of the cattle. The cattle were delivered with a bill of sale therefor, and Herrick delivered to Ralph Brokaw a check in the sum of $ 1,439.49, drawn upon the appellant bank, and gave Archie H. LeBeau for Rosenlieb & LeBeau a check in the sum of $ 730.80, in payment for the cattle purchased from them. This check was also drawn upon the appellant bank. This transaction took place about noon on November 16, 1929, at the town of Rock River, approximately forty miles north of Laramie. The appellant bank closed its place of business on Saturday, at the hour of 1 o'clock p. m., and said checks could not be presented for payment on that day.
The record further disclosed that all of the cattle purchased by Herrick were consigned to the plaintiff, Allen Dudley & Company, at South Omaha. After purchasing the cattle, Herrick returned to Laramie and drew two sight drafts upon the plaintiff, Allen Dudley & Company, which were made payable to the appellant bank, one for the sum of $ 9,347, which was drawn against the cattle purchased from Ole Ericksen, and the other in the sum of $ 1,970, which was drawn against the cattle purchased from the appellees. These drafts were mailed to the appellant bank, with instructions to deposit the same in his checking account.
The record goes on to show that on November 17, 1929, which was Sunday, Charles W. DeKay, cashier of the appellant bank, received the letter inclosing the drafts and took the same to the bank and mailed them to the appellant's correspondent, the First National Bank of Omaha, for collection.
The further facts are revealed that, on Monday, November 18, 1929, the appellant bank applied the balance in Herrick's account, including the credit given for the two drafts received by it on Sunday, totaling the sum of $ 14,096.56, upon the past due indebtedness of said Herrick, which amounted to $ 26,600. After this amount had been applied upon his indebtedness, there was nothing left in Herrick's account out of which any outstanding checks might be paid.
On Sunday, November 17, 1929, the appellees mailed the checks received by them from Herrick in payment for cattle to the First National Bank of Laramie, Wyoming, with which they did business, which, on the 18th of November, 1929, presented the checks to the appellant bank for payment and payment was refused. The First National Bank of Laramie notified the appellees to this effect, and on the following day, Tuesday, November 19, 1929, Ralph Brokaw and Archie H. LeBeau came to Laramie and the Brokaw check was again presented to the appellant bank for payment and payment was again refused.
Tuesday morning, November 19, 1929, the defendant Herrick went to the appellant bank and there talked with Charles W. DeKay, the cashier, concerning the drafts. At that time DeKay did not advise Herrick of the action taken the day before, in crediting his balance, together with the amount of these drafts, upon his indebtedness, but told him he had wired Omaha, inquiring about the payment of the drafts, and that the checks could not be paid until he was sure the drafts would be paid, and added: "We have all day in which to pay them." It appears that the defendant Herrick also wired the plaintiff commission firm regarding payment of the drafts.
There is also disclosed in the record that the appellees and the First National Bank of Laramie also wired the plaintiff concerning the sight drafts and instructed them to institute this suit to enjoin the First National Bank of Omaha from paying over the proceeds derived from the sale of the cattle to the appellant bank. Charles W. DeKay, cashier of the appellant bank, testifies that he did not know, at the time he received the two drafts, that they were drawn against cattle which had been purchased by Herrick from the appellees; that he did not know they were so drawn, at the time he applied the balance, including the credit given for these drafts, upon Mr. Herrick's indebtedness; that the first information he had in that regard was when the checks to Brokaw and LeBeau were presented for payment. The appellees, however, take the position that the appellant bank knew the nature of Mr. Herrick's business, and that, if it did not know the real...
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