Auto & Accessories Mfg. Co. v. Merchants' Nat. Bank

• Decision Date: 23 June 1911
• Citation: 81 A. 294,116 Md. 179
• Parties: AUTO & ACCESSORIES MFG. CO. v. MERCHANTS' NAT. BANK.
• Court: Maryland Court of Appeals

81 A. 294

116 Md. 179

AUTO & ACCESSORIES MFG. CO. v. MERCHANTS' NAT. BANK.

Court of Appeals of Maryland

June 23, 1911

Appeal from Superior Court of Baltimore City; James P. Gorter Judge.

Action by the Auto & Accessories Manufacturing Company against the American Motor Car Sales Company, with the Merchants' National Bank as garnishee. From a judgment in favor of the garnishee, plaintiff appeals. Affirmed.

Carl K Mengel and Richard B. Tippett, for appellant.

R. E Lee Marshall, for appellee.

Argued before BOYD, C.J., and BRISCOE, PEARCE, BURKE, PATTISON URNER, and STOCKBRIDGE, JJ.

PEARCE J.

The American Motor Car Sales Company, a corporation not resident in the state of Maryland, kept a large and active account with the Capitol National Bank of Indianapolis, and frequently deposited with that bank drafts drawn by the American Motor Car Sales Company upon different persons and corporations. It appears from the testimony of Mr. Kahler, the assistant cashier of the Capitol National Bank of Indianapolis, who was also the person in charge of the discounts of that bank, that bills of lading calling for one or more automobiles were sometimes attached to these drafts so deposited, and sometimes there were no bills of lading attached, but that under the course of dealing between these parties all drafts so deposited were entered as cash and passed to the credit of the American Motor Car Sales Company, and became immediately subject to their check after it was credited upon their pass book. He also testified that there was no agreement between the bank and the Motor Car Sales Company in respect to these drafts. On May 7, 1909, the Motor Car Sales Company drew a draft to the order of the Capitol National Bank of Indianapolis on the Auto & Accessories Manufacturing Company, a corporation under the laws of Maryland, in the city of Baltimore, for the sum of $2,165, with a bill of lading attached calling for several automobiles. This draft with the bill of lading attached was deposited by the Motor Car Sales Company in the Capitol National Bank of Indianapolis by which the proceeds were credited as cash to the Motor Car Sales Company, both upon the books of the bank, and upon the pass book of the Motor Car Sales Company, and the draft was by that bank sent to the Merchants' National Bank of Baltimore for payment, and it was paid on May 7, 1909, by the Auto & Accessories Manufacturing Company. On the same day, May 7, 1909, the Auto & Accessories Manufacturing Company issued out of the superior court of Baltimore city a nonresident attachment against the American Motor Car Sales Company upon an alleged indebtedness of $2,750 for commissions due on sales of nine automobiles, and for cash advanced, and the attachment was on the same day laid in the hands of the Merchants' National Bank of Baltimore, and it was summoned as garnishee. The garnishee appeared and pleaded nulla bona, and upon replication and issue joined thereon verdict was rendered for the garnishee under the instruction of the court and judgment entered thereon, and from that judgment the plaintiff in the attachment has appealed.

The only evidence in the case as to the general course of dealing between the Motor Car Sales Company and the Capitol National Bank of Indianapolis, and as to this particular transaction between them, is the testimony of Mr. Kahler, to which we have already referred for a general statement of the case, but we will now refer briefly more particularly to his testimony. When he was asked by plaintiffs' counsel if he took the draft for collection, he replied, "No; we took it and credited it as cash." Being further asked, "But you took the draft for collection, did you not?" he replied, "No, sir. Why didn't you? Because it was the same as a discount. Why do you call it the same as a discount? Because it was subject to their check immediately after it was passed on to their pass book." And under continued pressure from counsel for plaintiff he continued to assert that it was not taken for collection for the drawer, but was placed to its credit as cash and forwarded for payment.

Mr. Barthel, the general bookkeeper of the National Bank of Baltimore, was called as a witness for the plaintiff, and it was sought to prove by him some custom of national banks applicable to this case, and three exceptions were taken to the refusal of the court to allow him to answer certain questions propounded for that purpose. The first question asked was: "What is the custom of national banks where they take drafts from customers that are in excellent standing with them, and carrying large balances, in cases where they take drafts on other concerns in other cities?" The second question is: "Can you state whether, if a draft is put in bank by a depositor in good standing with the bank, it is carried to the credit of the depositor as cash?" The third question is: "Will you please state whether or not drafts that are put in the manner I have indicated, even though they may be marked 'for collection,' are carried as cash to the depositor's credit, if the depositor is in good standing with the bank?" These rulings all involve the same principle and may be considered together.

Before evidence of a custom or usage can be received, it must appear that there exists a usage established long enough to have become generally known, and to warrant a presumption that the contract in question was made in reference to it, and that the usage is uniform in reference to the business and localities involved in the inquiry. In this case the witness was not asked whether there was any usage relating to the subject of inquiry, nor was his attention directed to the field to be covered by it, and it by no means follows that the same usage which may prevail in bank management in Baltimore or in Eastern cities obtains in Indianapolis or in the cities of the west, and the failure to show these preliminary conditions constitutes a substantial objection to these questions.

Moreover, proof of usage cannot be received if it contradicts expressly, or by implication, the language or the substance of the contract. Jones on Evidence (2d Ed.) p. 585. "Usage may be admissible to explain what is doubtful. It is never admissible to contradict what is plain." Here the draft was drawn to the order of the bank, and was indorsed by it alone, for collection for it, and, when this is considered in connection with the clear and uncontradicted testimony of Mr. Kahler as to the circumstances of the transaction, such a usage as the plaintiff sought to show would contradict the conclusion naturally to be drawn from those circumstances and from his testimony. Balt. Baseball Club v. Pickett, 78 Md. 375, 28 A. 279, 22 L. R. A. 690, 44 Am. St. Rep. 304; First Nat. Bk. of Balt. v. Taliaferro, 72 Md. 169, 170, 19 A. 364. There was no error in the rejection of these questions. The principal question in this case, viz., the ownership of the draft when it was deposited in the Indianapolis Bank and credited as cash to the depositor, both upon the books of the bank, and also upon the depositor's pass book, was raised by the granting of an instruction to the jury at the close of the plaintiff's case "that there is no evidence in this case that the garnishee had at the time of the laying of the attachment in this case, or has since had, or now has, any property, funds, or credits of the defendant, and therefore their verdict must be for the garnishee." Upon this question it was said in Tyson & Rawls v. Western Nat. Bank, 77 Md. 419, 26 A. 521, 23 L. R. A. 161: "There has been much apparent conflict between the authorities; *** but this conflict has been more in appearance than in reality." In 2 Morse on Banking (4th Ed.) 1903, §§ 575, 577, the general rule is thus stated: "A deposit being made by a depositor in a bank, in the ordinary course of business, of money, or drafts or checks received and credited as money, the title to the money or drafts or checks is immediately vested in and becomes the property of the bank." Section 575. "When a bank receives from a customer a check on another bank for the special purpose of collection, the title does not pass by the special indorsement for that purpose, nor does the receiving bank owe the amount until the check is collected. But where the customer has a deposit account with the bankers on which he is accustomed to deposit checks payable to himself, which are entered on his pass book, and to draw against such deposits, an indorsement of the words, 'for deposit' on a check so deposited, is, in the absence of a different understanding, presumption of more than a mere agency or authority to collect.

It is a request and direction to deposit the sum to the credit of the customer and gives to the bankers authority not only to collect, but to use the...