Hudspeth v. Union Trust & Savings Bank
Decision Date | 23 October 1923 |
Docket Number | 35295 |
Citation | 195 N.W. 378,196 Iowa 706 |
Parties | JACK HUDSPETH, Appellee, et al., Appellant, v. UNION TRUST & SAVINGS BANK et al., Appellees |
Court | Iowa Supreme Court |
Appeal from Woodbury District Court.--C. C. HAMILTON, Judge.
APPELLANT asked that its claim be decreed a preferred claim on the funds in the hands of the receiver. The trial court established the claim as a general claim, but denied the preference. The claimant appeals.
Reversed.
Munger & Maennel and Carl R. Jones, for appellant.
Jepson Struble & Anderson, for appellees.
There is little, if any, dispute in the testimony. The evidence, for the most part, is that of the receiver himself and that of an officer of the defunct trust company and its predecessor, who were called and testified in behalf of appellant.
It appears that, sometime in the fore part of 1920, the Republic Cafe, of Sioux City, bought a considerable bill of goods from appellant, a Chicago concern, to furnish the cafe. According to the contract, the cafe people were to pay so much cash, and a note or notes were to be given for the balance. When the goods arrived, there was some dispute in regard to the quality and quantity. The parties finally compromised by the agreement of the proprietor of the cafe to pay a specific amount of cash. They executed a number of notes payable to claimant, and the balance, $ 2,862.56, was deposited with the Bennett Loan & Trust Company, to be held until claimant had fulfilled its part of the contract; and it was also agreed that the Republic Cafe was to advise the trust company when the money was to be released. The record is silent as to whether claimant fulfilled its part of the contract, and as to whether the Republic Cafe ever instructed the trust company or its successor to release the money. There is some claim by appellee that this was a condition precedent to claimant's establishing its claim, even as a general claim; but the receiver has not appealed. This matter seems not to have been put in issue by either side. The only issue tried out was as to the nature of the obligation between the Union Bank and appellant. We do not regard the question now raised by appellee, as to a condition precedent, as of great importance now, since the only question is whether claimant is entitled to a preference. So far as the record shows, there is no controversy between claimant and the Republic Cafe.
The actual deposit was made May 6, 1920. On that date, the Bennett Loan & Trust Company executed its receipt for the money in the following form:
The letter therein referred to contains, among other things, the following:
It was stipulated that this letter contained all of the instructions with reference to the collection and holding of this $ 2,862.56. On the same day, the Bennett Loan & Trust Company issued its certificate of deposit for the amount deposited, as follows:
It was stipulated that this certificate of deposit was issued as a mere matter of bookkeeping, on the part of the bank, and that it was not issued at the request of appellant, but the bank held it for something to offset the cash that was put in it for the purpose of bookkeeping, and they did it by issuing a certificate of deposit. The certificate of deposit was never delivered to appellant, but was retained by both banks, and was finally produced in evidence by the receiver. Mr. Hegquist, an officer of both banks, testified that the Union Trust & Savings Bank is the legal successor of the Bennett Company, dating from the first of September, 1920; that, at the time of the consolidation of the Bennett concern with the Union Trust & Savings Bank, this $ 2,862.56 was transferred to the latter bank,--that is, the aggregate of assets was transferred, and this was part of it; that both assets and liabilities to that amount were transferred, to represent this certificate. In other words, the total assets and total liabilities balanced. Whatever liability there was in connection with this was taken over by the Union Trust Company, and assets turned over to it to cover it. The amount before stated was carried as a demand certificate, and subsequently by its successor in the same way. It was not set aside as a specific fund, but was included in the total of certificates, as shown by the books of the Union Trust Bank. After the consolidation, this certificate of deposit appears on the books of the Union concern as a certificate of deposit of that amount transferred to it from the Bennett concern. The original certificate remained in the form it had been in since the time it was issued. It does not call for any interest. The letter of April 26th was the authority upon which this demand certificate was issued, directing the bank to hold both the papers and the money until the remainder of the merchandise was shipped. It is always customary, in that kind of a case, to issue a certificate of indebtedness, when a bank is holding the money subject to completion of a contract. Mr. Hegquist further testified that, at the date of the closing of the Union Trust & Savings Bank, at the close of business, February 15, 1921, the sum of $ 2,862.56 was still in the possession of the Union Trust & Savings Bank, under the terms set forth in the letter.
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