Branham v. Drew Grocery Co.

• Decision Date: 03 January 1927
• Docket Number: 26065
• Citation: 145 Miss. 627,111 So. 155
• Court: Mississippi Supreme Court
• Parties: BRANHAM et al. v. DREW GROCERY CO. [*]

111 So. 155

145 Miss. 627

BRANHAM et al. v. DREW GROCERY CO. ^[*]

No. 26065

Supreme Court of Mississippi

January 3, 1927

Division B

Suggestion of Error Overruled Jan. 31, 1927.

APPEAL from chancery court of Sunflower County, HON. L. F EASTERLING, Special Chancellor.

Attachment in chancery by the Drew Grocery Company against B. C Branham, doing business as the Cash Grain Company, and others. From the judgment below, defendants B. C. Branham and the Farmers' Bank of Woodland Mill, Tennessee, appeal. Affirmed in part, and reversed in part.

Judgment affirmed in part, and reversed in part.

Chapman, Moody & Johnson and F. H. Montgomery, for appellants.

Appellants contend that the court was without jurisdiction of the persons or the subject-matter of the suit and, therefore, the decree rendered is void. The bill alleges that B. C. Branham, a non-resident of the state of Mississippi, doing business as the Cash Grain Company, is indebted to the Drew Grocery Company and that The Merchants & Planters Bank of Drew, a resident of Mississippi, has in its hands effect of, or is indebted to, the said Branham; that the effects in the hands of The Merchants & Planters Bank of Drew, belonging to said Branham, are the proceeds of the draft drawn on J. M. Yeager; and that said draft was deposited with the defendant, Farmers Bank, who was acting only as agent for the collection of said draft for Branham. The jurisdiction of the court is wholly dependent on section 293, Hemingway's Code, section 536, Code of 1906.

If the jurisdictional facts do not exist, the suit must be dismissed even though the non-resident defendant has appeared, provided he has raised the jurisdictional question. Griffith's Chancery Practice, section 484. This proposition was conclusively settled in Werner Saw Mill Co. v. Sheffield, 42 So. 876.

Appellee contends that defendant, Farmers Bank, was acting only as agent for Branham in the collection of the draft and that the indebtedness owing by the Merchants & Planters Bank of Drew to the Farmers Bank was in truth an indebtedness to B. C. Branham.

As shown by the testimony, the Farmers Bank bought the draft in good faith without notice or knowledge of any defect or infirmity in it. Whether or not by discounting this negotiable paper, placing it to the credit of the Cash Grain Company and allowing it to check out the proceeds thereof, the Farmers Bank became a holder for value is the immediate question. This question has been definitely and decisively settled in the affirmative. Bank of Gulfport v. Smith, 132 Miss. 63, 95 So. 785; Colonial Lbr. Co. v. Andelusia Nat'l Bank, 103 So. 343.

The appellee contends, however, that although the entire proceeds of the draft in question had been withdrawn from the Farmers Bank by the Cash Grain Company before the filing of the attachment suit, yet other deposits had been made so that on March 23, the date of the filing of the suit, there was a balance in the Farmers Bank to the credit of the Cash Grain Company; whether there was a credit balance on the date the Farmers Bank received notice of the attachment does not appear. The weight of authority and the generally accepted rule are that the first money in is the first money out, and that if the deposit in controversy has been drawn out, although other deposits have been made subsequent to that deposit, the bank is purchaser for value. The discounting bank becomes a purchaser for value if, before notice of an infirmity in the paper, it pays out the amount for which credit was given to the depositor, although the depositor by subsequent deposits preserves a constant balance to his credit. Oppenheimer v. Radke, 129 P. 798; First Nat'l Bank of Minneapolis v. McNairy, 122 Minn. 215, 142 N.W. 139, Ann. Cas. 1914 D 977, also holds the law to be as here indicated. The rule, supported by abundant authority, is clearly stated in a note to Old Nat'l Bank v. Gibson, 6 A. L. R. 262 c.

Under the facts of the case at bar, the Farmers Bank was a bona-fide purchaser for value, without notice of any defect or infirmity, of the draft which was collected by The Merchants & Planters Bank of Orew, and the proceeds of which were attached. The Merchant & Planters Bank of Drew, the resident defendant, was indebted therefor to the Farmers Bank and not to the Cash Grain Company or B. C. Branham, manager. The resident defendant not having in its hands effects of, or being indebted to, B. C. Branham or the Cash Grain Company, the nonresident debtor, the chancery court was without jurisdiction to entertain the suit, and erred in rendering a decree in favor of the complainant.

Ward Allen, for appellee.

If the Mississippi bank had in its hands effects belonging to, or owed an indebtedness to Cash Grain Company, then the trial court had jurisdiction. Werner Saw Mill Co. v. Sheffield, 42 So. 876, cited in appellant's brief, is controlling on this point, but this is not the issue in this case.

The funds impressed are much more than sufficient to pay the decree and all costs, and we care little about a personal decree anyway. Our contention is that appellant, Farmers Bank of Woodland Mills, is not under the facts in this case a purchaser for value of the bill of lading, regardless of their dogmatic claim that they did purchase the bill of lading for value.

The writer of this brief propounded the cross-interrogatories shown in the deposition of Mr. Hefley, cashier of the Farmers Bank with Colonial Lbr. Co. v. Andelusia Nat'l Bank et al., 103 So. 343, before him, and the cross-interrogatories are based squarely on the verbiage of that case. Appellant contends that the expressions of the opinion in the Andadusia case, upon which we rely, are dicta. If they are dicta, Judge COOK seems to have been very careful and scrupulous in treading unnecessary ground.

Bank of Gulfport v. Smith, 132 Miss. 63, 95 So. 785, cited and relied upon by appellants, is not in point on the facts, for in that case the entire amount of the two deposits made was drawn out on the same day and no attempt was made to show the condition of the account during the intervening period between the deposit of the check and notice of the infirmity. Liberty Central Trust Co. of St. Louis v. Senton, 104 So. 157, is not in point with the case at bar on some of the facts, but we think the case shows an intention on the part of our court to afford every reasonable protection to citizens of Mississippi in such transactions as that shown in the case at bar. In other words, in each case the inquiry will be towards whether or not, under the particular facts the discounting bank is a purchaser for value of the draft. Dogmatic statements will not be accepted to change the true nature of the transaction.

We call the court's attention to the recent article en titled "The Tri-Partitie Ownership Resulting from the Transfer of a Bill of Lading to Shipper's Order to a Discounting Bank, 26 Columbia Law Review, page 63, footnotes in this article citing Sabel v. Planters Nat'l Bank of Richmond, 61 S.W. 367, and Wilson Grain Co. v. Central Nat'l Bank, 139 S.W. 996. It would seem that the question in this case has been decided both ways. To us, however, the main point in the article is that a so-called "tri-partite ownership" of the bill of lading and the proceeds thereof is created by such transactions as that shown in the case at bar, and that the shipper as well as the discounting bank and the consignee has an interest in the bill of lading and the proceeds thereof, and that the interest of the shipper is attachable.

Directly opposed to what appellants contend their case holds is Nat'l Bank of Commerce v. Morgan (Ala., 1921) 207 Ala. 65, 92 So. 10, 24 A. L. R. 897. The facts place this Alabama case exactly in point with the case at bar.

Argued orally by Elbert Johnson, for appellants.

OPINION

ETHRIDGE, J.

The Drew Grocery Company, a corporation, sued out an attachment in chancery against the appellant B. C. Branham, doing business under the name of Cash Grain Company, and the Farmers' Bank, domiciled at Woodland Mill, Tenn., a Tennessee corporation, and the Merchants' and Planters' Bank of Drew, Miss., alleging that on various dates since October 1, 1924, the complainant had purchased of B. C. Branham thirteen cars of corn and one car of hay, which cars were shipped to various persons in and around Drew, Miss., for the account of the complainant.

The complainant avers that the defendant Branham is indebted to him by reason of commissions due, overcharges on agreed prices, and shortages in weight on the said shipments amounting to a total of four hundred fifty dollars, which the said Branham refuses to pay. He further alleges that the Merchants' and Planters' Bank of Drew is indebted to or has in its hands effects of the defendant Farmers' Bank, acting in the capacity of agent for the defendant B. C. Branham, for purposes of collection only; that the said amounts due by or effects in the hands of the said Merchants' and Planters' Bank of Drew, are, in effect, due to or held for the defendant B. C. Branham, and that he was merely using the Farmers' Bank as an agent for the purpose of collection for the shipments; that Branham and the Farmers' Bank are nonresidents of the state of Mississippi, their post office address being set forth in the bill praying for process against the several defendants, waiving answer, under oath, as to all except the Merchants' and Planters' Bank of Drew; and for a decree against Branham, demanding and subjecting the indebtedness of the said defendants or the effects due to them or held for them by the Merchants' and Planters' Bank for the purposes of satisfying the debt said to be due the complainant, and for general relief. As an exhibit to the bill of complaint,...