Campbell v. Noble-Trotter Rice Milling Co., Inc.
| Decision Date | 25 July 1938 |
| Docket Number | 14731. |
| Citation | 198 S.E. 373,188 S.C. 212 |
| Parties | CAMPBELL v. NOBLE-TROTTER RICE MILLING CO., Inc. Ex parte CALCASIEU-MARINE NAT. BANK. |
| Court | South Carolina Supreme Court |
Appeal from Richland County Court; A. W. Holman, Judge.
Attachment proceeding by M. P. Campbell against the Noble-Trotter Rice Milling Company, Incorporated, wherein the Calcasieu-Marine National Bank intervened by petition, claiming money sought to be attached by plaintiff. From an adverse judgment, the intervener appeals.
Judgment reversed.
A. L Wardlaw, of Columbia, for appellant.
E. A Blackwell and C. T. Graydon, both of Columbia, for respondent.
The question to be decided is whether or not the appellant bank received the draft in question as a mere collecting agent, or as a purchaser, so that title and ownership vested in it.
On December 31, 1937, Noble-Trotter Rice Milling Company, Inc. a non-resident foreign corporation at Lake Charles, Louisiana, drew a draft in the sum of $1,344.50 on Allen Bros. Milling Company, Columbia, South Carolina, which represented the purchase price of a shipment of rice. Attached to the draft was a bill-of-lading covering the shipment, an invoice thereof, and a certificate of insurance. This draft was made payable directly to The Calcasieu-Marine National Bank, located at Lake Charles, and was deposited on December 31st by the Rice Milling Company in that bank, where it maintained a regular account, and where it had been transacting its business for years. The draft, according to the contention of the bank, was not entered for collection, but was treated as cash, and was immediately and unconditionally placed to the credit of the Rice Milling Company, and made subject to its check.
In due course, the draft, together with the attached papers, was forwarded by the bank for collection to the First National Bank, Columbia, South Carolina, where it was paid by the drawee, Allen Bros. Milling Company on January 10, 1938, after the deduction of $14.45, which was an authorized discount in the event payment was made not later than January 10th.
The day the draft was paid to the First National Bank of Columbia, the proceeds were attached in its hands by M. P. Campbell for the satisfaction of an unliquidated demand against the Noble-Trotter Rice Milling Company, which he was then asserting in an attachment proceeding brought in the County Court of Richland County at Columbia. The appellant bank intervened by petition, claiming to be rightfully entitled to the money by reason of its ownership of the draft. The issue was tried before the county Judge, without a jury. At the conclusion of the testimony, counsel for Campbell made a motion for a directed verdict, and for judgment thereon. And a similar motion was made on behalf of the appellant bank. Judgment was rendered in favor of Campbell, and the case is here upon appeal from that judgment.
The draft bore the endorsement of the appellant bank, directing payment "to the order of any bank, banker or trust company, for collection only." The bill of lading which was attached thereto, was endorsed in blank by the Milling Company.
There was also attached to the draft, as stated, a certificate of insurance protecting the shipment in transit to the extent of $1590, loss, if any, payable to the "order of" the Rice Milling Company. This certificate was likewise endorsed in blank by the Milling Company and delivered to the bank. The evidence shows that the draft in question, and two others, were listed and deposited by the Milling Company under a deposit slip customarily used by it for cash items, and which contained the following stipulation printed at the top:
The deposit slip is dated December 31, 1937, and has listed thereon the following items, which were credited and made subject to immediate withdrawal:
"Dft. 4463 Allen Bros. Mfg. Co. $ 1344.50 Dft. 4464 J. Drake Edins & Co. 571.25 Dft. 4465 Carolina Gro. Co. Georgetown 473.00 ---------- Total $2,388.75"
The pass book of the Rice Milling Company, and the original ledger sheet of the bank, stating the account of the Milling Company, show the entry of a deposit in the above amount on December 31st. The ledger sheet also shows various deposits and various withdrawals during the period from December 31, 1937, to January 10, 1938.
The pass book contained this printed notice: And then follows a stipulation identical in language with that printed on the deposit slip.
So much for the documentary evidence.
Mr. Dugan, assistant cashier of the appellant bank, testified that the draft was handled as a cash item, in accordance with an agreement entered into between the bank and the Milling Company for the rice milling season which is active from October until May. Under this agreement, when a draft payable directly to the bank was received, with bill of lading attached, an unconditional credit was immediately given to the Milling Company; or cash in full, if desired. The bank received interest, termed a discount, on the amount of a draft for the time that the draft was outstanding, that is, between the date that it was deposited up to the date that it was paid. The parties had a settlement each month with reference to this discount on all drafts handled. The bank received either a check therefor from the Milling Company or charged the amount to the account of the Milling Company. The amount of the rice shipments during the season was about $100,000 per month, representing a great many separate transactions. In each instance, unconditional credit was given to the Milling Company upon receipt of the papers noted.
The deposit slip used by the Milling Company, Mr. Dugan said, was the one used when the drafts were to be treated as cash items. The appellant considered that it had title to the draft as soon as it was received and credit was given to the Milling Company in its pass book-no credit entry being made in a depositor's pass book unless unconditional credit was granted.
The Bank had handled some collection items for the Milling Company, but they were dealt with by a separate department-the collection department. Such items were not entered in the pass book until they were actually paid. For them a regular collection receipt was given, different from the deposit slip in this case, reciting that they were received for collection only. The Bank's transit department handled cash items purchased outright, and this department had entire charge of the transaction in question. It appears that the stamp on the face of the draft, "No. N-557" is the discount serial number, indicating a cash item, which is different from the stamp used in the collection department. It was also stated that if this draft when presented had been dishonored, it would have been charged back to the Milling Company.
The crucial question in this case has to do with the circumstances under which a bank, in taking from a customer a check or draft in the usual course of its banking business, will become the owner of such check or draft, as distinguished from a mere collecting agent for the customer. See First Nat. Bank v. McSwain, 93 S.C. 30, 75 S.E. 1106, Ann.Cas.1914D, 809.
The authorities upon the question are multitudinous, and are irreconcilable. Annotations: 11 A.L.R. 1057, 16 A.L.R. 1084, 42 A.L.R. 495, 68 A.L.R. 730, and 99 A.L.R. 490. With a few exceptions, the rule is generally recognized that the determination of the question is controlled, in the absence of an express agreement, by the intention of the parties, as shown by the attending circumstances. Lawton v. Lower Main Street Bank, 170 S.C. 334, 170 S.E. 469; Michie on Banks and Banking (Permanent Edition), Vol. 5, Page 9. A reference to the numerous cases cited in the notes to the foregoing text from Michie's valuable work, shows that the rule supported by the very decided weight of authority is that, a deposit of a check, draft, or other commercial paper in the ordinary course of business, whereby the depositor received from the bank an unconditional credit of the amount as cash, against which he may draw, with nothing to qualify the effect of such act, prima facie operates to transfer the title to the bank. In such case the relation between the bank and the depositor is that of debtor and creditor; the bank is a purchaser, and the absolute owner of the paper, and may maintain action thereon.
"According to the prevailing view, the rule as to the passing of title to commercial paper, deposited and credited as cash, applies, although the bank has the right to charge dishonored paper back to the depositor instead of proceeding against the maker." Michie on Banks and Banking, Vol. 5, 65 (citing numerous cases).
And it has been held that an interest arrangement will not prevent a bank from becoming the sole owner of a draft. Thus, where the bank advances the full amount of a draft, it becomes the unconditional owner, though it is understood it will collect interest on the amount advanced, depending upon the time it takes for collection. Vickers v. Machinery Warehouse etc., Co., 111...
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