Bunge v. FIRST NAT. BANK OF MOUNT HOLLY SPRINGS, PA.
| Decision Date | 06 August 1940 |
| Docket Number | No. 4189.,4189. |
| Citation | 34 F. Supp. 119 |
| Parties | BUNGE v. FIRST NAT. BANK OF MOUNT HOLLY SPRINGS, PA. |
| Court | U.S. District Court — Western District of Pennsylvania |
Douglass D. Storey, of Harrisburg, Pa., for plaintiff.
Mark E. Garber, of Carlisle, Pa., for defendant.
This is an action in assumpsit for money had and received. The case was tried by the court without a jury. The jurisdiction of the court, the parties to the suit, and the amount in controversy are not questioned.
From depositions and the evidence taken, the court finds the following
1. Plaintiff is a citizen and resident of the city and state of New York.
2. Defendant is a national bank organized and existing under and by virtue of the laws of the United States of America, and is engaged in the banking business in the borough of Mount Holly Springs, Cumberland County, Pennsylvania.
3. Mount Holly Paper Company was a corporation organized and existing under and by virtue of the laws of the Commonwealth of Pennsylvania, engaged in manufacture and sale of bond and ledger paper in the said borough of Mount Holly Springs until December 28, 1937, when this court took jurisdiction of the company for reorganization under section 77B of the Bankruptcy Act, as amended, 11 U.S.C.A. § 207, and later, in May, 1938, adjudicated the company a bankrupt.
4. Robert Knowles was treasurer and active head of the Mount Holly Paper Company at all times during the transactions which are the basis of this suit. By agreement of counsel his deposition was taken, and offered and admitted in evidence at the trial, subject to objection by counsel for plaintiff.
5. Pursuant to letters dated the 14th and 17th of September, 1937, from plaintiff to Knowles, and letters dated the 13th, 15th and 18th of September, 1937, from Knowles to plaintiff, and conversation in New York City between Knowles and plaintiff, and sample of wood pulp enclosed with letter of September 14, 1937, from plaintiff to Knowles, plaintiff agreed to sell, and the Mount Holly Paper Company agreed to buy, 50 tons of bleached sulphate kraft pulp at $75 per air dry ton (2,000 lbs.), f. o. b. Philadelphia or Baltimore, said pulp to be shipped with sight draft attached to bill of lading and sent to defendant.
6. September 27, 1937, plaintiff drew a sight draft for $3,881.43 on the Mount Holly Paper Company, payable to the order of himself. This draft he endorsed and deposited, together with bill of lading and invoice hereafter referred to, to his account in the Irving Trust Company, a banking corporation in the state of New York.
7. September 30, 1937, by uniform bill of lading, plaintiff consigned 287 bales of wood pulp to order of himself at Mount Holly Springs, Pennsylvania, Mount Holly Paper Company to be notified of the arrival of the goods, via Central Railroad of New Jersey and the Reading Company. The bill of lading was endorsed by plaintiff to order of Mount Holly Paper Company.
8. The bill of lading stated on its face: . The shipper never gave permission for inspection before payment.
9. October 5, 1937, Irving Trust Company endorsed the draft referred to in fact no. 6, as follows: .
10. October 5, 1937, Irving Trust Company sent the draft, bill of lading and invoice to defendant for collection and remittance, accompanied by a "Collection Form" addressed to defendant, which contained the following printed notice: . Irving Trust Company never gave any instructions to defendant to deliver documents except upon payment of the attached draft.
11. Defendant received the "Collection Form", draft and other documents on October 7, 1937, and notified the Mount Holly Paper Company that day of their arrival.
12. About 11 o'clock A. M. on October 11, 1937, a representative of the Mount Holly Paper Company came to defendant bank, delivered to it a check of the paper company for the amount of the draft, drawn on the Farmers Trust Company, Carlisle, Pennsylvania, and received from defendant bank the draft, bill of lading, and invoice. The draft had been canceled "Paid".
13. About 11:15 A. M. on October 11, 1937, the Mount Holly Paper Company by surrendering the bill of lading and giving a check for freight charges, secured possession of the two cars of wood pulp from the Reading Company, and inspected them.
14. About 1:30 P. M. on October 11, 1937, Mr. Knowles of the paper company notified Mr. Snyder, of defendant bank, that the pulp was not as represented and was unfit for use, and that the Mount Holly Paper Company would not deposit with Farmers Trust Co. of Carlisle sufficient funds to make good the check given that morning by paper company to defendant bank. Mr. Snyder then telephoned the Farmers Trust Company and was told there were not sufficient funds of the paper company on deposit there to cover the check in question.
15. October 13, 1937, Mr. Snyder, of defendant, told Mr. Knowles, of the paper company, that the paper company either had to pay the check it had given defendant bank, or return to defendant bank the aforementioned canceled draft, bill of lading and invoice. Thereupon, the paper company procured from the Reading Company a return of the bill of lading, and surrendered to defendant bank the bill of lading, invoice and canceled draft, receiving from defendant bank the check of the paper company given to defendant on October 11, 1937. Upon returning the bill of lading the Reading Company repossessed the two cars of wood pulp and removed them from the siding of the paper company, on which they had been placed. On this same date the defendant returned to Irving Trust Company in New York all documents received from it, the canceled draft being marked: .
16. Upon receipt of the documents from defendant, the Irving Trust Company charged the face of the draft to the account of Alfred Bunge, plaintiff.
17. The paper company did not at any time between October 11, 1937, and October 13, 1937, have sufficient funds on deposit at the Farmers Trust Company in Carlisle to pay its check given to defendant on October 11, 1937, in payment of draft drawn by plaintiff, and this fact was known by the representative of the paper company who presented said check at the time he presented it.
18. The Bank Collection Act of 1931, 1931 Pa.P.L. 568, 7 P.S.Pa. § 212 et seq., was in full force and effect at the time of all transactions concerned, and was applicable thereto.
19. Defendant bank exercised ordinary care in accepting the check of the Mount Holly Paper Company in payment of the draft in question, with bill of lading attached.
20. Defendant bank did not violate the instructions of its principal by accepting check of the paper company instead of cash in payment of the draft in question.
21. Defendant bank was not negligent in any of the transactions concerned.
22. Defendant bank, by promptly securing return to the plaintiff of all the documents in question, placed plaintiff in the same position he was in before any of the transactions complained of, and thereby plaintiff can show no loss due to acts of the defendant.
From the foregoing findings of fact the court arrives at the following
1. Defendant bank was subagent of depositor plaintiff for collection of the check in question, and as such was liable to plaintiff for any actual loss caused by defendant's wrongdoing.
2. Defendant bank was justified and acted within the scope of its authority in accepting the check of the Mount Holly Paper Company in payment of the draft in question, with bill of lading attached.
3. Defendant bank is not liable to plaintiff as debtor because of the non-payment of the check of the Mount Holly Paper Company, which it...
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