American Exp. Co. v. Hansen

• Decision Date: 11 January 1934
• Docket Number: 24727.
• Citation: 176 Wash. 187,28 P.2d 788
• Parties: AMERICAN EXPRESS CO. v. HANSEN.
• Court: Washington Supreme Court

28 P.2d 788

176 Wash. 187

AMERICAN EXPRESS CO. v. HANSEN.

No. 24727.

Supreme Court of Washington

January 11, 1934

Department 2.

Appeal from Superior Court, King County; J. T. Ronald, Judge.

Action by the American Express Company against Howard H. Hansen supervisor of banking for the state liquidating the American Exchange Bank. Judgment for plaintiff, and defendant appeals.

Affirmed.

Bausman Oldham, Cohen & Jarvis and Perry R. Gershon, all of Seattle for appellant.

Kahin &amp Carmody and Orlo B. Kellogg, all of Seattle, for respondent.

HOLCOMB Justice.

This appeal is from a judgment by the court below, after a trial to the court, establishing the priority of the claim of respondent against the assets of the American Exchange Bank, a state bank, which is now in the course of liquidation by the state supervisor of banking.

The case is here upon the findings, conclusions, and judgment of the trial court, the facts being undisputed.

According to the facts found, respondent is engaged in the business of issuing traveler's cheques which are delivered to banks and trust companies for the purpose of having such banks and trust companies sell the same to the public and remit the proceeds thereof to respondent, charging a fee therefor. The traveler's cheques in question were delivered to the bank under the terms of a written instrument which reads:

'Received in trust from the American Express Company, Travelers Cheques of the American Express Company, as follows: [Description of cheques given]. The undersigned hereby agrees and undertakes:

'(1) To hold in trust for the American Express Company the said cheques until sold, and the proceeds thereof when sold, and the same shall at all times remain the property of the said American Express Company; (2) to observe the same care and protection in the custody of the said cheques as in the case of bearer securities of the undersigned; (3) to be fully responsible for the due issue of the said cheques; (4) to account to the American Express Company promptly for said cheques and for the proceeds received from the sale thereof; and (5) to notify the American Express Company promptly in case of theft or loss of said cheques.'

The custom had grown up between respondent and the bank to the effect that the bank would sell the traveler's cheques from time to time, place the proceeds of the sale in its general fund commingled with other assets of the bank. The bank would make no entry on its books in favor of respondent, but thereafter, periodically, would determine the amount of the sales and forward to respondent its cashier's check in favor of respondent which represented the proceeds of the sale. The court found:

'Such procedure of collection and remittance was in accordance with the understanding of and custom between the plaintiff and the bank.'

On December 11, 1931, the bank sold traveler's cheques to the following persons and in the following amounts:

                            Grace Lowe ........
                          
                            $ 300.00
                          
                            Evelyn Greenway .....
                          
                            800.00
                          
                            L. A. Buchanan ......
                          
                            300.00
                          
                            ---------
                          
                            $1,400.00
                          
                

Grace Lowe and Evelyn Greenway presented to the bank, in exchange for the traveler's cheques, their own personal checks drawn on the Exchange Bank, while Buchanan, the other purchaser, paid for his traveler's cheques by a check drawn by a relative upon the Exchange Bank. The bank debited the accounts upon which these respective checks were drawn, but made no entry of any kind in favor of respondent. Some time during the afternoon of December 11, the bank drew a cashier's check payable to the order of respondent in the sum of $1,403.05, representing the proceeds of the sale of the above-mentioned traveler's cheques. This was next to the last cashier's check ever issued by the bank.

At all times on and since December 11, 1931, the bank was insolvent. Notwithstanding that fact, late in the afternoon of December 11, although it had closed its doors for the last time some two hours Before , it mailed the above-mentioned cashier's check to respondent, which received it about 9 o'clock the next morning and was immediately advised that the bank had been taken over by the supervisor as an insolvent banking institution and was not open that day.

The court further found that the bank at all times had on hand more than sufficient to cover the transaction in question and had at the time it was taken over by the supervisor for liquidation.

The court also found and concluded from the facts that respondent had 'traced the proceeds of the sale of the said travellers' checks into the assets of the American Exchange Bank in the hands of the defendant and to a preferred and prior claim against the corporate assets.'

Respondent claimed that it was entitled to receive the proceeds of the sale of the above-mentioned traveler's cheques out of the assets of the bank. The supervisor rejected the claim of respondent, which, within the time limited by law, brought this action.

Respondent bases its right to recover upon the facts that the funds of the failed bank, to the extent necessary to cover the proceeds of the sale of the traveler's cheques in eqestion, was a trust fund for the benefit of respondent; and also relies upon express statutory enactments in our Bank Collection Code, Rem. Rev. Stat. §§ 3292-1 to 3292-13, inclusive. The particular statutory provisions relied upon by respondent are these:

Section 3292-1, which reads:

'That for the purposes of this act: * * *

'(b) Item. The term 'item' means any check, note or other instrument providing for the payment of money.'

Section 3292-13, omitting matters obviously irrelevant, is:

'* * * When a drawee or payor bank has presented to it for payment an item or items drawn upon * * * such bank and at the time has on deposit to the credit of the * * * drawer an amount equal to such item or items and such drawee or payor shall fail or close for business, * * * after having charged such item or items to the account of the * * * drawer thereof * * * but without such item or items having been paid or settled for by the drawee or payor either in money or by an unconditional credit given on its books or on the books of any other bank, * * * the assets of such drawee or payor shall be impressed with a trust in favor of the owner...