Am. Exch. Bank of Henryetta v. Arcady Farms Milling Co.

• Decision Date: 12 September 1933
• Docket Number: Case Number: 20758
• Citation: 24 P.2d 1002,165 Okla. 56,1933 OK 449
• Parties: AMERICAN EXCHANGE BANK OF HENRYETTA v. ARCADY FARMS MILLING CO.
• Court: Oklahoma Supreme Court

1933 OK 449

24 P.2d 1002

165 Okla. 56

AMERICAN EXCHANGE BANK OF HENRYETTA v. ARCADY FARMS MILLING CO.

Case Number: 20758

Supreme Court of Oklahoma

Decided: September 12, 1933

Syllabus

¶0 1. Banks and Banking--Whether Collecting Bank Debtor or Trustee as to Proceeds Dependent Upon Agreement as to Disposition of Proceeds.

Whether a bank, as to the proceeds of paper held by it for collection, is a debtor or a trustee, depends upon the agreement as to the disposition of the proceeds.

2. Same--Implied Agreement as to Whether Collection Item Deposited for Credit or for Remittance.

Whether an item is deposited for collection and credit, or for collection and remittance, in the absence of an express agreement, may be implied from the course of dealing between the parties, from the nature of the transaction, or from any other circumstance which discloses whether they intended credit or remittance.

3. Same--Insolvency of Collecting Bank After Proceeds Commingled With Bank Assets--Trust Fund Held not Created Against Bank Commissioner Taking Over Assets Unless Cash on Hand.

Where a bank receives a draft for collection, and after the draft has been collected and the funds derived from said collection have been commingled with the assets of said bank, and thereafter the assets of said bank are taken over by the State Bank Commissioner as an insolvent bank, no trust relation is created which will authorize recovery against the Bank Commissioner or its assignees in the absence of proof showing that at the time said collections were so made the actual cash on hand in the insolvent bank was equal to or in excess of the collection so handled. No trust fund will be established against said Bank Commissioner unless it also be proved that at the time said Bank Commissioner took over the assets of said failed bank, said bank had cash on hand, since the general assets of the bank are not available as a trust fund to satisfy the demands of the person for whom the collection is made.

Error from District Court, Okmulgee County; P. L. Gassaway, Assigned Judge.

Action by the Arcady Farms Milling Company against the American Exchange Bank of Henryetta and another. Judgment for plaintiff against defendant named, and it brings error. Reversed and remanded.

Hummer & Foster, for plaintiff in error.

Geo. C. Beidleman, for defendant in error.

BAYLESS, J.

¶1 The Arcady Farms Milling Company, a corporation, instituted an action in the district court of Okmulgee county, Okla., on the 26th day of November, 1926, against Citizens Bank of Henryetta, Okla., and American Exchange Bank of Henryetta, Okla., corporations. The trial of the case resulted in a judgment in favor of the plaintiff below and against American Exchange Bank of Henryetta, Okla., a corporation, from which this appeal resulted, and the parties will be referred to herein as they appeared in the trial court. No judgment seems to have been rendered against Citizens Bank of Henryetta, Okla., and whenever said bank is mentioned herein it is in connection with the evidence in the case and not with reference to any legal liability.

¶2 The petition of the plaintiff alleged that on or about the 16th day of November, 1925, it sold to an elevator company at Henryetta one car of feed at an agreed price of $ 1,175.63, and sent through the Merchants' Bank of Kansas City a bill of lading with draft attached for said carload of feed; that said Merchants' Bank in Kansas City forwarded said draft and bill of lading to the Citizens Bank of Henryetta for collection; that on November 18, 1925, the Citizens Bank of Henryetta collected said draft from said elevator company and delivered to it the draft and bill of lading; that thereafter, and on or about December 4, 1925, the Citizens Bank was declared insolvent by the State Bank Commissioner, and its assets were taken over by him for liquidation; that thereafter, and about the 15th of March, 1926, the American Exchange Bank of Henryetta was organized for the purpose of taking over the business of the Citizens Bank of Henryetta, and through some contractual arrangement, the exact nature of which is unknown to the plaintiff, the defendants herein took over the assets of the failed bank and assumed its obligations and had paid all of them except this plaintiff; that after collecting said draft the Citizens Bank converted the money so received to its own use and turned over and delivered the same to the defendant herein; that all of this was without the knowledge or consent of the plaintiff; that the taking over of the money belonging to this plaintiff was wrongful and violated its rights, and that by reason of the fraudulent transfer of the assets of the failed bank to the defendant herein the defendant herein became bound and liable to pay the obligation due this plaintiff; and prayed for judgment accordingly. To this petition the defendant filed an answer in the form of a general denial, and the case was tried to the court without a jury.

¶3 The court having heard the evidence and passed upon it, and having determined the issues in favor of the plaintiff, the findings of the court are entitled to the same weight and consideration that would be accorded the findings of a jury, and it is our duty to search this record to see whether or not there is some competent evidence reasonably tending to sustain the judgment in favor of the plaintiff.

¶4 A consideration of the plaintiff's petition makes it difficult to determine whether the action is one to recover the money upon the contract of assumption, or is an action in conversion to recover the money held in trust. However, from the brief filed by the plaintiff, we gather that it contends as follows: A draft sent to a bank for collection constitutes the collecting bank the agent of the forwarder, and the money when collected by the bank is not its property, but is the property of the forwarder, and is held in trust for the forwarder. It further contends that it has the right to trace such trust funds into the hands of the State Bank Commissioner and into the hands of the person to whom the State Bank Commissioner transferred such trust fund, and may recover it wherever it can be found and identified. The defendant contends that when the State Bank Commissioner takes possession of a failed bank for the purpose of liquidating it, his position is analogous to that of a receiver and is governed by the same rules of law, and that a sale of the property of a failed bank by the State Bank Commissioner, with the approval of the district court having jurisdiction, is analogous to a receiver's sale and passes title to the purchaser free and clear.

¶5 We will consider...