Hawaiian Pineapple Co. v. Browne
| Decision Date | 03 December 1923 |
| Docket Number | 5318. |
| Parties | HAWAIIAN PINEAPPLE CO., LIMITED, v. BROWNE. |
| Court | Montana Supreme Court |
Rehearing Denied Dec. 17, 1923.
Appeal from District Court, Hill County; C. D. Borton, Judge.
Action by the Hawaiian Pineapple Company against Frank Browne, as receiver of the Havre National Bank of Havre. Judgment for plaintiff, and defendant appeals. Remanded, with directions to modify judgment.
Max P Kuhr, of Havre, for appellant.
Norris Hurd, Rhoades & Hauge, of Havre, and Cleveland H. Hall, of Great Falls, for respondent.
The plaintiff, through the Bank of California, forwarded for collection to the Havre National Bank, hereafter called the Havre Bank, a draft upon the Ryan Havre Company of Havre Mont., in the sum of $4,671.28, with instructions to remit the proceeds to the First National Bank of Chicago, hereafter called the Chicago Bank. Five days later and on August 29, 1921, the Ryan Havre Company paid the draft by a check drawn on the Havre Bank with which it then had sufficient credit to cover the amount of the check. On the same day, August 29, for the purpose of paying the amount due the plaintiff the Havre Bank sent its cashier's check in the sum of $4,572.88 (being the amount due on the draft after allowing the authorized deductions) to the Chicago Bank. The Chicago Bank immediately sent the cashier's check to the Federal Reserve Bank of Minneapolis, Helena Branch, Helena, Mont., hereafter called the Helena Bank. The Helena Bank forwarded the check to the Havre Bank and it reached that bank on September 7, 1921. For the purpose of paying the check and some other cash items, the Havre Bank drew a draft upon and in favor of the Helena Bank in the sum of $6,565.36; but on the same day, September 7, after banking hours, it was decided officially that the Havre Bank should be closed on account of its insolvency and it did not open for business on the morning of September 8, and has been closed ever since. On September 7 the national bank examiner in charge of the Havre Bank notified the Helena Bank by telegram of the closing of the Havre Bank. At that time the account of the Havre Bank with the Helena Bank was overdrawn to the extent of approximately $12,000. The Helena Bank, having been authorized to file with the defendant receiver plaintiff's claim for the sum of $4,572.88, included that amount with other claims it then had, and on February 20, 1922, filed with the receiver a claim amounting to $9,000, and over, for which on March 5, 1922, the receiver issued to the Helena Bank his certificate, which is still outstanding, in full force, and has not been canceled.
On December 12, 1921, the plaintiff presented its duly verified claim to the receiver for the sum of $4,571.88. This the receiver disallowed, and he has ever since refused to allow it.
Nothing by way of funds or cash came into the possession of the Havre Bank or its receiver on account of the draft upon the Ryan Havre Company. The collection was handled in the usual course of business and by a transfer of credits merely on the books of the Havre Bank. The total amount of cash on hand in the Havre Bank at the time it closed its doors and when defendant was appointed receiver was $1,801.62.
Plaintiff having begun suit against the defendant as receiver, upon an agreed statement of facts containing substantially what is above set forth the trial court rendered judgment in favor of plaintiff for the sum of $4,572.88, declared the same to be a preferred claim against the bank, directed the receiver to issue a certificate based upon the preferred claim to the full amount thereof, and ordered him to pay the same in due course of administration of his trust. From this judgment the defendant has appealed.
When the Havre Bank obtained the amount of the draft which it was directed to collect and remit, the relation of agent and principal, and not that of debtor and creditor, existed between it and the plaintiff. Guignon v. First National Bank, 22 Mont. 140, 55 P. 1051, 1097; Spokane & Eastern Trust Co. v. United States Steel Products Co. (C. C A.) 290 F. 884; Michie on Banks & Banking, 1426, 1427. As in the Guignon Case, the Havre Bank could only receive cash in payment of the draft, and it could only discharge its duty by remitting the cash collected to the Chicago Bank. Under the circumstances, the collection and retention of the money by the Havre Bank created the relation of trustee and beneficiary between that bank and the plaintiff. State ex rel. Kelly v. Farmers' State Bank, 54 Mont. 515, 172 P. 130; 7 C.J. 617. If the collection of the draft augmented the assets of the bank, and if the plaintiff can trace the proceeds of the collection into the hands of the receiver, the plaintiff has a preferential right to those proceeds. As to this respective counsel agree. Defendant's counsel contends that by the collection of the draft in the manner in which it was done the assets of the bank were not augmented; he says there was a mere shifting of credits upon the bank's...
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