Commercial Nat. Bank v. Heid Bros.

• Decision Date: 16 December 1920
• Docket Number: (No. 1142.)
• Citation: 226 S.W. 806
• Parties: COMMERCIAL NAT. BANK OF HUTCHINSON, KAN., v. HEID BROS., Inc.
• Court: Texas Court of Appeals

226 S.W. 806

COMMERCIAL NAT. BANK OF HUTCHINSON, KAN., v. HEID BROS., Inc.

(No. 1142.)

Court of Civil Appeals of Texas. El Paso.

December 16, 1920.

Rehearing Denied January 13, 1921.

Appeal from District Court, El Paso County; Ballard Coldwell, Judge.

Suit by Heid Bros., Incorporated, against the Pierson-Lathrop Grain Company of Hutchinson, Kan., in which the Security National Bank of Dallas, Tex., was garnished, and in which the Commercial National Bank of Hutchinson, Kan., was made a party on application of the garnishee. From judgment rendered for plaintiff adjudging funds in the hands of the garnishee subject to garnishment, the Commercial National Bank of Hutchinson, Kan., appeals. Reversed, and judgment rendered for the Commercial National Bank of Hutchinson, Kan., for the garnished fund.

Loomis & Kirkland, of El Paso, I. N. Watson, of Kansas City, Mo., and C. M. Williams, of Hutchinson, Kan., for appellant.

W. M. Coldwell, J. U. Sweeney, and R. B. Rawlins, all of El Paso, for appellee.

Turney, Burges, Culwell, Holliday & Pollard, of El Paso, for garnishee.

HIGGINS, J.

This suit involves a fund in the possession of the Security National Bank of Dallas, Tex., garnishee, in a suit brought by the appellee, Heid Bros., Incorporated, of El Paso, Tex., against the Pierson-Lathrop Grain Company of Hutchinson, Kan.

The litigation arose out of the following facts:

In August, 1918, Heid Bros. contracted to purchase three carloads of corn from Pierson-Lathrop Grain Company. The corn was shipped from Hutchinson, Kan. The initial carrier issued an order bill of lading covering each of the three cars. Each bill recites that it was issued for shipment of 60,000 pounds of corn received at Hutchinson, Kan., from the Kansas Grain Company, consigned to order of the Kansas Grain Company, destination El Paso, Tex., notify Pierson-Lathrop Grain Company at El Paso, Tex. The bills were indorsed in blank by the Kansas Grain Company and Pierson-Lathrop Grain Company.

To cover the purchase price of the corn the Pierson-Lathrop Grain Company drew three demand drafts on Heid Bros. in favor of the Commercial National Bank, or order, amounting in the aggregate to $5,806.38. These drafts were attached to the bills of lading and delivered by the grain company to the Commercial National Bank of Hutchinson, Kan. The bank received same on August 27, 28, and 29, 1918. Upon their receipt the bank gave Pierson-Lathrop Grain Company credit for the amount of the drafts and entered such credits in the passbook issued to that company by the bank. The Commercial National Bank transmitted the drafts with the attached bills to its correspondent, the Fourth National Bank of Wichita, Kan. The latter bank transmitted the same to its correspondent, the Security National Bank of Dallas, Tex., which in turn transmitted the same to its correspondent, the Union Bank & Trust Company of El Paso, Tex. On September 3, 1918, Heid Bros. paid and took up the drafts and attached bills of lading from the latter bank, and received the corn from the terminal carrier. Prior to September 6, 1918, the El Paso bank remitted the proceeds to the Dallas bank. On the latter date the El Paso bank wired the Dallas bank to withhold payment, and in response to this wire the fund was held up by the Dallas bank. Mr. Moye, the vice president of the El Paso bank, testified that the wire was sent at the instance of Heid Bros., who stated the corn was in bad condition and they wanted to get a settlement with Pierson-Lathrop Grain Company before they received their money.

On November 7, 1918, Heid Bros. filed suit in the district court of El Paso county, Tex., against Pierson-Lathrop Grain Company to recover the amount of the drafts so paid by them and an additional sum paid for freight and demurrage charges. It was alleged that the corn was inferior in quality to that purchased, and that the corn was held by plaintiffs subject to defendant's order. In effect, it was a suit for rescission. At the instance of Heid Bros., a writ of attachment was issued in that suit on November 7, 1918, and levied upon the corn. On the same date Heid Bros. sued out a writ of garnishment against the Security National Bank of Dallas, Tex., which was served.

The garnishee answered, setting up that it had in its possession $5,806.38, being the proceeds received by it from the collection of three drafts drawn by the Pierson-Lathrop Grain Company on Heid Bros.; that said drafts, prior to their payment, had been received by the garnishee from its correspondent, the Fourth National Bank of Wichita, Kan., and by garnishee transmitted for collection to its correspondent, Union Bank & Trust Company, at El Paso, and, the said drafts having been collected by the El Paso Bank, the fund was transmitted to the garnishee; that the fund was claimed by the Pierson-Lathrop Grain Company, the Fourth National Bank of Wichita, Kan., the Commercial National Bank of Hutchinson, Kan., and the Union Bank & Trust Company of El Paso, Tex., and the garnishee was unable to determine to whom said fund belonged and to whom it was indebted on account thereof, and asked that the claimants of the fund be brought into court and their rights determined and the garnishee protected.

Service was obtained upon the various parties vouched in by the garnishee. Pierson-Lathrop Grain Company made no answer. The Fourth National Bank of Wichita and the Union Bank & Trust Company of El Paso filed disclaimers. The Commercial National Bank of Hutchinson, Kan., filed a lengthy answer claiming the funds.

On March 5, 1919, in the suit of Heid Bros. against Pierson-Lathrop Grain Company judgment by default was rendered in favor of Heid Bros. for the amount sued for with foreclosure of attachment lien upon the corn seized under the writ of attachment and without prejudice to the right of plaintiff to proceed with its garnishment. The judgment recites that it was rendered upon notice to the defendants served out of the state and ordered that no execution issue except as provided by law. In the garnishment proceeding Heid Bros. set up that the funds held by the Dallas bank was the property of the original defendant in the suit and denied all of the allegations of the Commercial National Bank. On January 26, 1920, judgment was rendered in the garnishment proceeding in favor of Heid Bros. for the funds in controversy and against the claim of the Commercial National Bank.

The case was tried before the court, which made findings of fact substantially as follows:

First. That the three drafts were deposited by the Pierson-Lathrop Grain Company and credited to its account.

Second. That the drafts were accepted for deposit by the Commercial National Bank subject to collection.

Third. That said bank acted as agent for collection of the drafts.

Fourth. That the proceeds of the drafts was the money of the Pierson-Lathrop Grain Company.

Fifth. That after notice of the claim of Heid Bros. the Commercial National Bank had on deposit, arising from other sources than said drafts, funds equal to the amount of the drafts.

Sixth. That no evidence of any fraud on the part of Pierson-Lathrop Grain Company was offered in evidence other than the proceedings in the suit of Heid Bros. against the Pierson-Lathrop Grain Company.

The court's conclusion of law was that the money in the hands of the Dallas bank was subject to the garnishment of Heid Bros., and that Heid Bros. were entitled to recover the same of the Dallas bank.

The passbook of the grain company in which the credits were entered contains the following:

"Notice

"All items received by this bank for deposit are credited subject to payment, reserving the right to charge back any item not paid."

The exact nature of the indorsements upon the drafts are not clearly shown. In the statement of facts the drafts are referred to as Exhibits H, I, and J. It is said of Exhibit H:

"The indorsement stamp of the Commercial National Bank of Hutchinson, Kan., dated August 27, 1918, of the Fourth National Bank of Wichita, Kan., dated August 28, 1918, and of the Security National Bank of Dallas, Tex., dated August 29, 1918, appear on the back of said draft; also the figure `2' with a circle around it."

As to Exhibit I it is said:

"This draft is similar in all respects to Exhibit H, except the following: The date of the draft is August 28, 1918. The indorsement stamp of the Commercial National Bank of Hutchinson, Kan., is August 28, 1918, of the Fourth National Bank of Wichita, Kan., is August 29, 1918, and of the Security National Bank of Dallas, Tex., is August 30, 1918. The figure `2' with circle around it does not appear."

As to Exhibit J it is said:

"This draft is similar in all respects to Exhibit H, except the following: The date of the draft is August 29, 1918, and the amount $1,943.70. The date of the indorsement stamp of the Fourth National Bank of Wichita, Kan., is August 30, 1918, and of the Security National Bank of Dallas, Tex., is August 31, 1918. The indorsement stamp of the Commercial National Bank of Hutchinson, Kan., does not appear on the back, and the figure `1' instead of `2' appears, with a circle around it."

The Commercial National Bank prosecutes this appeal.

Opinion.

Under the seventh assignment appellant complains of the third finding of fact by the trial court to the effect that it acted as agent for collection of the drafts upon the ground that such finding is contrary to the evidence.

There is doubt in the minds of some of the members of this court as to the correctness of this finding, but this court is not authorized to set aside a finding of...