Hatley v. West Texas Nat. Bank

• Decision Date: 12 May 1926
• Docket Number: (No. 631-4491.)
• Parties: HATLEY v. WEST TEXAS NAT. BANK OF BIG SPRING.
• Court: Texas Supreme Court

284 S.W. 540

HATLEY v. WEST TEXAS NAT. BANK OF BIG SPRING.

(No. 631-4491.)

Commission of Appeals of Texas, Section B.

May 12, 1926.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by Troy Hatley against J. W. White, in which the West Texas National Bank of Big Spring was garnished. Judgment giving plaintiff insufficient relief was affirmed in 272 S. W. 571, and plaintiff brings error. Reversed and rendered.

Cunningham & Cunningham, of Big Spring, for plaintiff in error.

Morrison & Morrison, of Big Spring, for defendant in error.

SPEER, J.

Troy Hatley, who held a judgment against J. W. White garnished West Texas National Bank of Big Spring, and from an instructed verdict in his favor for the sum of $128.08 admitted by the garnishee to be due White, he appealed, and that judgment was affirmed by the Court of Civil Appeals. 272 S. W. 571. That appeal and the present writ of error are predicated upon the contention of Hatley that the bank was liable for the full amount of his judgment against White, being $500 with interest, upon the theory that at the time of the service of the writ upon the bank, White was the owner of a check for $2,400 drawn by G. E. McNew, which check was at the time in the actual possession of the bank. McNew was buying a barber shop, which belonged to White, and the parties had agreed upon $2,400 as the consideration. McNew had executed and delivered his check as above stated, and White had presented the same to the bank for payment, but the bank refused payment at the time, because McNew was not in funds, but had arranged for a loan conditioned upon Sam Eason's signing a note with him, and since Eason had not signed when the check was first presented, the bank declined payment until the loan, which was for the sum of $2,400, should be consummated. Later, Eason did sign, the loan was consummated, the $2,400 was placed to the credit of McNew, and the check, which in the meantime in some way had been redelivered to White, was presented by and paid to White's wife. There is nothing to indicate the bank accepted the check for payment when first presented. The Court of Civil Appeals in affirming the judgment announced the propositions that a bank upon which a check has been drawn is not liable upon the check to the payee unless and until it accepts or certifies the same, and that under the Uniform Negotiable Instruments Act the transaction did not amount to an equitable assignment of the funds to McNew's credit. The first proposition is generally accepted as a correct statement of the law, but it is, of course, subject to the well-known exception ruled against in the second point of the holding. The real question in this case, then, is whether or not the check drawn by McNew and delivered to White amounted to an equitable assignment so as to make the bank liable directly to White for its payment, and therefore to the garnishing plaintiff. We think such was the effect of the transaction.

It is the generally accepted doctrine by the great weight of authority that an order drawn on a debtor for a part of a fund in his hands, and unaccepted by him, will not operate as an equitable assignment of part of the fund as against the drawee, even though drawn on a particular fund specified. The reason for this rule is generally said to be that the debtor has a right to pay his debt in solido and to refuse to be subjected to suits by several claimants, which might result if he were compelled to recognize each order as an assignment pro tanto of the funds. But however uniform has been the holding upon this question, the reasoning is of doubtful soundness, and when rightly analyzed is based apparently upon a false assumption, when applied to the relation of depositor and bank. That assumption is that the contract is that the bank will repay only in solido to the order of the depositor, whereas it is matter of common knowledge — the universal custom is — that the bank undertakes to repay the deposit or debt created thereby to the order of the...