Andrew v. Darrow Trust & Savings Bank of New Hampton

• Decision Date: 10 January 1928
• Docket Number: 38280
• Citation: 217 N.W. 438,204 Iowa 1317
• Parties: L. A. ANDREW, State Superintendent of Banking, Appellee, v. DARROW TRUST & SAVINGS BANK, Appellee; CITIZENS NATIONAL BANK OF CHARLES CITY, Appellant
• Court: Iowa Supreme Court

217 N.W. 438

204 Iowa 1317

L. A. ANDREW, State Superintendent of Banking, Appellee, v. DARROW TRUST & SAVINGS BANK, Appellee;

CITIZENS NATIONAL BANK OF CHARLES CITY, Appellant

No. 38280

Supreme Court of Iowa, Des Moines

January 10, 1928

Appeal from Chickasaw District Court.--H. E. TAYLOR, Judge.

Claim for a preference in the funds in the hands of the receiver of an insolvent bank. The trial court denied any relief to the claimant, and the latter appeals.--Modified and affirmed.

Modified and affirmed.

M. F Condon and William H. Salisbury, for appellant.

John Fletcher, Attorney-general, and Geiser & Donohue, for plaintiff, appellee.

FAVILLE J. STEVENS, C. J., and EVANS, KINDIG, and WAGNER, JJ concur.

OPINION

FAVILLE, J.

On December 25, 1924, the appellant purchased of the Darrow Trust & Savings Bank of New Hampton a note of $ 1,900, made by one Klatt and wife. On March 3, 1925, the claimant sent said note to said Darrow Trust & Savings Bank, the letter of advice stating that said note was sent "for collection and returns." On April 25, 1925, the president of the Darrow Trust & Savings Bank wrote claimant that the maker of said note was arranging for a loan, and asked to be permitted to carry the note for a little while. It appears, however, that, on March 4, 1925, Klatt renewed the note by the giving of a new one. The old note, which had been sent to the Darrow Trust & Savings Bank by claimant for collection, was stamped "paid," and surrendered to the maker at that time. It appears that the new note was made payable to the Darrow Trust & Savings Bank. This note was not entered in the bills receivable account of the bank. The transaction was carried on by A. J. Kolthoff, the president of the Darrow Trust & Savings Bank, but no entries appear to have been made in any of the books of the bank in regard to the transaction. There is no positive evidence in the record of what was done with the new note. It may fairly be inferred from the record that it was transferred to one Williams. There is no proof that it ever became an asset of the Darrow Trust & Savings Bank. It was not entered on the discount register of the bank, and was not held by it. The claimant did not authorize any such renewal, and did not know that any such renewal note was in existence until after the Darrow bank closed.

On July 20, 1925, the claimant wrote the Darrow bank, demanding that it return the Klatt note "by first mail." Instead of so doing, on July 21, 1925, A. J. Kolthoff, president of the Darrow bank, sent claimant a check for $ 1,986.55, drawn on the Darrow bank. The check was signed "A. J. Kolthoff, Special Account." The check was received by the claimant on July 22, 1925, and promptly presented for payment, but the Darrow bank was closed on July 22d, and the check was not paid. On the day the bank closed, the "A. J. Kolthoff, Special Account," carried a credit of $ 2,437.25. The Darrow bank was placed in the hands of a receiver, and appellant filed a claim for the amount of said check, and sought to have a preference established therefor. The trial court denied the claimant the rights of either a depositor or a general creditor.

I. When appellant sent the note which it held to the Darrow bank for collection and return, it established at once the relation of principal and agent between it and said bank. Page County v. Rose, 130 Iowa 296, 106 N.W. 744; Messenger v. Carroll Tr. & Sav. Bank, 193 Iowa 608, 187 N.W. 545; Leach v. Battle Creek Sav. Bank, 202 Iowa 875, 211 N.W. 527. The Darrow bank has never accounted to the appellant for said note, and is liable, in conversion at least, for the value of said note, which is presumed to be the amount due thereon. The important question in this case is whether or not the appellant is entitled to have a preference established in its behalf in the funds or assets of the bank that came into the hands of the receiver.

It is a general rule, recognized by many pronouncements of this court, that a creditor who asks that his claim be given a preference has the burden of showing that his property or the proceeds thereof have come into the hands of the receiver as an increase of the assets of the bank. Jones v. Chesebrough, 105 Iowa 303, 75 N.W. 97; Bradley v. Chesebrough, 111 Iowa 126, 82 N.W. 472; First State Bank v. Oelke, 149 Iowa 662. This right to a preference may be established by positive proof or by proper presumptions of law. There is no positive evidence in the record that the bank ever received anything in the way of proceeds from the appellant's note. There is some evidence tending to show that the renewal note was executed on a form in which the Darrow bank was the payee, but there is no direct evidence whatever that the bank, as such, ever received said note or any of the proceeds of said note. The evidence shows that the said renewal note did not become a part of the bills receivable of said Darrow bank. It fairly appears from the evidence that the president, Kolthoff, secured the renewal of the note by the maker, Klatt, the next day after the note was received by the Darrow bank from the appellant, and there is evidence indicating that Kolthoff sold and disposed of this note to one Williams. If it was so sold by Kolthoff, there is no showing that the proceeds of the note passed into the hands of the bank. The account in the bank designated as "A. J. Kolthoff, Special Account," does not show any item traceable to the proceeds of appellant's note or the renewal thereof. The cashier testified:

"No note of that amount has come into the bank during the month of March, nor any other month during the year 1925. Charles Williams showed me a note, soon after the bank closed, of $ 1,900, signed by A. C. Klatt, and indorsed by his mother, I...