Federal Reserve Bank v. Millspaugh

• Decision Date: 09 April 1926
• Docket Number: No. 26626.,26626.
• Citation: 282 S.W. 706
• Parties: FEDERAL RESERVE BANK OF ST. LOUIS v. MILLSPAUGH, State Finance Com'r.
• Court: Missouri Supreme Court

282 S.W. 706

FEDERAL RESERVE BANK OF ST. LOUIS v. MILLSPAUGH, State Finance Com'r.

No. 26626.

Supreme Court of Missouri, en Banc.

April 9, 1926.

Appeal from Circuit Court, Scott County; Frank Kelly, Judge.

Suit by the Federal Reserve Bank of St. Louis against Frank C. Millspaugh, Finance Commissioner. Judgment for plaintiff was affirmed by the Springfield Court of Appeals, and the case certified to the Supreme Court (275 S. W. 583). Affirmed.

Bailey & Bailey, of Sikeston, for appellant. James G. McConkey, of St. Louis, for respondent.

WALKER, J.

This is a suit brought by the respondent in the circuit court of Scott county against the appellant as finance commissioner of the state of Missouri in charge of the Bank of Oran, which failed and is now in process of liquidation.

The purpose of the action was to have certain funds in the hands of the commissioner in charge of the assets of the bank declared to be entitled to a preference over the claims of general creditors.

The case was tried to the court upon an agreed statement of facts. Plaintiff's claim was declared to be preferential and was allowed and judgment rendered in its favor against the Bank of Oran, now in process of liquidation and in charge of the appellant, the finance commissioner. From this judgment he appeals.

The agreed statement of facts, upon which the case was tried, is as follows:

"That the Federal Reserve Bank is, and was at the times herein mentioned, engaged in the business of banking as defined in an act known as the Federal Reserve Act [38 Stat. 251].

"That the Bank of Oran is and was at all times herein mentioned a state banking corporation, engaged in the business of banking at Oran, Mo.

"That the Federal Reserve Bank of St. Louis maintained no deposits nor kept any balance accounts with the Bank of Oran, and the latter bank maintained no deposits with nor kept any balance accounts with the Federal Reserve Bank.

"That the Federal Reserve Bank, under the Federal Reserve Act and the rulings of the Federal Reserve Board, is required to receive for collection and remittance all items collectable at par and payable in the district of the Federal Reserve Bank when such items are received from a member bank or another Federal Reserve Bank.

"That all member banks are required to clear at par items drawn on or payable at their bank when the collection is made through the Federal Reserve Bank.

"That any nonmember bank is permitted, under an agreement acceptable to the Federal Reserve Bank, to have forwarded to it for collection and remittance all items drawn on or payable at such nonmember bank.

"That at all the times herein mentioned there was in existence such an agreement between the Federal Reserve Bank and the Bank of Oran, by which the Federal Reserve Bank agreed to forward through the United States mail direct to the Bank of Oran all items coming through it for collection; and the Bank of Oran agreed that on the same day the item was received it would either collect and remit the proceeds or return the item, duly protested; the Bank of Oran to have the option of remitting by exchange acceptable to the Federal Reserve Bank, or by shipment of currency insured at the expense of the Federal Reserve Bank.

"That, acting under this agreement, the Federal Reserve Bank did, on January 9 and 10, 1924, respectively, forward by mail to the Bank of Oran its cash letters containing items drawn on or payable at the Bank of Oran, aggregating $2,393.59, indorsed for collection and remittance.

"That on January 10 and 11, 1924, when these respective cash letters were received by the Bank of Oran, it collected the items by charging them to the respective drawers' accounts in the Bank of Oran. That on the same days it drew its drafts on its correspondent, the First National Bank in St. Louis, payable to the order of the Federal Reserve Bank of St. Louis for $1,733.43 and $659.15, respectively, and forwarded such drafts to the Federal Reserve Bank.

"The Federal Reserve Bank duly presented the drafts for payment, and the same were refused, because, in the meantime, the Bank of Oran had been closed and was in charge of the commissioner of finance for the purpose of liquidation. The drafts were duly protested and remain unpaid.

"That, at the time the Bank of Oran collected the items referred to by charging the several amounts against the respective drawer's balance in the Bank of Oran, each of the respective drawers had more than sufficient funds to his credit in the bank than was necessary to sustain the charge.

"That, at the time the items were collected, the Bank of Oran had in its vaults cash amounting to $4,475.31, and, with its correspondent, the First National Bank in St. Louis, on whom the drafts were drawn, and subject to check, the sum of $14,906.

"That, at the time the Bank of Oran was closed and taken over by the state banking department, it had in its vaults, in cash, $2,326.66, and on deposit with the First National Bank in St. Louis subject to check, the sum of $18,-239.16.

"That of the items listed in Exhibit A, and on which claim was filed the item of $50.75, drawn by the East St. Louis Cotton Oil Company, in favor of Joe Gerst, and the item of $163.80, drawn by the East St. Louis Cotton Oil Company in favor of B. E. Harber have been satisfactorily adjusted between the drawer and payee, and are to be eliminated from the $2,310.08 claimed as preferred, leaving a balance of $2,095.53, on which a preference is claimed."

Signed by the counsel of the respective parties hereto.

That a clearer understanding may be more readily had of the matter at issue an epitome of the foregoing facts is stated as follows:

The Federal Reserve Bank of St. Louis forwarded to the Bank of Oran its cash letter containing items aggregating $2,392.59, to be remitted for in cash or in St. Louis exchange. The items were received by the Bank of Oran, and the latter collected the same from the several drawers against their respective deposits, and, in the case of drafts drawn against its depositors by the acceptance of the depositor's checks and the charging of the check against his deposits. The Bank of Oran attempted to forward the collections thus made by drawing its drafts on the First National Bank in St. Louis in favor of the Federal Reserve Bank of St. Louis for the proceeds thus collected and forwarded the drafts to the Federal Reserve Bank. The latter presented said drafts to the First National Bank for payment,...