Guignon v. First Nat. Bank

• Decision Date: 06 February 1899
• Citation: 55 P. 1051,22 Mont. 140
• Parties: GUIGNON v. FIRST NAT. BANK OF HELENA et al. [1]
• Court: Montana Supreme Court

55 P. 1051

22 Mont. 140

GUIGNON v. FIRST NAT. BANK OF HELENA et al. ^[1]

Supreme Court of Montana

February 6, 1899

Appeal from district court, Lewis and Clarke county; H. C. Smith Judge.

Action by Charles Guignon against the First National Bank of Helena and another. There was a judgment for plaintiff, and all parties appeal. Affirmed.

On August 8, 1896, plaintiff deposited with the First National Bank of Helena, Mont. (hereinafter called the "National Bank"), a draft for pounds sterling 400 on the Standard Bank of South Africa, of London, England, with instructions to collect it, and notify him. At this time, and thereafter until September 4, 1896, the National Bank was solvent, and doing a general banking business. Melville, Fickus & Co. bankers, of London, England (hereinafter designated as the "London Bank"), were the correspondents of the National Bank, and each house had current accounts with the other on its books. It was the custom, observed by them, for each bank, upon making a collection for the other, to credit it, as soon as made, upon its own books, and notify the other by letter of its action. The other would thereupon charge the collecting bank with the amount so collected. On August 8th the plaintiff's draft was forwarded by the National Bank to the London Bank for collection in the usual course. The London Bank collected the draft on August 21st, and thereupon, on the same day, notified the National Bank by letter that it had credited the amount. On September 2d this letter was received, and on the same day the National Bank wrote the London Bank, approving its action, and notifying it that the National Bank had charged the amount to the London Bank. This charge was made that day. From August 21st until September 3d the two banks continued business as usual making drafts upon each other, but the volume of this business does not appear, except as hereinafter stated. From August 21st to September 4th the National Bank did a large volume of general business, foreign and domestic, amounting to from $75,000 to $200,000 and upwards daily. On September 4th the National Bank failed to open its doors. On September 15th the defendant Wilson, in charge of it as examiner called upon the London Bank for the credit on its books in favor of the National Bank. This balance, amounting to pounds sterling>475 14s. 4d., was paid to Wilson, the receiver, on October 26, 1896. It was larger than the balance shown by the books of the National Bank, because two drafts had been drawn by the National Bank against its London balance three or four days before suspension, and credited on its own books, but had not been paid by the London Bank. These, together, amounted to $38.60. At the time the National Bank closed its doors it had on hand in cash $4,343.72. The National Bank paid plaintiff no part of the amount of the draft, nor has he been paid any part of it by any one. The defendant Wilson was subsequently made receiver of the National Bank. On August 8th, and thereafter until the National Bank closed its doors, the plaintiff had an account with it open to check. Demand was made upon Wilson by the plaintiff herein for the amount collected from the London Bank, but this demand was denied. The court below found upon these facts that from and after August 21st until September 4th the London Bank had a continuous balance in favor of the National Bank upon its books of more than the amount of plaintiff's draft; that the relation of principal and agent between plaintiff and defendant bank had never been converted into the relation of debtor and creditor; that plaintiff had a preferential claim against the funds in the hands of the receiver because of the payment by the London Bank into his hands of the balance on its books; and that he was, therefore, entitled to recover from the receiver the sum of $1,928, the full amount of his claim, without interest, because, if interest were allowed, it would be drawn from the general assets of the bank. From this judgment both parties appeal.

J. M. Clements, for plaintiff.

William Wallace, for defendants.

BRANTLY C.J. (after stating the facts).

The defendants assign as error that the facts found will not support the judgment. The plaintiff insists that he should be allowed interest. It will be seen from the statement of facts that the relation of principal and agent was established between the plaintiff and the National Bank by the transaction between them on August 8th, 1896. The draft was deposited with directions to collect and notify plaintiff and not for credit. Though the plaintiff at that time had an open account with the bank subject to check, this fact is of no weight in view of the specific directions given by him. Furthermore, the record does not show that the defendant bank ever gave notice to the plaintiff, or credited him with the amount of the collection. In our view of this case, the mere act of crediting the amount to the plaintiff upon the books of the defendant bank would not change the relation of the bank to plaintiff from that of agent to that of debtor until it had actually received the money from the London Bank. The plaintiff could still pursue the funds in the hands of the latter so long as he could identify them. The title to the...