Gaar, Scott & Co. v. Hughes

• Decision Date: 07 December 1895
• Citation: 35 S.W. 1092
• Parties: GAAR, SCOTT & CO. v. HUGHES et al.
• Court: Tennessee Supreme Court

Page 1092

35 S.W. 1092

GAAR, SCOTT & CO. v. HUGHES et al.

Court of Chancery Appeals of Tennessee.

December 7, 1895.

Appeal from chancery court, Maury county; A. J. Abernathy, Chancellor.

Bill by Gaar, Scott & Co. against Hughes & Hatcher. From a decree in favor of defendants, complainant appeals. Affirmed.

Ingersoll & Peyton, for appellant. Voorheis & Fowler, for appellee Hughes. Figuers & Padgett, for appellee Hatcher.

WILSON, J.

This bill was filed by the complainant, a corporation of the state of Indiana, against the defendants, a firm of attorneys of Columbia, Tenn., to hold them liable for the amount of a note sent to them for collection. Chancellor Abernathy heard the cause October 25, 1895, upon the pleadings, exhibits thereto, and an agreed state of facts. He adjudged that the defendants were not liable, and dismissed the bill, with costs. From this decree, complainant prayed an appeal to the supreme court, and has assigned errors.

A large part of the record is taken up with the correspondence that passed between Mr. Hatcher, of the defendant firm, and complainant, relative to the note in question, and between him and Messrs. Ingersoll & Peyton, a firm of attorneys at Knoxville, Tenn., to whom complainant committed the matter some time previous to the filing of the bill by them. We deem it unnecessary to notice this correspondence, by direct reference to its features, in this opinion, having given it proper consideration, as evidence, after careful perusal, in coming to our conclusions of fact. Nor need we pass upon the action of the chancellor in excluding certain letters as evidence, and in refusing to expunge certain designated parts of the answer of Mr. Hatcher to the bill, upon motion made therefor, inasmuch as no errors are assigned in respect thereto.

The facts, as presented in the agreed statement of the parties, necessary, in our view of the cause, to be stated to present the question for decision, are: In October, 1891, the defendants, as attorneys, received from complainant, for collection, a note for the sum of $185, on one McKennon, of Maury county. Mr. Hatcher, who, it seems, attended to this class of business, the day after its reception, placed the note in the hands of Mr. McGaw, a constable. This officer saw Mr. McKennon, and October 12, 1891, collected the note, with accrued interest, amounting to $208. He deposited this sum, the same day, to his official credit, in the Columbia Banking Company. This bank was regarded at that time as perfectly solvent, and there were no suspicions as to its solvency existing in the community, and McGaw had no information or cause to suspect that it was in an embarrassed condition. The weight of the evidence is, and we so find as a fact, that said officer drew his check as an official on said bank for the amount of his collection from McKennon on the note of complainant, payable to the defendants, or to the defendant Hatcher, but did not tender it that day, because he failed to see Mr. Hatcher. This had been the course pursued by that officer for a series of years in respect to collections placed in his hands by the defendants, and during these years he had collected a number of claims for this complainant, placed in his hands by Messrs. Hughes & Hatcher, and they had always accepted his checks on said bank in payment of collections made by him for complainant and their other clients. This officer, October 15, 1891, seeing Mr. Hatcher, tendered his check on said bank for the sum of the McKennon note collected by him as aforesaid; but, before the day of the tender of this check, the firm of Hughes & Hatcher had been retained to prepare an assignment for said bank. When they accepted a retainer to prepare the assignment, neither member of the firm of Hughes & Hatcher had any information that the officer had collected the McKennon note, and deposited the same in said bank to his official credit. When this officer tendered his check, as aforesaid, to Mr. Hatcher, October 15, 1891, the defendant firm was engaged in the preparation of said assignment; and Mr. Hatcher declined to accept it, saying he had no time to attend to the matter. But, as a matter of fact, said Hatcher then knew that he could not collect the money on said check of the officer; and this was the reason of his declination to accept it. He felt and believed that he ought not to decline to receive the check, because it might create suspicion about the bank, and thus defeat the end contemplated in the assignment he was preparing. The bank closed its doors on the 16th day of October, 1891. It appears that, before the officer tendered said check, Mr. Hatcher had sought to withdraw some funds from said bank, but could not do so. It seems, also, that at the time Mr. Hatcher declined to accept said check of the officer, he regarded his retainer to prepare said assignment and the nature of the information involved in it, as confidential, as he had no knowledge of the condition of said bank, except that derived from its officers in his professional capacity, received a day or two before the officer offered him said check. On the evening of the 16th of October, 1891, the deposit of the officer in question in said bank was changed from the official credit of the constable to the credit of complainant. The record discloses that the defendant Hatcher thinks the officer made the change, and that the officer thinks Mr. Hatcher had the change made; but Mr. Hatcher assumes whatever liability may attach to such transfer of this deposit, for, if the officer had the transfer made, he did so by authority from Mr. Hatcher. Mr. Hatcher, shortly after the transaction, notified complainant of all the material facts connected with the transaction, and of the transfer of the deposit in said bank from the credit of the officer to its credit. It is further admitted in the agreed statement of facts that neither complainant nor their solicitors in this case received any information as to Hatcher's agency in having the transfer of the deposit made, except from letters from Hatcher to complainant and to their solicitors. Defendant Hatcher advised complainant, in view of the facts, that, in his opinion, the officer was not liable because of his deposit of the funds in said bank, and that, in consequence, it would have to sustain the loss. After receiving this information, complainant received several dividends or pro ratas upon the deposit made by the officer as aforesaid, and thereafter changed to the credit of complainant. It is further agreed that the advice given to complainant by Mr. Hatcher as to the officer's liability was given in good faith, and after an investigation by him of the legal proposition involved. The defendant Hughes had nothing to do with the collection in controversy, nor with the transfer of the deposit, nor did he know of the matter until after the correspondence had been begun by the solicitors, Ingersoll & Peyton, in regard to the matter. It seems that complainant received several dividends from said insolvent bank, and one after the filing of the bill in this case; but Mr. Hatcher does not rely upon any plea of ratification or estoppel against complainant on the ground of its acceptance of dividends after receiving knowledge of the transfer of the deposit to its credit, but in his answer says if, under the facts and circumstances, as they shall appear to the court, respondent was ever at any time liable to complainant, either...