First Nat. Bank v. Smith Bros. Grain Co.

• Decision Date: 17 October 1925
• Docket Number: (No. 11245.)
• Citation: 276 S.W. 951
• Parties: FIRST NAT. BANK OF ROSWELL, N. M., v. SMITH BROS. GRAIN CO.
• Court: Texas Court of Appeals

276 S.W. 951

FIRST NAT. BANK OF ROSWELL, N. M., v. SMITH BROS. GRAIN CO.

(No. 11245.)

Court of Civil Appeals of Texas. Fort Worth.

October 17, 1925.

Appeal from Tarrant County Court; H. O. Gossett, Judge.

Action by the Smith Bros. Grain Company against R. E. Levers & Co., in which the Farmers' & Mechanics' National Bank of Fort Worth was garnished, and wherein the First National Bank of Roswell, N. M., appeared and controverted the pleading of plaintiff. From a judgment for plaintiff, the First National Bank of Roswell, N. M., appeals. Affirmed.

Goree, Odell & Allen and Hampden Spiller, all of Fort Worth, for appellant.

Smith & Smith, of Fort Worth, for appellee.

CONNER, C. J.

Appellee obtained a judgment against R. E. Levers & Co., and as such judgment creditor garnished the Farmers' & Mechanics' National Bank of Fort Worth, Tex. The Fort Worth bank answered that it was not indebted to Levers & Co., but that it held $193.54, the proceeds of a draft drawn by that company, on December 4, 1923, on E. M. Rogers & Co., payable to the First National Bank of Roswell, N. M., and by that bank sent to the garnishee for collection; that the amount so collected by the garnishee bank was claimed by the Roswell bank as its property.

The appellee controverted the answer of the garnishee bank and alleged that the Roswell bank had received and accepted the draft for collection only, and that the drawer of the draft, Levers & Co., was in fact the owner of the fund, and it prayed that the Roswell bank be made a party and that it have judgment against both banks for the amount of the judgment which it alleged it had recovered against Levers & Co., in the main suit to which the garnishment was ancillary.

The Roswell bank appeared and controverted the pleading of the Smith Bros. Grain Company, alleging that it had purchased the draft from Levers & Co. and paid value for the same, and that the same was not taken by it for collection only, and that the fund collected by the Fort Worth bank belonged to it and not to Levers & Co.

The case was tried before the court without a jury and resulted in a judgment for the appellee company, from which the Roswell bank has prosecuted this appeal.

The draft in question was drawn by R. E. Levers & Co. upon E. M. Rogers & Co., care Farmers' & Mechanics' National Bank, Fort Worth, Tex., and made payable to the First National Bank of Roswell, N. M., in the sum of $322.56. Beneath the figures $322.56 appear in pencil $192.02, making a balance of $193.54. It was indorsed in blank by the First National Bank of Roswell, and further indorsed:

"No protest. Do not return account nonpayment until disposition instructions are furnished by sender. On arrival of car Penn 560032, accept paid freight bill as part payment. F. & M. Collection No. 18278. Paid December 4, 1923."

The trial court found that the draft had been delivered to the Roswell bank for collection only, and that the proceeds in fact belonged to Levers & Co. It is manifest that the vital issue in the case is one of fact. The draft was not indorsed by Levers & Co. for collection merely, and at the time of its deposit the evidence shows that the Roswell bank entered its face value to the credit of Levers & Co., which was one of its customers, and we think that without further explanation and evidence the fund would belong to the Roswell bank. Under that state of facts the Roswell bank would have the legal title and entitled to recover the draft or its proceeds from whomsoever had possession thereof. See Provident National Bank of Waco v. Cairo Flour Co. (Tex. Civ. App.) 226 S. W. 499; Atlantic Oil Producing Co. v. Dawkins (Tex. Civ. App.) 230 S. W. 525; West Texas National Bank v. Wichita Mill & Elevator Co. (Tex. Civ. App.) 194 S. W. 835. But we think it was not conclusively so.

In 3 R. C. L. p. 524, § 152, it is said:

"When a check or other commercial paper is deposited in a bank, indorsed for collection, or where there is a definite understanding that such is the purpose of the parties at the time of deposit, there is no question that the title to the paper remains in the depositor. So, checks deposited as checks do not give rise to the...