American Nat. Bank v. Reed

• Decision Date: 13 November 1939
• Docket Number: No. 5079.,5079.
• Citation: 134 S.W.2d 782
• Parties: AMERICAN NAT. BANK v. REED.
• Court: Texas Court of Appeals

134 S.W.2d 782

AMERICAN NAT. BANK v. REED.

No. 5079.

Court of Civil Appeals of Texas. Amarillo.

November 13, 1939.

Rehearing Denied December 18, 1939.

Appeal from Potter County Court; J. N. Riggs, Judge.

Suit by O. S. Reed against the American National Bank for the amount of a check which the defendant was alleged to have wrongfully paid. The defendant filed a cross-action. From a judgment for the plaintiff, the defendant appeals.

Reversed and remanded.

Adkins, Pipkin, Madden & Keffer and H. C. Pipkin, Jr., all of Amarillo, for appellant.

W. F. Nix, of Amarillo, for appellee.

FOLLEY, Justice.

The appellant, American National Bank, is a national banking corporation of Amarillo, Texas. The appellee, O. S. Reed, is engaged in the produce business in the same city and during the month of July, 1938 was a depositor of the appellant bank. On July 18, 1938 Gray Garner, who is in the produce business at Memphis, Texas, delivered to the appellee about sixty cases of eggs in Amarillo under an agreement previously made between these parties. Garner's daughter and another lady employed by Garner, at the request of appellee, candled some thirty-five or forty cases of these eggs in the establishment of the appellee at Amarillo on the day the eggs were delivered. The remainder of the eggs were not candled which was at the request of the appellee because he had already sold them to other buyers in Amarillo. From the eggs candled about five cases were found to be bad and were discarded from the lot. While such eggs were being candled an employee of the appellee was present in and about the room and, according to some of the testimony, assisted in the work. There was other testimony to the effect that the appellee himself was present a part of the time and exercised some supervision over the examination of the eggs during the candling process. At the conclusion of such process the appellee gave Garner a check for $279.89 for the eggs which had not been discarded. Such check was drawn on the appellant bank and payable to the order of Garner. There was evidence to the effect that on the next day and the day following the appellee discovered that some of the eggs for which he had given the check were in bad condition.

After the delivery of the eggs Garner returned to his home at Memphis and on the next day took the check to the First National Bank of Memphis and asked that such bank advance him the money on it. The vice president of the Memphis bank called the appellant bank by telephone and asked an employee of the latter bank if the check would be paid by it upon presentation. The employee of the Amarillo bank replied that such check would be paid. Thereupon the Memphis bank paid to Garner the face amount of the check in cash, less the amount of the telephone call. The check was forwarded through regular banking channels to the appellant for payment. On July 20, 1938, before the check reached the appellant bank the appellee instructed the appellant not to pay the check. Upon presentment of the check to the appellant such bank refused payment and stamped "Payment Stopped" on the face of the check. The check was thereupon returned to the Memphis bank unpaid. The vice president of the Memphis bank again called the appellant by telephone, reminded such bank of its previous assurance that the check would be paid upon presentment and insisted that the check be paid. Thereafter the Memphis bank, through its correspondent bank, again presented the check for payment. Upon this second presentment the appellant paid the check, charged the same against the account of the appellee and informed the latter of its action.

On July 25, 1938 the appellee filed this suit against the appellant in the County Court of Potter County, Texas, alleging that he had instructed the appellant not to pay the check but that notwithstanding such instruction the appellant had done so and had withdrawn from appellee's balance the sum of $279.89, the amount of the check. The appellee answered setting up facts substantially as above stated, asked that Garner and the First National Bank of Memphis be impleaded and prayed for judgment over and against them for any recovery obtained against it by the appellee. By an amended answer in the nature of a cross-action, in which the appellant apparently abandoned any claims against Gray Garner and the First National Bank of Memphis, the appellant alleged that it had acquired by assignment from Garner whatever rights Garner held either under the check or the contract for the sale of the eggs; that the eggs involved in such contract were determined merchantable by test made under the supervision and in the presence of the appellee; that such eggs were delivered to the appellee upon the completion of the tests and were accepted by him as being sound and merchantable; that the appellee had sold some of the eggs and had received and retained value therefor; that if at a later time such eggs became unsound and unmerchantable such condition was occasioned through no...