Hardesty v. Smith

• Decision Date: 23 February 1935
• Citation: 159 So. 522,118 Fla. 464
• Parties: HARDESTY v. SMITH.
• Court: Florida Supreme Court

159 So. 522

118 Fla. 464

HARDESTY v. SMITH.

Florida Supreme Court, Division B.

February 23, 1935

Suit by Walter C. Hardesty, Jr., against M. A. Smith, as liquidator of the Merchants' Bank & Trust Company. From a decree dismissing the bill of complaint, the complainant appeals.

Reversed and remanded, with directions. Appeal from Circuit Court, Volusia County; M G. Rowe, Judge.

COUNSEL

J. A Scarlett and Scarlett & Futch, all of De Land, for appellant.

E. W. &amp R. C. Davis and D. V. Rouse, all of Orlando, for appellee.

OPINION

BUFORD Justice.

The appellant filed suit in the circuit court of Volusia county for the purpose of having his claim against Merchants' Bank & Trust Company adjudicated to be a preferred claim in the sum of $209.16.

The record shows that on the 10th day of July, 1929, the appellant deposited $100 in currency and a check for $209.16, the check being drawn on Title Guaranty & Trust Company of New York City; that the check was payable to the complainant in the court below, appellant here, and was indorsed by the complainant in blank to the Merchants' Bank & Trust Company; that the check was good and payable, and was forwarded by air mail by Merchants' Bank & Trust Company on July 10th to Irving Trust Company of New York City; that the check was paid through the New York Clearing House during business hours on July 12, 1929. On the morning of July 11, 1929, Merchants' Bank & Trust Company failed and ceased to do business. It was a closed banking institution at the time the check was cleared and paid in New York and did not reopen.

The record further shows that on July 10, 1929, Merchants' Bank & Trust Company was hopelessly and irretrievably insolvent, and its failure was imminent, and such conditions were fully known, or should have been known, to its officers.

The appeal is from a final decree finding the equities with the defendant and dismissing the bill of complaint.

The complainant in the court below only claimed preference as to the proceeds of the check of $209.16. The record shows, as stated above, that these proceeds became available to the bank after it became a closing banking institution.

Section 4748, R. G. S., section 6834, C. G. L., provides as follows:

'When a check, draft, note or other negotiable instrument is deposited in a bank for credit, of for collection, it shall be considered due diligence on the part of the bank in the collection of any check, draft, note or other negotiable instrument so deposited, to forward en route the same without delay in the usual commercial way in use according to the regular course of business of banks, and the maker, endorser, guarantor or surety of any check, draft, note or other negotiable instrument, so deposited, shall be liable to the bank until actual final payment is received, and when a bank receives for collection any check, draft, note or other negotiable instrument and forwards the same for collection, as herein provided, it shall only be liable after actual final payment is received by it, except in case of want of due diligence on its part as aforesaid.'

Now it is clear to us that under the provisions of this section the bank did not become liable to Hardesty for the amount of the check until the check was paid. Up until the time the check was paid, Hardesty was liable to the bank, and, as the...