In re Canal Bank & Trust Co. In Liquidation

• Decision Date: 07 May 1934
• Docket Number: 14824
• Citation: 154 So. 498
• Parties: In re CANAL BANK & TRUST CO. IN LIQUIDATION (Intervention of E. C. PALMER & CO., Limited)
• Court: Court of Appeal of Louisiana — District of US

154 So. 498

In re CANAL BANK & TRUST CO. IN LIQUIDATION (Intervention of E. C. PALMER & CO., Limited)

No. 14824

Court of Appeal of Louisiana, Orleans.

May 7, 1934

Dufour, St. Paul, Levy & Miceli, of New Orleans (Rene J Waguespack, of New Orleans, of counsel), for appellant.

Henican & Carriere, of New Orleans, for appellee.

OPINION

WESTERFIELD Judge.

E. C Palmer & Co., Limited, filed its petition of intervention in the liquidation proceedings of the Canal Bank & Trust Company on June 30, 1933, claiming that it was entitled to the payment of $ 327.60 in preference and priority to all other creditors by virtue of a lien and privilege conferred by Act No. 63 of 1926. There was judgment below as prayed for, and the liquidators of the bank have appealed.

The case was tried below upon an agreed stipulation of facts, which are substantially as follows:

Palmer & Co., on March 1, 1933, deposited three checks drawn to its order with the Canal Bank & Trust Company, one of the Second National Bank of Houston, Tex., drawn on the Chase National Bank of New York, for $ 471.90, one of the American National Bank, Pensacola, Fla., drawn on the Central Hanover Bank & Trust Company, New York, for $ 6.21, and the third of the Enterprise Publishing Company on the Citizens' National Bank of Cameron, Tex., for $ 25.90. The two first described items were forwarded to the Chase National Bank of New York on the same day that they were deposited for collection, and on the 3d day of March, 1933, the proceeds were credited to the account of the Canal Bank & Trust Company with the Chase National Bank. The third item was collected through the Federal Reserve Bank of Atlanta, New Orleans Branch, and the proceeds credited to the account of the Canal Bank & Trust Company with that institution on March 18, 1933. The day on which the deposit was made by intervener, March 1, 1933, the Canal Bank & Trust Company was open for business as usual and doing a general banking business in the city of New Orleans. On the afternoon of that day the New Orleans Clearing House Association, with the approval of the Governor of the State of Louisiana, adopted a resolution, the effect of which was to close all banks in the city of New Orleans on March 2, 1933. The following day, March 3d, another resolution having been adopted by the Clearing House Association in the meantime, the Canal Bank & Trust Company and other state banking institutions reopened for business on a qualified basis, one effect of which was to limit the payment to depositors to 5 per cent. of their balances with the bank. Thereafter, on March 6, 1933, in compliance with certain regulations of the United States Treasury and executive orders by the President of the United States, the Canal Bank & Trust Company and other banks again closed their doors and remained closed until March 20, 1933, when it again opened on the restricted basis under which it operated from March 3rd to March 6th. On May 20, 1933, the bank examiner took charge and the bank was formally placed in liquidation. For a more detailed statement of the banking situation as it affected the Canal Bank & Trust Company and others similarly situated during the recent crisis in banking circles, both state and national, reference is made to the statement of facts in the case of In re Liquidation of Canal Bank & Trust Co., Intervention of Harry H. Wainer, 178 La. 961, 152 So. 578, of the Supreme Court of Louisiana, decided January 2, 1934.

Section 1 of Act No. 63 of 1926 reads as follows:

"Section 1. Be it enacted by the Legislature of Louisiana, That when any bank receives as agent (whether as agent of another bank or of any person, firm or corporation) for collection and remittance or delivery to its principal and not for deposit any bill, note, check, order, draft, bond, receipt, bill of lading, or other evidence of indebtedness, or other instrument, and collects or realizes any money on the same, and has not deposited same to the credit of said principal, the principal shall have a privilege on all of the property and assets of said agent bank for the amount so collected or realized by said agent bank, which privilege shall be superior to the claims of all depositors of said agent bank, the claims of all creditors of said agent bank having no privilege and to all other general privileges on the property and assets of said agent bank, except those for law and judicial charges."

It is the contention of the liquidator that this act only grants a privilege to persons placing items in a bank "for collection and remittance or delivery to its principal and not for deposit," and that since, under the agreed statement of facts in this case, the several items deposited by intervener were immediately credited to his account with the privilege of checking against them, the act does not apply for the reason that the items were collected and the money realized and deposited to the credit of Palmer & Co., the effect of which was to change the relation of principal and agent, formerly existing between the bank and Palmer & Co., concerning these items, into that of debtor and creditor.

In the case of S. E. Hall, Inc., v. Farmers' Trust & Savings Bank, 177 La. 659, 148 So. 909, the court said (Syllabi):

"Whether drafts were sold to bank or placed there for collection or deposited for collection and remittance depends wholly on intention of parties, to be determined from facts surrounding transactions.

"Where drafts were deposited for collection and deposited to credit of plaintiff, money received by bank after insolvency would be remitted to owner of...