Bank of Guntersville v. Crayter

• Decision Date: 05 April 1917
• Docket Number: 8 Div. 988
• Citation: 75 So. 7,199 Ala. 599
• Parties: BANK OF GUNTERSVILLE v. CRAYTER.
• Court: Alabama Supreme Court

75 So. 7

199 Ala. 599

BANK OF GUNTERSVILLE v. CRAYTER.

8 Div. 988

Supreme Court of Alabama

April 5, 1917

Appeal from Chancery Court, Marshall County; James E. Horton, Jr. Chancellor.

Suit between the Bank of Guntersville and Earl M. Crayter. From a decree in favor of Crayter, the Bank appeals. Affirmed.

This is a contest in chancery between the appellant bank and the appellee as to moneys or funds deposited in the bank by one J.L. Burke, an agent of appellee, and who was also a debtor of, and depositor in, the appellant bank.

The funds were deposited by Burke in the bank, the deposit being entered in the name of "J.L. Burke, Agent," and a part thereof was drawn out on checks signed, "J.L Burke, Agent," and these checks or the proceeds thereof were paid to appellee.

There is no dispute that the deposited moneys belonged to appellee and that they were sent to Burke, as an agent, to be lent out for the benefit of appellee, nor that some of the funds were so lent out and the proceeds paid to appellee.

While it is not shown that the bank had any direct notice that the specified deposits were the funds of appellee, it is shown that the bank knew that Burke was a loan agent, and was lending the moneys of his clients, and, as such agent, was making deposit of the funds received by him in such capacity in the appellant bank.

Burke was a debtor of the bank to the amount of $550, as evidenced by his two notes, one for $300, due November 12, 1914, on which one H.C. Henderson was surety, and one for $250, due November 28, 1914, on which one Gordon Gilbreath was surety. Burke died on the 4th day of October, 1914, before either note was due; and on the 20th day of October, 1914, the bank applied enough of the funds deposited by J.L. Burke, agent, to pay these notes.

On the 28th day of October, 1914, eight days after the bank had thus applied the funds on deposit to the payment of the two notes, but before either note was due, appellee gave the bank written notice that the funds so deposited were the money of appellee.

The chancellor decided that the application of the funds to the payment of the notes was wrongful, and that, as between the parties, the funds belonged to appellee; and respondent appeals.

John A. Lusk & Son, of Guntersville, for appellant.

D. Isbell, of Guntersville, for appellee.

MAYFIELD J.

We are of the opinion that the chancellor found and decreed correctly.

The banks was clearly chargeable with notice that the funds deposited by Burke were deposited by him in his capacity of agent for another, though the account was entered simply as that of "J.L. Burke, Agent."

The strict rules of pleading or of commercial law should not be applied to a proceeding like this in a court of equity, where no bona fide purchaser is concerned. The bank either knew absolutely or was chargeable with notice that the moneys or funds so deposited by Burke were not the property of Burke but that of some principal or client of his; and the notice was such that, if the bank had followed it up with due diligence, the inquiry would have elicited the truth of the...