American Bank & Trust Co. v. Shouse & Burrus
| Decision Date | 15 April 1983 |
| Citation | 648 S.W.2d 540 |
| Court | Kentucky Court of Appeals |
| Parties | 36 UCC Rep.Serv. 280 AMERICAN BANK & TRUST COMPANY, Appellant, v. SHOUSE & BURRUS, Appellee. |
J. Montjoy Trimble, Trimble & Henry, Lexington, for appellant.
William C. Shouse, Shouse & Burrus, Lexington, for appellees.
Before HOWARD, HOWERTON and PAXTON, JJ.
American Bank & Trust Company appeals from a summary judgment of the Fayette Circuit Court ordering it to pay Shouse & Burrus the sum of $8,250.85 plus prejudgment interest from March 12, 1982, until paid. The claim of Shouse & Burrus arose when it purchased the Bank's stock from Jan Wallace, who was indebted to the Bank for several loans. Wallace endorsed the stock certificates to Shouse & Burrus to cover a fee. The Bank had not been notified and the transfer had not been recorded when Shouse & Burrus offered the stock for sale through the brokerage firm of Hilliard-Lyons, Inc. The Bank arranged to purchase its own stock but made the purchase check payable to the brokerage house, Jan Wallace, and itself. The Bank claimed a right to do this because of a "banker's lien" on the stock. It also argued that Shouse & Burrus was not a bona fide purchaser because it had knowledge that Wallace was indebted to the Bank.
We find no merit in the Bank's arguments. A Bank is entitled to a general lien upon all the securities of a customer or depositor which are in the bank's possession, unless the property has been delivered to the bank under circumstances which would limit the application of the lien. A Bank is also entitled to set off a general deposit to enforce collection of an indebtedness owing to the bank. For a bank to have the type of possession necessary to constitute a lien, the certificates would have to be brought to the bank by the owner and left in its possession for security. A banker has no lien on such property casually left at the bank or accidentally left in the possession of the bank other than in the course of banking business. See generally, 10 Am.Jur.2d Banks Sec. 660 (1963).
The stock was of the Bank, but the certificate was not in the possession of the Bank nor had the stock ever been encumbered as collateral for any of Wallace's debts. KRS 355.8-103, reads:
A lien upon a security in favor of an issuer thereof is valid against a purchaser only if the right of the issuer to such lien is noted conspicuously on the security.
The Bank had not conspicuously or inconspicuously noted anything on the stock certificates. The bank stock was a security and the Bank was an issuer. KRS 355.8-102 and KRS 355.8-201.
The Bank argues that it is not claiming a lien pursuant to KRS 355.8-103. It does not claim to be an "issuer" but, rather, a banker asserting its banker's lien on a security of Wallace coming into its possession. In other words, it contends that it could claim a banker's lien on any corporate stock of its debtor which it acquired by purchase. The Bank would simply pay the purchase price less the amount the debtor owed to it. We completely disagree. The problem in this case is not limited to the relationship of the Bank with Wallace.
The analogy to a set-off is also inapplicable in this...
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...Cumberland cannot now claim a lien against property which was actually left with it for safekeeping. See American Bank & Trust Co. v. Shouse & Burrus, 648 S.W.2d 540 (Ky.App.1983). A bank is many things to many persons; Cumberland should have more clearly defined its role with Utica when th......
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...bank may exercise a right of setoff to enforce collection of indebtedness owed to it by a depositor. See American Bank & Trust Co. v. Shouse & Burrus, Ky.App., 648 S.W.2d 540 (1983). Many authorities refer to the bank's right as that of a lien upon the deposit account, but, strictly speakin......
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