In Re: Citizens' State Bank Of Gooding
| Decision Date | 25 March 1927 |
| Citation | 44 Idaho 33 |
| Court | Idaho Supreme Court |
| Parties | In The Matter Of The Citizens' State Bank Of Gooding, Idaho. |
Appeal of PAULINE BIGHAM et al. from Allowance and Classification by Commissioner of Finance as to Priority of Claims.
BANKS AND BANKING-INSOLVENCY-PAYMENT OF CLAIMS-HOLDERS OF CASHIER'S CHECKS-CERTIFIED CHECKS-BANK DRAFTS-CLASSIFICATION - "DEPOSITOR" - CONTRACTUAL LIABILITY - TRUST FUNDS - AUGMENTATION OF ASSETS.
1. Under Laws 1921, chap. 42, sec. 19, defining term "depositor," holders of cashier's checks issued by bank before its failure are not entitled to classification as depositors as provided by section 13.
2. Under Laws 1921, chap. 42, sec. 19, holder of certified check, issued by bank before its failure, is not entitled to classification as a depositor in accordance with sec. 13.
3. Where drafts on other banks were secured by depositors by drawing checks on deposit before bank's failure, holders thereof were not entitled to classification as depositors, as provided in Laws 1921, chap. 42, sec. 13, since failure to pay draft would not have effect of transferring amount thereof back to the holders' account as depositors.
4. Holder of cashier's check, issued by bank before its failure as proceeds of collection paid by check against account in such bank, held entitled to classification under Laws 1921, chap. 42, sec. 13, as class 4, covering all other contractual liabilities other than expenses of liquidation trust funds and claims of depositors, since assets of bank were not augmented by transaction.
5. Where cashier's draft, issued by bank before its failure as proceeds of collection, which was paid to it in cash actually augmented assets of bank which passed into hands of commissioner, holder was entitled to classification under Laws 1921, chap. 42, sec. 13, subd. 2, as a debt due by the bank as trustee.
APPEAL from the District Court of the Fourth Judicial District, for Gooding County. Hon. H. F. Ensign, Judge.
Appeal from judgment approving and sustaining allowance and classification by Commissioner of Finance as to priority of claims. Judgment modified in part and affirmed in part.
James & Ryan, for Appellants.
A bank cashier's check and a deposit stand on the same footing. The depositors deposit their money relying upon the credit of the bank. The purchaser of a cashier's check purchases the same relying upon the credit of the bank. It is a case where equality among creditors is equity. (Harrison v. Wright, 100 Ind. 515, 50 Am. Rep. 805.)
Where a depositor of a bank draws a check upon his account in such bank and receives therefor a cashier's check and the bank thereafter becomes insolvent and the cashier's check is not paid, the drawer of the check is restored to his original position as a depositor. (Stanley v. Green, 205 Ala. 225, 21 A. L. R. 680, note, 87 So. 356; Clark v. Chicago Title & Trust Co., 186 Ill. 440, 78 Am. St. 294, 57 N.E. 1061, 53 L. R. A. 232; Dingley v. McDonald, 124 Cal. 90, 56 P. 790.)
Where a claim against a third party is forwarded to a bank for collection and the bank collects the same in cash and attempts to remit it to the creditor by cashier's check but closes its doors before such cashier's check in due course of business is presented for payment, having at all times cash on hand in excess of the amount collected, the creditor is entitled to receive the amount of his claim from the assets of the defunct bank as a trust fund in preference to general creditors. (Goodyear Tire & Rubber Co. v. Hanover State Bank, 109 Kan. 772, 21 A. L. R. 677, 204 P. 992; Kesl v. Hanover Bank, 109 Kan. 776, 204 P. 994.)
Bissell & Bird, for Respondent.
Appellants were not general depositors in so far as the funds represented by the cashier's checks and drafts in question are concerned. (Sec. 19, c. 42, Sess. Laws 1921; Drinkall v. Movius State Bank, 11 N.D. 10, 95 Am. St. 693, 88 N.W. 724, 57 L. R. A. 341; People's Bank v. Bone (Kan.), 250 P. 276; Bacon v. State Bank of Kamiah, 41 Idaho 518, 240 P. 194; Bates v. Capital State Bank, 18 Idaho 429, 110 P. 277; Duncan v. Anderson (Okl.), 250 P. 1018.)
Appellants U.S. Fuel Co. and Northwestern National Bank are holders of cashier's checks and there is, therefore, no trust relationship between them and the failed bank.
These two appellants cannot be classified as depositors because they are the holders of cashier's checks. (Secs. 13 and 19, chap. 42, Sess. Laws 1921.)
JOHNSON,
Commissioner.-The Citizens' State Bank of Gooding failed and was taken in charge by E. W. Porter, Commissioner of Finance, under Sess. L. 1921, c. 42, p. 53.
Some twenty-one parties filed their claims with said commissioner, asking for various classifications. The commissioner allowed their claims, but the claimants being dissatisfied with their classifications perfected an appeal to the district court. The appeal was consolidated for hearing and "it was stipulated and agreed in open court that the record of appeal of the various appellants and the answers of the commissioner of finance filed thereto contained a true statement of the facts in the matter of said appeal." The district court entered a judgment approving and sustaining the commissioner's classification. From this judgment an appeal is taken to this court.
The various claimants have been grouped in appellants' brief. Appellants' statement of facts, not questioned by respondent, clearly and concisely states the facts as follows:
For a number of years prior to April 20, 1925, the Citizens' State Bank was doing a general banking business at Gooding, Idaho. On April 20, 1925, said bank closed its doors and ever since its affairs have been in the hands of E. W. Porter, Commissioner of Finance of the State of Idaho.
Each of the appellants filed separate claims with the Commissioner of Finance against the bank wherein they requested certain priorities. The Commissioner of Finance allowed the full amount of each claim but rejected the priorities requested.
Appellant, Pauline Bigham, carried a checking account in the bank and on Saturday, April 18, 1925, she obtained the bank cashier's check in the sum of $50.88 and gave the bank a check on her account. The bank did not open for business the following Monday morning, April 20, 1925.
The claims of the following appellants, to wit, Modern Woodmen of America, Modern Woodmen of the World, F. O. Requist, and H. H. Evilsizer, are practically identical with the claim of Pauline Bigham. That is, they all carried checking accounts and shortly before the bank closed, obtained cashier's checks and gave checks on their accounts. Appellant, H. A. Bushby, on Saturday, April 18th, obtained the bank cashier's check in the sum of $200 and gave the bank $200 in cash. The bank did not open for business on the following Monday, April 20th. The claims of appellants, Schmidt, Estabrook, Fales, Soloman, Christensen, Church, Ydoyga, Osborn and Rector are practically identical with the claim of H. A. Bushby. That is, shortly before the bank closed they obtained cashier's checks and paid for the same in cash. Appellants, A. C. Thompson, administrator, and C. L. Miller, carried checking accounts in the bank and shortly before the bank closed, obtained drafts on other banks and gave checks on their accounts. Appellant, A. F. James, agent for W. E. Barkley, carried a checking account
in the bank and obtained a certified check for the full amount of his deposit, to wit, $196.38.
None of the cashier's checks, drafts or the certified check were paid for the reason that the bank closed before any of them were presented for payment. All the above appellants requested priority in payment as claims for the class specified in Sess. L. 1921, c. 42, sec. 13, subd. 3, p. 61. The Commissioner of Finance rejected the priority requested and gave all of the said claims the priority of class 4 as defined in said sec. 13.
Appellant, United States Fuel Company, was a creditor of the City Transfer Company of Gooding, and drew a sight draft on said company and forwarded the same to the Citizens' State Bank for collection. On April 16, 1925, the bank collected said claim in cash from said City Transfer Company and on the same day forwarded its cashier's check in the sum of $179.95 to the United States Fuel Company, at Salt Lake City. It is admitted that at all times since the bank made such collection it had on hand in cash a sum in excess of the amount collected. The claim of the Northwestern National Bank of Portland, Oregon, is based upon facts similar to the claim of the United States Fuel Company. That is, the Furcht Auto Company was indebted to the Northwestern National Bank and it drew a draft on the auto company and forwarded it to the Citizens' State Bank, which collected from the auto company by the issuance of checks by said company against its account in the Citizens' State Bank. On April 16, 1925, the bank forwarded its cashier's check to the Northwestern National Bank in the sum of $43.55, and on April 18th forwarded to the said bank its cashier's check in the sum of $119.97. The cashier's checks payable to the United States Fuel Company and to the Northwestern National Bank were not paid for the reason that the Citizens' State Bank closed before the same were presented for payment. Both filed their claims with the Commissioner of Finance and requested priority in payment as claims of the class specified in subdivision 2 of the aforesaid act. The Commissioner of Finance rejected
the priority requested and gave both of said...
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