Hayes v. Tootle-Lacy Nat. Bank

• Decision Date: 27 July 1934
• Docket Number: No. 1004.,1004.
• Citation: 72 F.2d 429
• Parties: HAYES v. TOOTLE-LACY NAT. BANK et al.
• Court: U.S. Court of Appeals — Tenth Circuit

72 F.2d 429 (1934)

HAYES v. TOOTLE-LACY NAT. BANK et al.

No. 1004.

Circuit Court of Appeals, Tenth Circuit.

July 27, 1934.

E. R. Sloan and Albert M. Cole, both of Holton, Kan., for appellant.

John L. Hunt, of Topeka, Kan. (Bennett R. Wheeler, S. M. Brewster, Margaret McGurnaghan, and Ralph M. Hope, all of Topeka, Kan., on the brief), for appellee Central Nat. Bank.

Brown, Douglas & Brown, of St. Joseph, Mo., for appellee Tootle-Lacy Nat. Bank.

Before PHILLIPS, McDERMOTT, and BRATTON, Circuit Judges.

McDERMOTT, Circuit Judge.

The First National Bank of Holton, Kansas, which failed on May 22, 1931, was a depositor of The Tootle-Lacy National Bank of St. Joseph, Missouri. The Central National Bank of Topeka, Kansas, was another customer of the St. Joseph Bank. On May 14, the Topeka bank sent to the St. Joseph bank for collection a cashier's check of the Holton bank for $2,138.26. The St. Joseph bank sent this check, along with other items aggregating $3,948.35, directly to the Holton bank for payment. The Holton bank honored these items on May 16, and sent a credit memorandum to the St. Joseph bank for that amount. On the same day, the Holton bank sent the St. Joseph bank, for deposit, items aggregating $6,222.27, which included a draft for $5,000 on a Kansas City bank. Upon receipt of this memorandum on May 18 (May 17 being Sunday) the St. Joseph bank charged the Holton bank with $3,948.35 as directed, and credited it with $6,222.27. Before this charge and credit, there was a balance of $2,437.19 to the credit of the Holton bank. After these entries, the Holton bank's credit balance was $3,659.46. The Kansas City bank dishonored the $5,000 draft; whereupon the St. Joseph bank charged $5,000 back to the Holton bank, which left the Holton bank overdrawn. The St. Joseph bank then ran a line through the charge of $3,948.35 and another charge of $2,119.98; this, the St. Joseph and Holton banks claim, transformed the overdraft into a credit balance of $2,952.78 which has been tendered into court.

The receiver of the Holton bank demanded the credit balance so disclosed. The Topeka bank claimed that since the St. Joseph bank, as a collection agent, had in fact collected the item of $2,138.26, it should remit the sum so collected to its principal.

Confronted by these two claims, one as a depositor for a balance in his account, and the other by a principal for failure to remit moneys collected as an agent, and the amount which it conceded owing being less than the two claims, the St. Joseph bank brought this action which, in its brief in this court, it styles a bill of interpleader. Its bill states the above facts and prays that it be permitted to pay $2,952.78 into court and be relieved of the obligations asserted by the two defendants, aggregating $5,091.04. The action involving the winding up of the affairs of a national banking association, it was removed to the United States court. 28 USCA § 41 (16); Moulton v. National Farmers' Bank (D. C. Minn.) 27 F.(2d) 403.

Neither of the defendants challenged directly the right of the plaintiff to a discharge from claims aggregating $5,091.04 by the payment of $2,952.78 into court, except in so far as the answers each contain a general denial coupled with admissions of the specific facts affecting the answering defendant.¹ The receiver of the Holton bank alleged that plaintiff was indebted to him for the balance of the deposit, and prayed for judgment for the amount thereof. The Topeka bank alleged that plaintiff, as agent for the Topeka bank, had collected $2,138.26 and failed to remit, and asked judgment for that sum. The plaintiff has not challenged the right of defendants to ask for affirmative relief. City of Los Angeles v. Amidor, 140 Cal. 400, 73 P. 1049. Instead, all parties went to trial upon an agreed statement of facts and submitted the cause for decision.

The trial court held that the Topeka bank was entitled to recover $2,138.26 with six per cent interest from May 14, 1931, and judgment was rendered accordingly; it was ordered that plaintiff pay $2,952.78 into court and that the Topeka bank's judgment should be paid out of that sum, or, if plaintiff did not pay such sum into court, then execution to issue. The St. Joseph bank paid such sum into court. No order was entered upon plaintiff's prayer for a discharge from both claims, and no judgment rendered on the receiver's claim against the plaintiff. No disposition has been made of the balance of the sum paid into court after satisfying the judgment of the Topeka bank.

The St. Joseph bank has not appealed, either from the judgment in favor of the Topeka bank, or from the order directing it to pay the money into court without discharging it from its obligations to both defendants. Instead, it has complied with the order. Whether it was entitled to a discharge, or whether its bill stated a cause in interpleader, is therefore not before us. In a very similar case, Mr. Justice Holmes doubted whether the case was one of interpleader, but said that "still as all parties consented to the jurisdiction we do not feel called upon to raise a question upon that score. See McGowan v. Parish, 237 U. S. 285, 295, et seq., 35 S. Ct. 543, 59 L. Ed. 955." Levinson v. United States, 258 U. S. 198, 200, 42 S. Ct. 275, 276, 66 L. Ed. 563.

The only appeal is by the receiver of the Holton bank. Since his claim has not been adjudicated, it is very difficult to see what interest he has in a decision of the controversy between the Topeka and St. Joseph banks over an agency relationship to which he is a stranger. If the Topeka and St. Joseph banks are satisfied with the outcome of their controversy — and neither has appealed — it is not at all clear that the receiver has any legal right to object. However, the receiver is at least an interested bystander, for the decision that the cashier's check had been paid by a charge to the account of the Holton bank in the St. Joseph bank, will be at least a persuasive authority when the receiver's contention to the contrary is heard in the trial court. But there has been no motion to dismiss his appeal, and we pass to the merits.

The St. Joseph bank was the agent of the Topeka bank for the purpose of collecting an item from the Holton bank. If the Holton bank paid the St. Joseph bank, then the St. Joseph bank, having made the collection, must remit the amount collected to its principal, the Topeka bank. The question is, Did the Holton bank pay the St. Joseph bank?

The Holton bank authorized the St. Joseph bank to charge the account of the Holton bank with this item. The authorization was in the form of a credit memorandum, but the legal effect is identical with a check drawn by the Holton bank on the St. Joseph bank. The St. Joseph bank could have dishonored this check and demanded a return of the cashier's check or the cash. Or, it could honor the check and permit the Holton bank to retain the cashier's check. It did the latter, and charged the account of the Holton bank as requested. Thereupon the collection was made. The fact that the St. Joseph bank hoped and expected that another check of $5,000 sent by the Holton bank for deposit would be paid, and that it was later dishonored, does not alter the situation; that is a matter of which the Topeka bank had no knowledge or concern. The St. Joseph bank could have declined to honor the check of the Holton bank until the $5,000 check cleared, but it did not do so.

The law is entirely clear that if a check is presented to the bank upon which it is drawn, and accepted by payment in cash or credit unconditionally given, the payee cannot be required to reimburse the bank because the check overdrew the drawer's account. When a check is so presented, the bank must then decide to accept it, absolutely or conditionally, or dishonor it. When it accepts it unconditionally, the check is paid, and the incident closed.

In First Nat. Bank v. Burkhardt, 100 U. S. 686, 689, 25 L. Ed. 766, the decision turned on whether a check was paid by the bank on which it was drawn the moment it was accepted from another customer for deposit, or not until it was charged to the depositor's account after banking hours. The court said:

"When a check on itself is offered to a bank as a deposit, the bank has the option to accept or reject it, or to receive it upon such conditions as may be agreed upon. If it be rejected, there is no room for any doubt or question between the parties. If, on the other hand, the check is offered as a deposit and received as a deposit, there being no fraud and the check genuine, the parties are no less bound and concluded than in the former case. Neither can disavow or repudiate what has been done. The case is simply one of an executed contract."

In American Nat. Bank v. Miller, 229 U. S. 517, 520, 33 S. Ct. 883, 884, 57 L. Ed. 1310, a depositor drew a check on a Nashville bank in favor of another customer of the bank. The Nashville bank charged the check to the drawer's account...