Edwards v. Lewis

• Decision Date: 20 November 1929
• Citation: 124 So. 746,98 Fla. 956
• Parties: EDWARDS v. LEWIS.
• Court: Florida Supreme Court

124 So. 746

98 Fla. 956

EDWARDS v. LEWIS.

Florida Supreme Court

November 20, 1929

Suit by W. B. Lewis, trading as the Jasper Grocery Company, against G. L. Edwards, as receiver of the Suwannee River Bank. From an order overruling a demurrer to the bill, defendant appeals.

Affirmed.

Commissioners' Decision.

Syllabus by the Court

SYLLABUS

Collecting bank is liable only after final payment is received on check deposited with it, unless negligent (Comp. Gen. Laws 1927, § 6834). Section 6834, Compiled General Laws of Florida 1927 changed the existing rule, and now a bank in which a check is deposited, for deposit or collection, is liable only after final payment is received by it, unless it is negligent in its duty, according to the regular course of business of banks.

Relationship of depositor of commercial paper with bank of deposit is in nature of principal and agent until bank actually receives payment (Comp. Gen. Laws 1927, § 6834). Under the statute (section 6834, Compiled General Laws of Florida 1927), the relationship of the depositor of commercial paper with his bank of deposit, even though the deposit is not for collection, is in the nature of principal and agent, until such paper has been collected and payment actually received by the bank, in which event the depositor becomes the creditor of his bank, the debtor.

Initial bank of deposit of commercial paper is authorized to employ subagents becoming directly responsible to owner for defaults (Comp. Gen. Laws 1927, § 6834). Under the Florida statute the initial bank of deposit of commercial paper, by the mere fact of deposit for collection, is authorized to employ subagents of the owner, who become directly responsible to him for their defaults.

Bank forwarding items for collection was on insolvency of collecting bank after making collections and remitting checks therefor, entitled to preference. Where one bank sends items of collection and remittance to another bank, and the collecting bank makes collections from other banks or persons, and remits to forwarding bank checks of collecting bank on other banks for the amount collected, but such checks are not paid in due course because of the failure of the collecting bank after making the collections and after remitting its checks therefor, but before the checks of the collecting bank are paid, and there was no commingling of funds by consent and no reciprocal accounts or deposits between the two banks, collecting bank having an account with a balance to its credit with forwarding bank, but forwarding bank having no account with collecting bank, forwarding bank is entitled to a preference in payment by the receiver of collecting bank for the collections made.

Bank receiving commercial paper for collection and remittance holds paper as agent in trust for owner; sums collected by bank on commercial paper transmitted for collection and remittance are impressed with trust in favor of owner. When a person transmits through a bank for collection and remittance commercial paper owned by him, the bank of deposit holds such paper as agent and in trust for the owner, and, when the collections are made, the sums so collected are impressed with a trust in favor of the owner.

Bank receiving check on itself for collection does not change status from that of trustee by sending draft on deposit with another bank. A bank, which upon receiving a check upon itself for collection and remittance of funds, makes the collection, does not change its status from that of trustee by sending a draft upon its deposit with another bank for transmission of the funds.

Commingling by bank of trust funds with funds belonging to bank does not defeat owner's title; mingling of trust funds with funds of bank extends trust to all bank's funds. A commingling by a bank of trust funds with funds belonging to the bank does not defeat the owner's title, simply because there is no way to identify money. The mingling of such funds extends the trust to all the funds of the bank.

Appeal from Circuit Court, Hamilton County; Mallory F. honrne, judge.

COUNSEL

J. B Hodges, of Lake City, for appellant.

I. J. McCall and F. B. Harrell, both of Jasper, for appellee.

OPINION

DAVIS C.

The appellee (complainant in the court below) filed his amended bill of complaint against the appellant, and alleged, in substance, that he was the holder and owner of certain checks drawn on the Suwannee River Bank; that such checks were by him 'deposited in the Commercial Bank of Jasper' after being indorsed by him; that they were forwarded by the Commercial Bank of Jasper for collection and remittance to the Barnett National Bank of Jacksonville; that the Barnett National Bank forwarded them for collection directly to the said Suwannee River Bank, which said bank charged to the accounts, respectively, of the drawers of the said checks, they having sufficient credit balances on deposit to pay them; that the said Suwannee River Bank had at the time of receiving said checks sufficient funds available to pay all of them and continued to have every day thereafter until the bank closed sufficient funds 'so available'; that the Suwannee River Bank forwarded to the Barnett National Bank its checks drawn on the Atlantic National Bank of Jacksonville in sums sufficient to cover, and for the purpose of paying the proceeds from the collections of the several checks deposited by the complainant with the Commercial Bank of Jasper, as well as for other items that might have been due the Barnett National Bank by the said Suwannee River Bank; that the checks so deposited by him had been delivered by the Suwannee River Bank to the respective drawers of the same marked paid by it; that the checks drawn by the Suwannee River Bank upon the Atlantic National Bank and forwarded to the Barnett National Bank were not paid when presented, or at any time thereafter; that the Suwannee River Bank suspended business and was insolvent at the time of making such collections; that, at the time the Suwannee River Bank suspended business, it had in its possession, custody, and control cash items in excess of amount of complainant's deposit; that a receiver was appointed to take charge of the assets of the Suwannee River Bank; that, after the Suwannee River Bank suspended business, the Barnett National Bank charged to the account of the Commercial Bank of Jasper the amounts of the checks deposited by the complainant; that the checks deposited by him were never returned to the complainant; that he made demand upon the said receiver for the payment of the aggregate amount of the said checks so deposited by him as a preferred claim payable before unsecured claims against the Suwannee River Bank were paid, which claim, though admitted by the receiver as a just claim, was denied and refused to be considered as a preferred claim; that it was the custom and understanding between the Commercial Bank of Jasper and the Barnett National Bank, and between the said Barnett National Bank and the Suwannee River Bank, at the time the said checks were forwarded to the Suwannee River Bank for collection, that the said Suwannee River Bank should remit to the Barnett National Bank as the agent of the Commercial Bank of Jasper the amount of money collected each day and the day the same was collected; that there was no understanding between the said Barnett National Bank and the Suwannee River Bank that the Barnett National Bank should give any credit or allow the said Suwannee River Bank any latitude in the time of remitting for said checks sent for collection; that the Barnett National Bank kept no account with the Suwannee River Bank and had no credit balance with it; that there were no reciprocal or mutual accounts of any kind between the said Barnett National Bank and the Suwannee River Bank; that the assets held by the said receiver were impressed with a trust in favor of the complainant, and that he is entitled to have his claim against the receiver allowed as a preferred claim.

The defendant demurred to the bill on the grounds:

'1. That it does not appear from the bill of complaint that the complainant is able to trace or locate any trust fund.

'2. That no agency is shown to exist between the complainant and the Suwannee River Bank.

'3. That it appears from the Bill of Complaint that the checks mentioned therein were sent to the Suwannee River Bank through more than one bank by the complainant in the usual course of business, and without any special instructions relative to the collection and remittance of the proceeds thereof.

'4. That it appears from the allegations of the said Bill of Complaint that the Complainant is a general and not a preferred creditor of the Suwannee River Bank.

'5. That it appears from the allegations of said bill of complaint that the proceeds of the checks mentioned therein become commingled and unseparated from the funds of the Suwannee River Bank, and passed with such funds to the defendant, as Receiver of said Bank.

'6. That it appears from the allegations of said Bill of Complaint that the title to the checks mentioned therein and the proceeds thereof, passed to the Suwannee River Bank, and that the relation, principal and agent has ended.

'7. That it appears from the allegations of said bill of complaint that it was intended that the Suwannee River Bank make collection of the checks mentioned therein, place the proceeds of such collection in its own funds, and thereafter remit the proceeds thereof in the usual course of business.

'8. That it appears from the allegations of the bill of complaint that the complainant did not select the Suwannee River Bank as his collecting agency in and about the making of collection of said checks.

'9. That it appears...