American Bank of Alaska v. Johnson

• Decision Date: 01 October 1917
• Docket Number: 2815.
• Citation: 245 F. 312
• Parties: AMERICAN BANK OF ALASKA v. JOHNSON.
• Court: U.S. Court of Appeals — Ninth Circuit

245 F. 312

AMERICAN BANK OF ALASKA v. JOHNSON.

No. 2815.

United States Court of Appeals, Ninth Circuit.

October 1, 1917

Thomas A. McGowan, John A. Clark, and John Knox Brown, all of Fairbanks, Alaska, and Charles J. Heggerty and Knight &amp Heggerty, all of San Francisco, Cal., for plaintiff in error.

Herman Weinberger, of San Francisco, Cal., and Louis K. Pratt and Thomas A. Marquam, both of Fairbanks, Alaska, for defendant in error.

Before GILBERT and HUNT, Circuit Judges, and WOLVERTON, District judge.

HUNT Circuit Judge (after stating the facts as above).

There is little conflict in the testimony, and the facts are substantially as follows: Mitchell & Co., a partnership consisting of Thomas Mitchell, J. J. Fallon, and H. Fawcett had an account with the bank for some weeks before July 31 1913. By June 9, 1913, the firm owed about $1,500, besides a debt of about $400 to the bank. The first clean-up, on July 3, 1913, amounted to $1,904. This was turned into the bank, where the overdraft was then $1,400, and was credited to the firm. Checks were drawn against it, and again overdraft was made. The second clean-up, on July 16th, realized $2,280, and was also put in the bank to the credit of the firm, and checks were honored. The third clean-up was on July 30th, and was made subsequent to a telephone message from Brunning, cashier of the bank, advising the firm that it had no money and that notes and overdrafts were due, and that he (Brunning) had deposited his note for $500 to meet checks to reduce the overdraft. On the evening of July 31st, about 5 o'clock, after regular banking hours, Fallon, who had charge of the books and accounts, went to the bank with gold dust worth $3,750.14. The firm then owed over $13,000, of which it owed the bank, on notes and overdraft $4,096.14; the debt being for labor account checks, merchandise, and other things paid for by the bank between July 16th and 31st.

Fallon, in testifying as to the occurrences in the bank, said that he and Fawcett went to the bank about 5 o'clock and left the firm bank book and the gold dust, which was 'to be blown and credited the same as before'; that he went back in the evening, between 7 and 8 o'clock, and was told that the dust was not cleaned up, whereupon he said he would call in the morning; that the next morning, when he called, Mr. Brunning gave him the bank book and vouchers, and told him that he had been instructed to get all overdrafts in, and said, 'I have applied it and disbursed it,' and that the bank could not carry the firm any longer. Fallon also said that the book was returned on August 2d, and showed that on July 31st $3,750.27 was placed to the credit of the firm; that on August 2d the books and vouchers returned showed that the bank had paid checks for $6,329.70 since the previous balance, and that it had credited the firm account with the last clean-up, and charged against the account the notes the firm had in the bank, and that there was still an overdraft of $133.70. The books of the bank, offered in evidence, showed deposits of proceeds of gold dust and check withdrawals and overdrafts. A deposit of $2,213.14 was made on July 18th; one of $500 on July 19th to reduce overdraft; one on July 31st of $3,750.27; while on July 16th overdraft was $133.71; on August 2d checks amounting to $6,329.70 were returned. Petition in involuntary bankruptcy was filed August 23, 1913.

The evidence showed that between June 11, 1913, when the firm commenced to do business with the bank, and July 31, 1913 the bank honored the checks of the firm and paid out for them $9,683.35, and received and credited gold dust from them amounting to $7,934. On the evening of July 31st a garnishment was levied upon the bank in an action brought by certain creditors against the firm, but these proceedings were all subsequent to the delivery of the gold dust to the bank. Brunning, the cashier, testified that the credit of the proceeds of the dust was made July 31st; that the books were balanced as on that day and that a deposit slip, which was introduced in evidence, showing the advance of...