Deposit Guaranty Bank & Trust Co. v. Luke

• Decision Date: 04 November 1935
• Docket Number: 31672
• Citation: 164 So. 30,174 Miss. 98
• Parties: DEPOSIT GUARANTY BANK & TRUST CO. et al. v. LUKE et al
• Court: Mississippi Supreme Court

164 So. 30

174 Miss. 98

DEPOSIT GUARANTY BANK & TRUST CO. et al. v. LUKE et al

No. 31672

Supreme Court of Mississippi

November 4, 1935

Division A

Suggestion Of Error Overruled January 6, 1936.

APPEAL from the chancery court of Hinds county HON. V. J. STRICKER Chancellor.

Bill by E. B. Luke and others against the Deposit Guaranty Bank &amp Trust Company, J. I. Magee, and others. From a decree for plaintiff's as to named defendants, named defendants appeal. Affirmed as to J. I. Magee, reversed and bill dismissed as to the Deposit Guaranty Bank & Trust Company.

Affirmed as to Magee; and reversed and bill dismissed as to the bank.

Eugene Palmer, Shaw & Pilgrim and Barron C. Ricketts, all of Jackson, for appellant, Deposit Guaranty Bank & Trust Company.

An action brought upon a written contract, in which is set forth the rights of the parties, must be determined by the terms of that instrument insofar as they are dependent upon it.

Brenard Mfg. Co. v. Sumrall, 104 So. 160; Phosphate Co. v. International Harvester Co., 57 So. 206.

Where a trust is declared in writing the courts never permit parol proof to contradict the intention as expressed upon the face of the instrument itself.

Collar v. Collar, 13 L.R.A. and notes; 26 R. C. L., p. 1202.

The bill charges that the complainants relied upon representations of J. I. Magee, and his agents and associates, and upon the letter hereinbefore referred to.

If, as alleged in the bill, they relied upon this letter, they knew the bank had not offered to act as trustee for the funds accruing from the contributions made by them to the Founder's Syndicate, while on the other hand, if the representations of J. I. Magee, and his agents and associates, were relied upon by them, then it became a matter between them and J. I. Magee and in which the bank was not concerned, as these parties were not acting as the agent of or for the bank, and the bill fails to charge anything which would show that the bank came into possession of the money with notice of such representations, or that the parties were contributing, as they allege they thought, to a fund which was to be held in trust.

Griffith's Chancery Practice, sec. 613.

If Magee had any right to deposit the money as manager of the Syndicate, in the absence of notice to the bank to the contrary, he had a right to withdraw it, and the bank was bound to assume that he would appropriate it when drawn, to a proper use.

Duckett v. National M. Bank, 39 L.R.A. 84; Eyrich v. Capital State Bank, 67 Miss. 60.

Under all of the facts and circumstances shown by this record, with due respect to the learned chancellor, Magee, as a matter of law, was the manager of the Founder's Syndicate, with the knowledge and approval of all of his associates, and his transactions with the bank were ratified and approved by them.

Lane v. Feen, 120 N.Y.S. 256; Sears Trust Estates, secs. 81-88; Darling v. Buddy, 58 A.L.R. 502.

Magee would be liable, no doubt, in an action for an accounting to the syndicate members, but there is no, such privity between the members and the bank by which, under the facts in this case, they would join the bank as a defendant in such an action.

Butler & Snow, of Jackson, for appellant, Deposit Guaranty Bank & Trust Company.

The bill of complaint does not state a cause of action against the bank and the court should have sustained the bank's demurrer thereto.

Appellees were permitted to recover against the bank because some of the checks deposited in the syndicate account were made payable to the bank for the account of Founders Syndicate, and the funds subsequently checked out in the way they were authorized to be checked out when the account was opened, when the bank had no notice whatsoever of any fraudulent representations made by Magee or the syndicate to induce the subscribers to part with the funds, was entirely innocent in the transaction and had no notice whatsoever of any possible equity that the subscribers might have had in the fund except such notice, if any, as was afforded by the checks payable as aforesaid.

It is fundamental that complainant can have relief only on a case made by his bill of complaint; that it is necessary that one seeking relief in equity must bring the matter before the court in a clear, concise and accurate statement, so that the chancellor may have before him the controversy in a definite manner to determine the proper ruling to make and, also, that the opposite party may be definitely advised as to just what the case is he is called on to meet.

Griffith's Chancery Practice, secs. 55, 564-565; Williams v. Lumpkin, 169 Miss. 146.

The effect of the transaction was for the drawers of such checks to constitute the payee bank their agent to transfer the funds from the banks on which the respective checks were drawn to the Founders Syndicate, and thereby create the relation of debtor and creditor between the bank and Founders Syndicate.

5 Michie on Banking, pages 32, 58 and 94; Duckett v. National Mechanics Bank, 86 Md. 400, 39 L.R.A. 84; Armstrong v. American Exchange National Bank, 133 U.S. 433, 33 L.Ed. 747; Bank of Venice v. Clapp, 17 Cal.App. 657, 121 P. 299; Weirick v. Mahoning County Bank, 16 Ohio Rep. 297; Bank of Hickory v. McPherson, 102 Miss. 852, 59 So. 934; Milano, v. Sheridan Trust & Savings Bank, 242 Ill.App. 362; Sims v. Trust Co., 103 N.Y. 472; Bjorgo v. First National Bank of Emmons, 127 Minn. 105, 149 N.W. 3, L.R.A. 1915B 287; Bristol Knife Co. v. First National Bank of Hartford, 41 Conn. 421; Graham v. Southingham Bank & Trust Co., 99 Conn. 494; Kuder v. Greene, 72 Ark. 504; Boles v. Clark, 59 Wash. 336, 109 P. 812, 31 L.R.A. (N.S.) 614.

The Deposit Guaranty Bank & Trust Company was not bound to accept the agency but when it did accept it and deposited the money in the account, it had discharged its agency; had no further relation with the drawers of the checks and a mere debtor and creditor relationship thereupon arose between the bank and the Founders Syndicate.

Boles v. Clark, 59 Wash. 336, 109 P. 812, 31 L.R.A. (N.S.) 613.

When the bank accepted the deposit it was bound to obey the instructions which accompanied the deposit.

Armour v. Bank, 69 Miss. 700; Duckett v. National Mechanics Bank, 86 Md. 400, 39 L.R.A. 84; 5 Mitchie on Banking, page 58; Bank of Hickory v. McPherson, 102 Miss. 852, 59 So. 394; Commercial Bank v. Jones, 18 Texas 811.

The rule which applies to ordinary accounts is here applicable. The bank was agent of the drawers of the checks to see that the proceeds were credited to the syndicate account. When it did so, its duty and obligations as an agent were fully discharged.

The lower court seemed to think that, because the bank was charged with notice that Magee, as manager of the Founders Syndicate, was drawing checks against the syndicate account and depositing them to the credit of his individual account, the syndicate members had some higher rights than they otherwise might have had. This factual situation does not affect the case.

Sec. 3828, Code of 1930; Eyrich v. Capital National Bank, 67 Miss. 60; Gray v. Johnson, L. R. 3 Eng. & Irish App.

Chambers & Trenholm, of Jackson, for appellant, J. I. Magee.

We hold no brief for appellant, Deposit Guaranty Bank & Trust Co., in this case, but in all fairness to, it we must say that neither upon the exhibits to the bill nor the evidence is there the slightest cause to hold it liable, and we feel confident that this court, after considering the briefs filed in its behalf, will reach that conclusion. To the extent that those briefs set forth very cogent reasons why the complainants should not be entitled to recover at all, we adopt them on behalf of appellant Magee, and avoid a needless repetition.

Neither the report of the master, the exhibits, nor the evidence, offer the slightest ground for holding that the money paid by complainants was on stock. We submit, therefore, that the court in effect overruled the master on his finding of facts, but with nothing in the record to support such action. The final decree was therefore erroneous both as to Magee and the bank.

Griffith's Chancery Practice, par. 192; 21 C. J., par. 424.

Where the exhibit to the bill, relied upon to support the charges thereof, does not do so, a demurrer will be sustained.

Swope et al. v. Watson, 101 So. 488.

On the proposition that even if the demurrer was not well taken, there should have been no decree in favor of complainants where they sued solely for recovery of subscriptions to stock, whereas the proof was conclusive that they paid no money upon subscriptions to stock, but only contributed to the expenses of their own pool operations, see 21 C. J., page. 672, par. 855.

Parties must therefore recover or defend upon the issues which they have respectively presented in their pleadings, or not at all.

Griffith's Chancery Practice, pars. 55, 564, 565; U. S. Casualty Co. v. Malone, 126 Miss. 288, 88 So. 709.

J. Morgan Stevens, Harry M. Bryan and J. M. Stevens, Jr., all of Jackson, for appellees.

The bank, as a depository for the funds which reached it, under general principles of equity, was a trustee for complainants and permitted the withdrawal of the funds at its peril.

1 Thompson on Corporations (3 Ed.), sec. 127, page 157, and sec. 129, page 159; Fletcher's Cyclopedia of Corporations, secs. 192, 221, 1951; 14 C. J. 276, pars 322-323; Jackson v. Morman, 99 Okla. 220, 226 P. 570; Alkire v. Acuff, 272 P. 405; Alger on Law of Promoters and Promotion of Corporations, sec. 162; Johnson v. Hulse, 256 P. 551; 5 Michie on Banks and Banking, 132; 26 R. C. L. 1170; 1 Perry on Trusts and Trustees (7 Ed.), sec. 112, page 144, and sec. 122, page 177; Fogg v. Bank of Friars Point, 80 Miss....