First Nat. Bank of Memphis, Tennessee v. Bianca
| Decision Date | 07 January 1935 |
| Docket Number | 31354 |
| Citation | 171 Miss. 866,158 So. 478 |
| Court | Mississippi Supreme Court |
| Parties | FIRST NAT. BANK OF MEMPHIS, TENNESSEE et al. v. BIANCA |
Suggestion Of Error overruled February 4, 1935.
APPEAL from the chancery court of Sunflower county HON. J. L WILLIAMS, Chancellor.
Action by Sam Bianca against the Merchants' Bank & Trust Company of Indianola in which the petition was amended to allow petitioner to enter suit against the First National Bank of Memphis, Tennessee. From an adverse decree, the First National Bank of Memphis and J. S. Love, State Superintendent of Banks of Mississippi, in charge of the liquidation proceedings of the Merchants' Bank & Trust Company appeal. Reversed, and petition dismissed as to the First National Bank of Memphis, and modified and affirmed as to J. S. Love, Superintendent of Banks, and his successor in office.
Reversed in part, and affirmed as modified.
Cooper & Thomas, of Indianola, for appellants.
Our court is committed to the doctrine that where the owner of a check endorses it and delivers it to a bank to collect and this bank forwards the item for collection and credit, and there is nothing on the check to show that the bank forwarding the item is not the owner thereof, that the bank receiving the items becomes the holder in due course thereof and also a holder for value from the moment it collects the item and credits the forwarding bank.
National Shawmut Bank of Boston v. Barnwell, 105 So. 462, 140 Miss. 816.
The facts in this case insofar as the Indianola bank is concerned do not show a Stronger case than that of a man who leaves a check at a bank, with instructions to collect and remit to him the proceeds. Whether the item be called a collection item or whether the item be called one of collection and credit or collection and deposit is immaterial on the question of whether or not the proceeds constitute a trust fund in favor of such party.
Paton's Digest, vol. 1, sec. 1600; Love, etc., v. Fulton Iron Works, 140 So. 528; Love v. Federal Land Bank, 157 Miss. 52, 127 So. 720; Billingsley v. Pallock, 69 Miss. 759, 13 So. 828; Hecker-Jones-Jewel Milling Co. v. Cosmopolitan Trust Company et al., 242 Mass. 181, 24 A. L. R. 1148; 3 R. C. L. 634, sec. 262.
It is our firm belief that the case of Love, etc., v. Fulton Iron Works, 140 So. 528, completely and effectually disposes of the case at bar.
Myers v. Twelfth Ward Bank, 28 Misc. 188, 58 N.Y.S. 265, 24 A. L. R. 1112; Hecker-Jones-Jewel Milling Company v. Cosmopolitan Trust Company et al., 242 Mass. 181, 24 A. L. R. 1148; Peterson v. Grasper (Iowa), 118 N.W. 411, 31 A. L. R. 481; Butcher v. Butler, 134 Mo.App. 61, 114 S.W. 564, 31 A. L. R. 475.
The liability under the facts of this case of the Indianola bank to Sam Bianca rose no higher than that of the holder of outstanding exchange, or cashier check or a depositor in said bank.
Mississippi Central Railroad Company v. Conner, 114 Miss. 63.
Allen & Allen, of Indianola, for appellee.
Certainly, the intention of the parties in this case could never be construed to authorize a deposit and the relation of debtor and creditor to arise.
3 R. C. L. 624, 632; Alexander County National Bank v. Conner, 110 Miss. 653, 70 So. 827.
Under the decision of the lower court, supported by overwhelming proof, it was held that the Indianola bank was handling the check for collection and that the relation of principal and agent existed. When an agency has been thus established it continues in existence until the fulfillment of the purpose for the creation of such agency.
31 Cyc. 1292; Love, Superintendent of Banks et al. v. Meridian Grain & Elevator Co., 139 So. 857, 858, 859.
The case which comports with the rule of reason and which does no violence to, but which upholds and perpetuates those principles of law so long and well established in this state, is the case of Love v. Kraft-Phoenix Cheese Corporation, 139 So. 393, in which case the bank was acting "only as depositors collecting agent," as is true in the instant case, not only by virtue of the instructions given to the bank by me and the special instructions, agreement and understanding had with my client and the bank, but the duplicate deposit slip itself which shows that the bank was acting "only as depositors collection agent" and in no other capacity.
6 C. J. 658, sec. 171; Re Bank of Cuba (1921), 198 A.D. 733, 191 N.Y.S. 88; Morton v. Woolery (N. Dak.), 24 A. L. R. 1107; Armour-Cudahy Packing Company v. First National Bank of Greenville, 69 Miss. 700, 11 So. 28, 31 A. L. R. 485; Blythe v. Kujawa et al., and H. E. Skinner, Receiver, etc. (Minn.), 60 A. L. R. 330.
A trust has been defined to be a holding of property, subject to a day of employing it or applying its proceeds according to directions given the person from whom it was derived.
39 Cyc. 17; Greenfield v. Clarence Savings Bank (Mo.), 5 S.W.2d 708.
The money in this case never belonged to the bank, and certainly cannot belong to appellants. The money at all times being the property of appellee.
Security Savings Bank Case, 217 N.W. 831; Railroad Co. v. Conner, 114 Miss. 63, 75 So. 57; Raynor et al. v. Scandinavian-American Bank et al., 25 A. L. R. 716.
Where a check was left with bank for "collection and deposit" and after forwarding collection bank closed, the check could be recovered by depositor.
National Shawmut Bank of Boston v. Barnwell, 105 So. 462.
A trader or a bank is denominated as insolvent when not in a condition to pay its debts in the ordinary course, as persons carrying on trade or banking usually do. Deposits accepted by a bank with knowledge on the part of its officers that it cannot meet its obligations is a fraudulent act.
Steele et al. v. J. C. Allen, Commissioner of Banks, et al., 20 A. L. R. 1203, 134 N.E. 401; First National Bank v. Strauss, 66 Miss. 479, 6 So. 232; Bank of Hickory v. McPherson et al., 102 Miss. 852, 59 So. 934.
While we have discussed the transaction and the nature of it to show that it was a deposit for collection, yet, it is immaterial what the transaction may have been called by the parties at the time, the law reads into it what it is. Equity looks to substance and not to form, and when the intention of the parties is arrived at, it will declare the result.
Eastern Bank & Tr. Co. Case, 52 F.2d 925, 926; Schumacher v. Harriett, 52 F.2d 817; Love, Supt. of Banks et al. v. Kraft-Phoenix Cheese Corporation, 139 So. 393.
It is our view that the Memphis bank, when it accepted the office of agent to aid its correspondent bank, the Indianola bank, in the collection of this check, knowing full well about the provision on the back of the deposit slip and seeing that the check itself was the property of Bianca, that it took this check as our agent under the law and could not come into possession of funds as our agent and use it for any other purpose than to turn it over to us in full as soon as collected.
Pearl River County v. Merchants Bank & Trust Company, 151 So. 756, 760; Peoples Gin Company v. Canal Bank & Trust Company et al., 144 So. 858, 146 So. 308.
From an adverse decree the appellant the First National Bank of Memphis, Tennessee, and J. S. Love, state superintendent of banks of Mississippi, in charge of the liquidation proceedings of the Merchants' Bank & Trust Company of Indianola, Mississippi, prosecute this appeal.
The appellee, Sam Bianca, filed his petition in the liquidation proceedings of the Merchants' Bank & Trust Company, which bank was being liquidated under section 3817, Code 1930, wherein he alleged that he was entitled to a preference claim, because the proceeds of a certain check were held by the bank in trust for the petitioner. After the hearing of this case had proceeded to a considerable extent, the petition was amended so as to allow the petitioner, Bianca, to enter suit against the First National Bank of Memphis, Tennessee, as his agent in the collection of that certain check.
It was charged in the petition that the First National Bank of Memphis, which we shall hereafter call the Memphis Bank, had collected a certain check which had been forwarded to it by the Merchants' Bank & Trust Company of Indianola, which we shall hereafter call the local bank, and that the two banks had conspired together to defraud him of the proceeds of the check, in that the Memphis Bank had applied the proceeds thereof to the debt of the local bank.
The decree in this case, after reciting the parties in pleading, uses this language: "Is of the opinion, and cloth so order that complainant is entitled to the relief prayed for: It is, therefore, the judgment of this court that the petitioner, Sam Bianca, do have of, and recover from, the defendant, J. S. Love, Superintendent of Banks in charge of the Merchants Bank & Trust Company of Indianola, Mississippi, in liquidation, and the First National Bank of Memphis, Tennessee, incorporated, the sum of five hundred and ninety-nine dollars and fifteen cents, being the sum of five hundred and thirty-five dollars and legal interest thereon, together with six per cent. interest on said sum from this date until paid, and all costs of this suit accrued, and to accrue, on all of which let execution issue as at law." The amended petition sought preference as to the local bank and a money decree against the Memphis Bank.
In stating the facts of the case, we will assume that the chancellor found from the evidence the following facts: On December 19, 1931, B. B. Allen, of Indianola, an attorney for the appellee, presented a check at the local bank, a copy of which, with the indorsements thereon, is as follows:
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