American Can Co. v. Schramm

• Decision Date: 15 September 1931
• Citation: 2 P.2d 924,137 Or. 328
• Parties: AMERICAN CAN CO. v. SCHRAMM, Superintendent of Banks, et al.
• Court: Oregon Supreme Court

2 P.2d 924

137 Or. 328

AMERICAN CAN CO. v. SCHRAMM, Superintendent of Banks, et al.

Supreme Court of Oregon

September 15, 1931

In Banc.

Appeal from Circuit Court, Clatsop County; H. K. Zimmerman, Judge.

Suit by the American Can Company against A. A. Schramm, as Superintendent of Banks for the State of Oregon and ex officio liquidator of Astoria Savings Bank, insolvent, and the Astoria Savings Bank. From an order sustaining a demurrer to the complaint, and dismissing the suit, plaintiff appeals.

Remanded with directions.

Teal, Winfree, McCulloch & Schuler, of Portland, for appellant.

Hesse &amp Franciscovich, of Astoria, for respondents.

RAND J.

This is a suit in equity to enforce a trust upon a fund amounting to $2,652.26, which has come into the possession of defendant as state superintendent of banks through the insolvency of the Astoria Savings Bank, and his taking over of its assets for the purposes of liquidation. The case is here upon appeal from an order sustaining a demurrer to the complaint and dismissing the suit. It appears from the allegations of the complaint that on June 12, 1929, plaintiff shipped by rail to the Point Adams Packing Company, located at Hammond, Or., a carload of cans. On the following day plaintiff forwarded the bill of lading issued therefor with a sight draft attached to the Astoria Savings Bank and, by another paper, directed the bank to collect the draft and remit the proceeds in Portland exchange to plaintiff. The draft reads as follows:

"American Can Company

"Portland Ore.

"When remitting proceeds Refer to No. 89

"June 13, 1929.

"$2652.26 At sight (with exchange and collection charges)

"Pay to the order of Astoria Savings Bank, Astoria, Oregon Twenty-six hundred fifty-two and 26/100 dollars, value received, and charged to the account of

"American Can Company

"By [signed] R. R. Brennan, Cashier.

"To Point Adams Pkg. Co.,

"orm 551

"This draft must be paid in cash or its equivalent; the Bank named as payee acting only as agent to collect and remit to the drawer.

"Bill of lading attached delivered only on payment hereof."

Pursuant to these directions, the bank delivered the bill of lading to the packing company and received from the packing company a check for $3,000, drawn by the packing company upon the Hibernia Commercial Savings Bank of Portland, and the goods were delivered to the packing company. The check covered the purchase price of the goods, amounting to $2,652.26, and other small amounts owing by the packing company to plaintiff. The Astoria Bank sent the check to the Bank of California for collection, and, upon payment of the check, the Bank of California deposited the amount thereof in its own bank to the credit of the Astoria Savings Bank.

On June 15, 1929, the Astoria Savings Bank issued a draft upon the Bank of California payable to the order of plaintiff for said amount which draft plaintiff received on June 17th and on the following day deposited it for collection with the First National Bank of Portland. However, at the close of banking hours on June 17, 1929, the Astoria Bank had become insolvent and had closed its doors, and all its assets were taken over by defendant as the state superintendent of banks for purposes of liquidation, and, when the draft last referred to was presented to the Bank of California for payment, it was refused because of the insolvency of the Astoria Bank. Subsequently, plaintiff presented to defendant its claim for the moneys collected from the packing company, claiming that they were held by the Astoria Bank as trust funds, but defendant, although allowing the claim as an ordinary claim refused to give it any preference or priority over the claims of depositors or other creditors of the bank and refused to treat it as a trust fund.

The complaint alleges all the foregoing facts, and also alleges that both the bank and the superintendent of banks were in possession of funds in excess of the amount of plaintiff's claim, and that defendant has come into possession of all said funds. The relief prayed for is that the defendant be decreed to be a trustee for plaintiff in said sum of $2,652.26, and that he be directed to pay the same over to plaintiff out of the funds now in his possession and under his control.

In making the collection, the Astoria Bank was acting purely as an agent of plaintiff, and, upon receipt of the money, it held it in trust for plaintiff, and, when it mingled it with its own funds, the trust attached pro tanto to the funds. Lane v. First National Bank, 131 Or. 350, 270 P 476, 281 P. 172, 176, 283 P. 17; Holder v. Western German Bank (C. C. A.) 136 F. 90, 92; Central National Bank v. Insurance Co., 104 U.S. 54, 26 L.Ed. 693; Knatchbull v. Hallett, 13 Ch. Div. 696; Kane v. Bloodgood, 7 Johns. Ch. (N. Y.) 90, 11 Am. Dec. 417; Spokane & Eastern Trust Co. v. U.S. Steel Products Co. (C. C. A.) 20 F. 884. In Lane v. First National Bank, supra, the late Mr. Justice McBride quoted with approval an excerpt from the decision of Chancellor Kent in Kane v. Bloodgood, supra, as follows: "Every person who receives money to be paid to another, or to be applied to a...