Andrew v. Sec. Trust & Sav. Bank

• Decision Date: 24 June 1932
• Docket Number: No. 41208.,41208.
• Citation: 243 N.W. 542,214 Iowa 1199
• Court: Iowa Supreme Court
• Parties: ANDREW, SUPERINTENDENT OF BANKING, v. SECURITY TRUST & SAVINGS BANK (NATALINI & FELCIAI, INTERVENERS).

214 Iowa 1199

243 N.W. 542

ANDREW, SUPERINTENDENT OF BANKING,

v.SECURITY TRUST & SAVINGS BANK (NATALINI & FELCIAI, INTERVENERS).

No. 41208.

Supreme Court of Iowa.

June 24, 1932.

Appeal from District Court, Webster County; H. E. Fry, Judge.

In a suit for the appointment of receiver and the liquidation of Security Trust & Savings Bank of Ft. Dodge, Natalini & Felciai, a partnership, claimed a preference which the district court allowed. The receiver appeals.

Reversed.

FAVILLE, J., WAGNER, C. J., and STEVENS and ALBERT, JJ., dissenting.John Fletcher, Atty. Gen., and Helsell, McCall & Dolliver, of Ft. Dodge, for plaintiff and defendant.

Thomas & Loth, of Ft. Dodge, for interveners.

MORLING, J.

Interveners were customers of the Security Trust & Savings Bank both as borrowers and depositors. They had a passbook labeled “Security Trust & Savings Bank, Fort Dodge, Iowa, in account with Natalini and Felciai.” In it were several pages of entries by date and amount. The last entry is the one in controversy and is as follows: “May 19, '30 $3126.15.” This entry was the total of seventy-two different sums (checks) listed on an adding machine slip attached to the deposit slip. Printed in the passbook was the following “notice”: “In receiving items for deposit or collection, this Bank acts only as depositor's collecting agent and assumes no responsibility beyond the exercise of due care. All items are credited subject to final payment in cash or solvent credits. This Bank will not be liable for the defaults or negligence of its duly selected correspondents nor for losses in transit, and each correspondent so selected shall not be liable except for its own negligence. This Bank or its correspondents, may send items, directly or indirectly, to any bank including the payor, and accept its draft or credit as conditional payment in lieu of cash; and it may charge back any item before final payment, whether returned or not, also any item drawn on this Bank not good at close of business on day deposited.”

Interveners contend here that because of this “notice” the bank took the seventy-two checks only as interveners' agent for collection, not on deposit, and that the bank acquired no title to them. For convenience of expression we shall speak of the transaction as a “deposit” and the Security Trust & Savings Bank as “the bank.”

On May 17, 1930, interveners were owing the bank an overdraft of $550.70. One member of the intervener partnership was also indebted to the bank on his promissory note for $1,000, which had been pledged to the Continental Company as security for an indebtedness of the Security Trust & Savings Bank. The deposit in question was made Saturday evening May 17, 1930. Interveners and the bank official each made out a deposit slip in the following form:

“Security Savings Bank

Deposited by Natalini & Felciai. Ft. Dodge Ia 5--19--31

Please list each check separately

Currency......

Silver......

Gold......

Checks

+--------------+
                ¦Slp¦3,126.15” ¦
                +--------------+
                

Attached was the adding machine slip previously mentioned. Checks representing $123.35 of this amount were drawn on the Security Trust & Savings Bank. The others were drawn on other banks. The intervener making the deposit testifies that the slip “is dated May 19th,” but the fact is it was Saturday, May 17th, about 7:15 p. m. The banker made out the deposit slip. “There was a list of the checks made out on the adding machine which totaled $3126.15. All of the deposit consisted of checks. * * * The checks were first endorsed by me and my firm and I turned them over to Jim Jensen in the bank. I made out one deposit slip myself which the bank got. I had a list--Jensen made out the deposit slip * * * which was put in the drawer and he wrote the deposit in my book.”

The bank did not open after Saturday, May 17. Intervener making the deposit further testifies: “After the bank closed I went to the first man that was there and asked about the checks. He said the checks was closed and was in clearance Monday morning.” A representative of the banking department took charge of the bank and cleared the checks. There is no evidence that the indorsement of the checks was in any way limited. On June 16, 1930, interveners filed “Claim and Petition of Intervention,” alleging that the receiver had classified their claim as a deposit of $2,575.45. “That in truth and in fact these interveners are entitled to a preference against the funds and assets in the hands of the receiver for said sum * * * because * * * these interveners entrusted the Security Trust & Savings Bank with 72 checks drawn on other banks, which checks were left in the possession of the Security Trust & Savings Bank under the following written agreement * * * (setting out the ‘Notice’ previously referred to). That said Security Trust & Savings Bank having obtained possession of said checks under said agreement, suspended its business and closed its doors before having performed any of the terms or conditions of said agreement, and without having collected any of said checks, * * * and that the proceeds and avails of the said checks have gone into the hands of the receiver * * * that at the time said checks were entrusted to said bank, these interveners were owing said bank a sum slightly in excess of $600 on open account and that the receiver * * * has deducted such amount from the aggregate sum of said checks and has classified the claim of these interveners with respect to the remainder of said checks as an ordinary deposit claim. Wherefore, These interveners pray that the court adjudge them to be entitled to a preferred claim for the sum of $2,575.45. * * *”

On September 4, 1930, interveners filed objections to receiver's report on the ground that it “fails to allow them a claim for preference in the sum of $2,575.45 as prayed in their petition of intervention filed June 16, 1930. * * *” In another division interveners claimed that they were entitled to offset the $1,000 note against the amount to which the bank was indebted to them or held trust funds for them. It was stipulated that the court should first decide whether the note might be offset and “if such right of offset exists, the court shall order the same; and in such event the claim of the interveners for preference is to be reduced by the sum of $1,000. * * * And the claim for preference shall stand and be determined by the court only for the balance. * * *” The court allowed the offset and granted interveners a preference for the balance, $1,575.45.

[1] For the moment we lay the “notice” out of consideration. Deposit slips are receipts and constitute an admission of the existence of the relationship of debtor and creditor for the amount thereby acknowledged to have been received by the bank. In re Ruskay (C. C. A.) 5 F.(2d) 143, 147;First National Bank v. Clark, 134 N. Y. 366, 32 N. E. 38, 17 L. R. A. 580.

[2] Interveners by making out the slip indicated their purpose of making a deposit. Blacher v. National Bank, 151 Md. 514, 135 A. 383, 387, 49 A. L. R. 1366.

The evidence is that interveners indorsed the checks “and turned them over to” the bank. The bank gave interveners credit on their overdrawn account for the amount of the checks, and (leaving the first sentence of the “notice” out of view) became the owner of them. As to the checks the relationship between the bank and interveners was that of indorser and indorsee, and as to the balance of the credit interveners had the right to check against it and the relationship was that of debtor and creditor. Acme v. Metropolitan Nat. Bank, 198 Iowa, 1337, 201 N. W. 129;Andrew v. Marshalltown State Bank, 204 Iowa, 1190, 1193, 216 N. W. 723;Burton v. United States, 196 U. S. 283, 25 S. Ct. 243, 49 L. Ed. 482; 7 C. J. 599.

Such was the relationship although the bank by express or implied agreement reserved the right to charge back the checks if dishonored. Interveners had the credit. The bank had the title to the checks although both the interveners' credit and the bank's title were conditional. Bellevue Bank v. Bank, 168 Iowa, 707, 715, 150 N. W. 1076;City of Douglas v. Federal Reserve Bank, 271 U. S. 489, 46 S. Ct. 554, 70 L. Ed. 1051;In re Receivership of Washington Bank, 72 Minn. 283, 75 N. W. 228, 229;Blacher v. Nat. Bank, 151 Md. 514, 135 A. 383, 386;Commercial, etc., Bank v. Minshull, 137 Wash. 224, 242 P. 29, 30;Cottondale, etc., Co. v. Bank, 220 Mo. App. 265, 286 S. W. 425, 427;Bryant v. Williams (D. C.) 16 F.(2d) 159, 162;Clancy v. First State Bank, 55 N. D. 946, 215 N. W. 779, 780;Scott v. W. H. McIntyre Co., 93 Kan. 508, 144 P. 1002, 1004, L. R. A. 1915D, 139;Walker & Brock v. D. W. Ranlett Co., 89 Vt. 71, 93 A. 1054, 1056;Davidow v. Bank of Detroit, 254 Mich. 447, 236 N. W. 828;Tropena v. Keokuk Nat. Bank, 203 Iowa, 701, 703, 213 N. W. 398.

[3] The agreement for charging back in case of dishonor amounted only to a summary remedy for enforcing the indorsement. It did not operate to withhold from the bank the ownership of the paper. Id.

Was a different relationship created by the “notice”? Interveners' contention is that because of the terms of the “notice” the bank took merely the possession of the notes as interveners' agent for collection and obtained no title. This contention is necessarily based upon the first sentence, namely, “in receiving items for deposit or collection this Bank acts only as depositor's collecting agent and assumes no responsibility beyond the exercise of due care.”

The question thus presented is one of great importance not only in respect to claims for preference such as that before us, but with respect to relationships, and conditions that cannot be foreseen. The checks were indorsed and delivered to the bank concededly on the understanding that the bank through its officers and employees would transmit them to other banks. If the relationship of principal and agent between the claimants and the bank was created, the bank incidentallyto such...