German Nat. Bank v. Grinstead

• Decision Date: 04 October 1899
• Citation: 52 S.W. 951
• Parties: GERMAN NAT. BANK v. GRINSTEAD et al. SAME v. HERNDON et al. SAME v. DRUEIN et al. SAME v. OTTER et al. SAME v. SULLIVAN. SAME v. WEDEKIND et al.
• Court: Kentucky Court of Appeals

52 S.W. 951

GERMAN NAT. BANK v. GRINSTEAD et al.

SAME v. HERNDON et al.

SAME v. DRUEIN et al.

SAME v. OTTER et al.

SAME v. SULLIVAN.

SAME v. WEDEKIND et al. ^[1]

Court of Appeals of Kentucky.

October 4, 1899

Appeals from circuit court, Jefferson county, law and equity division.

"Not to be officially reported."

Actions by W. E. Grinstead & Co. and others against the German National Bank on certain checks. Judgment for plaintiffs, and defendant appeals. Affirmed.

Richards Baskin & Ronald and W. M. Smith, for appellant.

HOBSON J.

The learned judge of the court below delivered the following opinion in these cases:

"D H. Taylor, a man without capital, made an arrangement with the German National Bank, through its cashier, for him (Taylor) to buy and ship eggs to New York. Taylor was to draw a draft on the New York consignees, with a bill of lading covering the consignment of eggs attached thereto and to turn it over to the bank; and thereupon the bank would pass the amount of the draft thus secured by the bill of lading to the credit of Taylor on the books of the bank and on Taylor's bank pass book as so much cash. Taylor would then draw checks on the bank against this cash credit for the purchase price of the eggs in favor of the persons from whom he had purchased them. This was the principle upon which he had been carrying on his business with the Third National Bank prior to his transferring his business to the defendant, the German National Bank. It was further, a part of the arrangement that the German National Bank would cash the checks which Taylor had previously drawn in favor of his vendors, when presented, and take to itself the proceeds of the drafts on the New York customers which had been discounted at said bank. It is admitted that such was the arrangement in regard to the first draft of $640, on January 8, 1896. The next day, January 9th, Taylor delivered to the bank another draft on New York, with bill of lading attached thereto, for the amount of $1,139.40. This draft was discounted on that day, and the amount passed to his credit on the books of the bank and upon his pass book; and on the 13th of January another draft of similar character on New York consignees, with bill of lading attached, was discounted by Taylor at the said bank for $1,780.48, and the same entries made on the bank book, putting the same to Taylor's credit, and also upon his pass book. The proof shows that these amounts were put to Taylor's credits, and that the bank not only paid all of Taylor's checks on the first draft of $640, but also cashed several checks drawn by Taylor, in favor of his vendors from whom he had purchased the eggs, against the second draft deposited by him with the indorsed bill of lading attached thereto. After these drafts on New York, with the indorsed bills of lading attached thereto, had been discounted at the bank, and the amounts of the same passed to Taylor's credit on the bank books and in his pass book as so much cash, and after the bank had cashed Taylor's checks against the same in amount more than the amount of the first draft on New York, and after Taylor had given to the several plaintiffs in these six actions checks on the bank against his cash credit for the purchase price of the eggs shipped to New York and covered by the bills of lading held by the bank, and after the second draft on New York for $1,139.40 had been dishonored, the president of the defendant bank--who, it seems, had not known of the arrangement between the cashier and Taylor, and who testifies that he did not know of the dishonor of the New York draft for $1,139.40 -- directed the cashier to charge back on the books of the bank to Taylor's account the two drafts, one for $1,139.40 and the other for $1,782.48, and place the same on the books as drafts for collection. The cashier obeyed the orders of the president, and without the knowledge or authority of Taylor, or of any one authorized to represent him in that matter,--for from the evidence Druein certainly had no such authority,--charged the amount of these two drafts back to Taylor, who was at that time in the city of New York. The plaintiffs, to whom Taylor had given checks on the bank for the price of the eggs bought by him from them, presented their checks to the bank, and demanded payment thereof, and the same was refused. Hence these suits.

"The bank did not, when it charged back these amounts to Taylor's account, offer to surrender the drafts on the New York consignees, or the bills of lading attached thereto nor did it make such offer when it dishonored Taylor's checks drawn in favor of these plaintiffs, nor has it ever offered to surrender the said drafts on New York and the bills of lading. On the contrary, the proof is that the president of the bank, with full knowledge of all the facts, held onto the New York drafts and bills of lading, and refused to surrender them to Taylor, and the same are in possession of the bank. The dishonor of Taylor's draft on New York, it may be stated in passing, was caused by one of Taylor's New York creditors attaching one of his consignments for an old debt due from Taylor to him. When the attachment in New York was levied on the eggs, the defendant bank, payee in Taylor's draft against the New York consignee, and the holder and owner of the bill of lading accompanying said draft, had, in law and in equity, a superior legal interest and right in said...