Hill Syrup Co. v. American Sav. Bank & Trust Co.

• Decision Date: 18 March 1925
• Docket Number: 18592.
• Citation: 234 P. 11,133 Wash. 501
• Court: Washington Supreme Court
• Parties: HILL SYRUP CO. v. AMERICAN SAV. BANK & TRUST CO.

234 P. 11

133 Wash. 501

HILL SYRUP CO. v. AMERICAN SAV. BANK & TRUST CO.

No. 18592.

Supreme Court of Washington, En Banc.

March 18, 1925

Appeal from Superior Court, King County; Carey, Judge.

Action by the Hill Syrup Company against the American Savings Bank &amp Trust Company. Judgment for defendant, and plaintiff appeals. Affirmed.

James R. Chambers, of Seattle, for appellant.

Stratton & Kane and Lyons & Orton, all of Seattle, for respondent.

ASKREN J.

This is an action to recover the proceeds of four checks amounting to $2,080, and the facts are substantially as follows:

In the year 1921, W. E. Sander was the president of the Hill Syrup Company, a corporation, and at the same time he was the principal stockholder, trustee, and president of the Hardware Specialties Manufacturing Company. In the months of March and April, 1921, Sander drew checks on the National Bank of Commerce, against the funds of the Hill Syrup Company, payable to the American Savings Bank & Trust Company. The checks were cashed by the American Savings Bank & Trust Company, and the proceeds thereof deposited to the credit of the Hardware Specialties Manufacturing Company which had an account at that bank. The Hardware Specialties Company thereafter checked out these funds so deposited to its credit. At the time the checks were cashed by the American Savings Bank & Trust Company, the bank knew that Sander was the president, and that he, with his father-in-law, were the owners of a controlling interest in such company. The evidence further shows that at the time the checks were drawn by Sander, the Hill Syrup Company, a corporation, was not indebted to him. On this state of the evidence the trial court decided that since the defendant bank had never received nor retained to its own benefit any of the proceeds of the checks, and had no notice or knowledge at the time it paid out the proceeds that Sander did not have authority from the Hill Syrup Company to direct the deposit of the proceeds of the checks to the account of the Hardware Company, that recovery could not be had. Plaintiff appeals therefrom.

The state of facts surrounding the affairs of the Hill Syrup Company, and the actions of its former president, W. E Sander, are detailed very much at length in Hill Syrup Company v. Marine National Bank, 128 Wash. 509, 223 P. 595, and Hill Syrup Co. v. National City Bank, 129 Wash. 171, 224 P. 578. Both cases were decided by departmental opinions, and thereafter the causes assigned for rehearing en banc, the former being overruled, but the opinion in the latter case being adhered to.

The sole question to be decided in this case is whether the circumstances surrounding the cashing of the checks and the deposit of the proceeds thereof to the credit of the Hardware Specialties Company were such as to put the bank upon inquiry. In other words, was this such a suspicious circumstance that the bank had no right to assume that there was a legitimate transaction between the Hill Syrup Company and the Hardware Specialties Company?

Counsel for appellant insists that because Sander was an officer in each company that fact is sufficient to show the bank that he was using the money for his own benefit. Appellant relies upon the case of Harden v. State Bank of Goldendale, 118 Wash. 234, 203 P. 16, and Hill Syrup Co. v. National City Bank of Seattle, 129 Wash. 171, 224 P. 578; but this case does not come within the rule there announced because of the difference in the facts. In the first case cited, the court found that the respondent bank 'was doing a banking business and placed that sum of money to Clark's private banking account, and knew that he was checking against such account for his...