Brown v. Maguire's Real Estate Agency

• Citation: 121 S.W.2d 754,343 Mo. 336
• Decision Date: 19 November 1938
• Docket Number: 35384
• Parties: Elizabeth Drew Brown et al. v. Maguire's Real Estate Agency and James H. Maguire, Defendants, First National Bank in St. Louis (Garnishee) Appellant, Rutherfurd Bingham et al., Roy Rutherfurd et al., Mrs. Robert B. (Eliza H.) Lawrence et al. (Claimants) Appellants
• Court: Missouri Supreme Court

121 S.W.2d 754

343 Mo. 336

Elizabeth Drew Brown et al. v. Maguire's Real Estate Agency and James H. Maguire, Defendants, First National Bank in St. Louis (Garnishee) Appellant, Rutherfurd Bingham et al., Roy Rutherfurd et al., Mrs. Robert B. (Eliza H.) Lawrence et al. (Claimants) Appellants

No. 35384

Supreme Court of Missouri

November 19, 1938

Appeal from Circuit Court of City of St. Louis; Hon. H. A. Hamilton, Judge.

Reversed and remanded (with directions).

Fordyce White, Mayne, Williams & Hartman, Walter R. Mayne and Joseph R. Long for First National Bank in St. Louis.

(1) The bank as garnishee had a right to set off the deposit of Maguire's Real Estate Agency against the note held by the bank. Sec. 777, R. S. 1929; Shuman v. Bank, 27 N.D 599, 147 N.W. 388, L. R. A. 1915A, 728; First Natl. Bank v. Blue, 20 Ala.App. 107, 101 So. 75; Rotteman v Herner, 54 Cal.App. 485, 202 P. 334; Sternheimer v. Harris, 148 N.E. 447, 253 Mass. 169; Brannan's Negotiable Instruments Law (4 Ed.), p. 632, sec. 701; 8 C. J. 406; 57 C. J., p. 393, sec. 44; 24 R. C. L., sec. 46, p. 842; Homer v. Natl. Bank of Commerce, 140 Mo. 238, 41 S.W. 790; Warren v. Franklin Ins. Co., 104 Mass. 518; Steiner v. Mut. Alliance Trust Co., 131 A.D. 645, 124 N.Y.S. 184; Brown v. Wieland, 116 Iowa 711, 89 N.W. 17, 16 L. R. A. 417; Morrison v. Moreland, 15 Serj. and R. 61. There was no waiver of the bank's right of set-off. (2) Claimants cannot recover as the funds deposited by Maguire's Real Estate Agency were not trust funds and the bank had no knowledge of the claimants' claim. Paul v. Draper, 158 Mo. 197, 59 S.W. 77; In re Citizens Bank of Senath, 96 S.W.2d 526; Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W.2d 33; First Natl. Bank v. City Natl. Bank, 102 Mo.App. 357, 76 S.W. 489; Wilson v. Farmers First Natl. Bank, 176 Mo.App. 76, 162 S.W. 1047; Horigan Realty Co. v. First Natl. Bank, 221 Mo.App. 329, 273 S.W. 772; City of Fulton v. Home Trust Co., 336 Mo. 239, 78 S.W.2d 445; Powell v. Morrison, 35 Mo. 244; Eyerman v. Bank, 13 Mo.App. 289; Sparrow v. Bank, 103 Mo.App. 338, 77 S.W. 168; Coleman v. Lipscomb, 18 Mo.App. 443; Kobusch, etc., v. Lowenburg, 194 Mo.App. 551, 185 S.W. 747; Hunter Bank, etc., v. City, etc., 224 Mo.App. 550, 30 S.W.2d 782; Compton Co. v. Farmers Trust Co., 220 Mo.App. 1085, 279 S.W. 746; Potter v. Mount Vernon Roller Mill Co., 101 Mo.App. 581, 73 S.W. 1005; Special Road Dist. v. Cantley, 223 Mo.App. 89, 8 S.W.2d 944; Deal v. Bank, etc., 52 S.W.2d 201, Id., 79 Mo.App. 262; Stephens v. Bragg City, 224 Mo.App. 469, 27 S.W.2d 1063; Parker, Curatrix, etc., v. Trust Co., 229 Mo.App. 1244, 71 S.W.2d 106; Forrester v. Cantley, 227 Mo.App. 325, 51 S.W.2d 550; Bartholomy, Guardian, v. Harrison, 228 Mo.App. 872, 74 S.W.2d 69; Mo. Mut. Assn., v. Holland Banking Co., 220 Mo.App. 1256, 290 S.W. 100; Butcher v. Butler, 134 Mo.App. 61, 114 S.W. 564; In re North Mo. Trust Co., 39 S.W.2d 415; Mo. Utilities Co. v. Scott County Bank, 62 S.W.2d 933; Greene County B. & L. Assn. v. Cantley, 228 Mo.App. 14, 62 S.W.2d 931.

Wm. H. Killoren, Salkey & Jones and Sam Elson for Rutherfurd Bingham et al.

Wilson v. Farmers' First Natl. Bank, 184 Mo.App. 73, 162 S.W. 1047; Horigan Realty Co. v. First Natl. Bank, 221 Mo.App. 329, 273 S.W. 772; In re Citizens Bank of Senath, 96 S.W.2d 526; Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W.2d 33; Richardson v. St. Louis Natl. Bank, 10 Mo.App. 246; Cable v. Iowa State Savs. Bank, 194 N.W. 957, 31 A. L. R. 748; American Law Institute Restatement, Trusts, sec. 8; American Law Institute Restatement, Agency, secs. 13, 398, 423, 427; Pomeroy's Equity Jurisprudence (4 Ed.), sec. 1031; Steere v. Stockyards Natl. Bank, 256 S.W. 586; Western Shoe Co. v. Amarillo Natl. Bank, 42 S.W.2d 469; First Natl. Bank of Greenville v. First State Bank of Campbell, 252 S.W. 1089; Zollinger v. First Natl. Bank, 259 P. 141; First Natl. Bank v. Duncan, 260 P. 491; Berg v. Union State Bank, 243 N.W. 696; Allen Dudley & Co. v. First Natl. Bank of Omaha, 240 N.W. 522; Hartford Acc. & Indemnity Co. v. Colorado Natl. Bank, 40 P.2d 254; Burkhalter v. People's Bank, 165 S.E. 749; Purdy v. Bank of America Natl. Trust & Savs. Assn., 28 P.2d 369; Williams v. Hanson State Bank, 36 P.2d 84; 13 A. L. R. 324, 31 A. L. R. 756, 50 A. L. R. 632; Fulton Natl. Bank of Atlanta v. Hosier, 295 F. 611; Citizen's Southern Bank v. Fayram, 21 F.2d 998.

Leahy, Walther, Hecker & Ely and J. L. London for respondents.

(1) The relation of debtor and creditor (a) existed between Maguire's Real Estate Agency and the claimants; and (b) between the Bank and Maguire's Real Estate Agency. Security Natl. Bank Savs. & Trust Co. v. Moberly, 101 S.W.2d 33; Paul v. Draper, 158 Mo. 197, 59 S.W.2d 78; Hunters Bank of New Madrid v. New Madrid, 224 Mo.App. 550, 30 S.W.2d 782; Compton Co. v. Farmers Trust Co., 220 Mo.App. 1085, 279 S.W. 746; Kobusch, etc., v. Lowenberg, 194 Mo.App. 551; In re Citizens Bank of Senath, 96 S.W.2d 526; Mo. Utilities Co. v. Scott County Bank, 62 S.W.2d 933; Greene County B. & L. Assn. v. Cantley, 228 Mo.App. 14, 62 S.W.2d 931; Butcher v. Butler, 134 Mo.App. 69; Boswell Post v. Farmers State Bank, 61 S.W.2d 761; Rhinehart v. Packing Co., 99 Mo.App. 381; Sparrow v. Bank, 103 Mo.App. 338; Edson v. Angell, 58 Mich. 336, 25 N.W. 307; City of Fulton v. Trust Co., 336 Mo. 239; Coleman v. Lipscombe, 18 Mo.App. 443; Stephens v. Bragg City, 224 Mo.App. 469; Horrigon v. Bank, 221 Mo.App. 329; Mo. Mut. Assn. v. Banking Co., 220 Mo.App. 1256; First Natl. Bank v. Bank, 102 Mo.App. 357; McLain v. Wallace, 103 Ind. 562; School Dist. v. First Natl. Bank, 102 Mass. 174; Farmers Trust Co. of Maryville v. Tootle-Lacy Natl. Bank, 56 S.W.2d 769; Jackson v. Bank of United States 10 Pa. St. 61; Robinson v. Ward, 2 Car. P. 59, 172 Eng. Reprint, 27; Williams v. Lowe, 62 Ind.App. 357, 113 N.E. 471; Deal v. Bank of Smythsville, 52 S.W. 204; Landwehr v. Moberly, 338 Mo. 1106. (2) A fund which the depositor may recover from the bank at will is subject to garnishment by creditors of the depositor. Commercial Bank v. Manufacturers' Equitable Assn., 20 Ill.App. 133; Petty v. Dunlap Hardware Co., 99 Ga. 300, 25 S.E. 697; McLain v. Wallace, 103 Ind. 562; Jackson v. Bank of United States, 10 Pa. St. 61. (3) A bank has no lien on the deposits of its customers. The title to the deposit is in the bank. One cannot have a lien on his own property. Bank of Maysville v. Brewing Co., 33 N.E. 1054, 50 Ohio St. 151; 7 Zollman, Banks & Banking, p. 105. (4) A bank has no right of set-off against an obligation that has not matured, even though the depositor be insolvent. Homer v. Natl. Bank of Commerce, 140 Mo. 225; Carson Natl. Bank v. Amer. Natl. Bank, 225 Mo.App. 948, 34 S.W.2d 143; Ross v. Bank of Versey, 167 Mo. 406, 67 S.W. 303; Kortjohn v. Continental Natl. Bank, 63 Mo.App. 166; Citizens Trust Co., 163 F. 880; Birmingham Natl. Bank v. Mayer, 104 Ala. 634, 16 So. 520; Heidel Bank v. Natl. Park Bank, 87 Hun, 117, 33 N.Y.S. 794; Bradley v. Seaboard Natl. Bank, 46 A.D. 550, 82 N.Y.S. 51, reversed 167 N.Y. 427, 60 N.E. 771; Ellis v. First Natl. Bank, 22 R. I. 565, 48 A. 936; Bank of Spartanburg v. Mahon, 78 S. C. A. 408, 59 S.E. 31; Forgarties v. State Bank, 12 R. I. C. H. L. 518; Callahan v. Bank of Anderson, 69 S.C. 374, 48 S.E. 293; Oatman v. Batavian Bank, 77 Wis. 501, 46 N.W. 881; Moreland v. People's Bank, 74 So. 828; Peoples Natl. Bank v. Hewitt, 235 N.Y.S. 392. (5) The right of a bank to set-off a deposit of a customer against the customer's unmatured indebtedness is subordinate to the lien of an attaching creditor. First Natl. Bank v. Minge, 186 Ala. 405, 64 So. 957; Birmingham Natl. Bank v. Mayer, 104 Ala. 634, 16 So. 520; Elsy v. Morrison, 180 Ill.App. 711; Appleton v. Natl. Park Bank, 211 A.D. 708, 208 N.Y.S. 228, affirmed 241 N.Y. 561, 150 N.Y. 555; Presnall v. Stock Yards Natl. Bank, 151 S.W. 873, affirmed 109 Tex. 32, 194 S.W. 384; Clark v. Knealy, 13 Mo.App. 104; Iler v. Natl. Bank, 69 Mo.App. 64. (6) Any agreement between the bank and the depositor covering a so-called option to accelerate the due date of a depositor's obligation, in the event of a garnishment or other proceeding, is subordinate to the rights of a garnishment creditor. Nor can the option be exercised after the occurrence. Corn Exchange Bank v. Locher, 151 F. 764; Eastern Milling Co. v. Eastern Co., 146 F. 761; Samuels v. Public Natl. Bank & Trust Co., 251 N.Y.S. 671; Schiff v. Schindler, 98 Pa.Super. Ct. 207; Clark v. Knealy, 13 Mo.App. 104; Iler v. Natl. Bank, 69 Mo.App. 64; Valiant Co. v. Pleasanton, 164 A. 143, 108 Pa.Super. Ct. 197.

Hyde, C. Ferguson and Bradley, CC., concur.

OPINION

HYDE

This case, recently reassigned to the writer, is a garnishment proceeding against the First National Bank as garnishee, seeking to have property and credits of James H. Maguire and Maguire's Real Estate Agency applied to payment of plaintiffs' $ 4347.36 judgment. Interpleas were filed by certain persons, who were not parties, claiming $ 4000 of the fund. Garnishee claimed the right to apply the whole deposit to the payment of the Agency's note to it. The court found against garnishee and interpleaders, and entered judgment for plaintiffs against garnishee for $ 4187.55, the full amount of these deposits. Garnishee and interpleaders appealed to the St. Louis Court of Appeals. On dissent of one of the judges the case has been certified here. [Brown v. Maguire's Real Estate Agency, 101 S.W.2d 41.]

Interpleaders contend that the judgment cannot stand because it gives their property to plaintiffs; while garnishee claims that it has the right of set-off of all deposits as a matter of law. Garnishment was served January 4, 1933. At that time, the Agency had on deposit $ 93.65; Mr. Maguire only had forty cents. The next day, before it...