First Nat. Bank v. Cross & Napper

• Decision Date: 05 December 1934
• Docket Number: 4844
• Citation: 157 So. 636
• Parties: FIRST NAT. BANK v. CROSS & NAPPER
• Court: Court of Appeal of Louisiana — District of US

157 So. 636

FIRST NAT. BANK v. CROSS & NAPPER

No. 4844

Court of Appeal of Louisiana, Second Circuit.

December 5, 1934

Rehearing denied January 9, 1935.

W. E McBride and A. K. Goff, Jr., both of Ruston, for appellant.

Elder &amp Elder, of Ruston, for appellee.

OPINION

DREW Judge.

On August 30, 1933, Cross & Napper, defendant herein, drafted on Anderson Clayton & Co., of Monroe, La., for the sum of $ 771.92. The payee in the draft was the Bank of Simsboro. Attached to the draft was a bill of lading or statement giving the numbers and weights of each of sixteen bales of cotton. The draft was deposited in the Bank of Simsboro on that date, and the account of Cross & Napper credited with the amount of the draft, less 77 cents, which was deducted as charges for collecting the draft. The amount of $ 771.15 was entered in the bank book of defendant, and a deposit slip also issued to it for said amount. On the front leaf of the bank book the following notation is printed:

"Always bring this book with your deposits.

"See that entries agree with your tickets.

"In receiving items for deposit or collection, this bank acts only as depositors' collecting agent and assumes no responsibility beyond the exercise of due care. All items are credited subject to final payment in cash or solvent credits. This bank will not be liable for default or negligence of its duly selected correspondents nor for losses in transit, and each correspondent so selected shall not be liable except for its own negligence. This bank or its correspondents may send items, directly or indirectly, to any bank, including the payor, and accept its draft or credit as conditional payment in lieu of cash; it may charge back any item at any time before final payment, whether returned or not, also any item drawn on this bank not good at close of business on day deposited."

This same notice is printed at the top of the deposit slip.

The Bank of Simsboro was dealing with the First National Bank of Ruston, plaintiff herein, as one of its correspondents, and had from time to time prior to this transaction secured money from that bank. On the morning the draft in question was given, the Bank of Simsboro had secured from the First National Bank of Ruston the sum of $ 800 in currency, with the understanding and agreement that it would deliver to it some cotton drafts, and on the afternoon of that day the vice president and chairman of the Simsboro Bank went in person and delivered to the First National Bank of Ruston the draft in question. The following slip was attached to the draft by the Bank of Simsboro when it was delivered to the First National Bank of Ruston:

"Bank of Simsboro

"Simsboro, La., August 30, 1933.

"First National Bank, Ruston, La.

"N. P. 84-235:

"We enclose for credit (7)6D.

"Please report by date of letter.

"Do not hold for convenience of parties, but protest and return at once unless otherwise instructed.

"Do not deliver Bill of Lading until payment of Draft.

"Protest Items marked X.

"Wire non-payment of items of $ 500.00 and over.

"Respectfully,

"C. W. Tatum,

"V. P. and Cashier.

Drawn On Amount

Anderson Clayton

$ 771.92

$ 771.92"

The First National Bank issued to the Bank of Simsboro a credit letter showing receipt of the said draft, and credited the account of the Bank of Simsboro with the amount called for by said draft. At noon, the day following, the bank examiner closed the Bank of Simsboro, and it has never opened since that time. Cross & Napper, the makers of the draft, immediately notified Anderson Clayton & Co. not to pay it, and the draft was not paid. Cross & Napper executed another draft on Anderson Clayton & Co. for the same amount, but, before it was paid, the First National Bank of Ruston informed Anderson Clayton & Co. that it was claiming the proceeds under the first draft; therefore Anderson Clayton & Co. refused to pay the second draft.

When the draft was delivered to the First National Bank of Ruston by the Bank of Simsboro, it bore the following indorsement:

"Pay to the order of any Bank, banker or trust company. All prior endorsements guaranteed.

"Bank of Simsboro,

"C. W. Tatum, V. P., and Cashier."

The First National Bank of Ruston instituted this suit against Cross & Napper, makers of the draft, alleging it was the owner in due course of said draft, that it acquired it for value, and that its indorser, Bank of Simsboro, had acquired the draft for value from Cross & Napper.

The defense set up is that the draft was deposited with the Simsboro Bank for collection, that ownership did not pass to the Bank of Simsboro, and that plaintiff did not acquire said draft in due course, but received it for collection as a corresponding bank of the Bank of Simsboro. Before any evidence was introduced on trial of the case below, defendant objected to the introduction of any evidence for the reason that plaintiff's petition did not set forth a cause or right of action.

The testimony was admitted subject to the objection, and, after trial was had, the lower court rendered a written opinion awarding judgment to plaintiff as prayed for, and holding that the Bank of Simsboro had acquired the draft for value and was the owner of same. Defendant has appealed from that judgment, and urges in this court the objection urged in the lower court to the introduction of any testimony. In support of this contention, defendant relies exclusively upon the case of Citizens Trust Company v. Ward, 195 Mo.App. 223, 190 S.W. 364, which case cites the cases of Bank of Indian Territory v. First Nat. Bank, 109 Mo.App. 665, 83 S.W. 537, and National Bank of Rolla v. First Nat. Bank of Salem, 141 Mo.App. 719, 125 S.W. 513, wherein the court said, following the defendant's reasoning, it must be admitted that the indorsement on the note "pay to any bank or banker" is an indorsement for collection, and that an indorsement for collection does not transfer title.

This identical question was before the court in the case of Interstate Trust Company et al. v. United States National Bank, and decided by the Supreme Court of Colorado, reported in 67 Colo. 6, 185 P. 260, 261, 10 A. L.R. 705. In that case the court said:

"It is urged by plaintiffs in error that the endorsements: "Pay to the order of any bank or banker previous endorsements guaranteed,' made by The Interstate Trust Company, and "Received payment through the Denver Clearing House,' by The First National Bank, were collection, or restrictive endorsements, and that the endorsers guaranteed nothing as to the genuineness or worth of the paper. A restrictive endorsement is such only when it prohibits further negotiation of the paper, constitutes the endorser merely the agent of the owner, or vests the title in the endorsee in trust for, or to the use of, some other person. Section 4499, R. S.1908. The authorities are practically unanimous that endorsements such as the ones under consideration can have no such limited or restricted effect. Crawford on Negotiable Instruments (1916 Ed.) 78, 79, 130, 132; National Bank v. Bossemeyer, 101 Neb. 96, 162 N.W. 503, L. R.A.1917E, 374; First Nat. Bank v. First Nat. Bank, 58 Ohio St. 207, 50 N.E. 723, 41 L.R.A. 584, 65 Am. St. Rep. 748; First Nat. Bank v. First Nat. Bank, 4 Ind.App. 355, 30 N.E. 808, 51 Am. St. Rep. 221; Woods v. Colony Bank, 114 Ga. 683, 40 S.E. 720, 56 L.R.A. 929; N. Y. Produce Ex. Bank v. Twelfth Ward Bank, 135 A.D. 52, 119 N.Y.S. 988.

"In National Bank v. Bossemeyer 101 Neb. 96, 100, 162 N.W. 503, L.R.A.1917E, 374, supra, the court in discussing the effect of the endorsement: "Pay to any bank or banker; all previous endorsements guaranteed,' said:

" "Is the indorsement restrictive? Whatever may have been held before the enactment of the Negotiable Instruments Act, it is clear that the question must be determined by the provisions of that statute, (3)5C as follows: "An indorsement is restrictive which either: First prohibits the further negotiation of the instrument; or, second constitutes the indorsee the agent of the indorser; or, third vests the title in the indorsee in trust for or to the use of some other person. But the mere absence of words implying power to negotiate does not make an indorsement restrictive."

" "There is nothing on the face of this indorsement which prohibits the further negotiation of the instrument or constitutes the indorsee the agent of the indorser, or vests title in the indorsee in trust for the use of some other person, and hence, by the most elementary principles of statutory construction, the plain meaning of the language must be observed, and it must be held that the indorsement was not restrictive.' "

In the footnotes of this case, it will be seen that a number of states hold to the view urged by defendant and hold such an indorsement to be a restricted indorsement and cannot transfer title.

The reasoning in the case above quoted meets with our approval, and we find the indorsement was not restrictive and was sufficient to transfer title. The objection to the testimony was therefore properly overruled.

The first defense raised is that the Bank of Simsboro did not become the owner of the draft when deposited. It is clear from the oral testimony, as well as the printed notice on the deposit slip and in the bank book of defendant, that the Bank of Simsboro reserved to itself the right to charge back to defendant the amount of the draft, in case it was returned unpaid. It is also clear that no restrictions were placed on the credit given defendant by the Bank of Simsboro. There is nothing in the record to show that defendant could not have checked out the entire amount; in fact, it did give checks against its account on that date, but the total amount of...