Kesl v. The Hanover State Bank

• Decision Date: 12 November 1921
• Docket Number: 23,570
• Citation: 109 Kan. 776,204 P. 994
• Parties: JOHN KESL et al., Copartners as KESL BROTHERS, Appellees, v. THE HANOVER STATE BANK et al., Appellants
• Court: Kansas Supreme Court

204 P. 994

109 Kan. 776

JOHN KESL et al., Copartners as KESL BROTHERS, Appellees, v. THE HANOVER STATE BANK et al., Appellants

No. 23,570

Supreme Court of Kansas

November 12, 1921

Decided July, 1921

Appeal from Washington district court; JOHN C. HOGIN, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1.TRUST FUNDS--Proceeds of Check Sent to Bank for Collection--Insolvency of Bank--Preferred Claim.Where a check of one having a checking account large enough to cover it is sent by mail for collection to the bank on which it is drawn, which has at the time of its receipt and at all times thereafter sufficient cash to meet it, and the bank charges it to the drawer, and at once mails to the owners a draft for the amount, payment of which is prevented by the bank commissioner taking charge of the bank issuing it before it could be presented in due course of business, the owners of the check have a preferred claim for its amount against the assets of the suspended bank.

2.SAME In an action brought by the payees of the check in the circumstances set cut in the foregoing paragraph it is held that no ground for the reversal of a judgment for the plaintiffs is shown by the manner in which they deposited the check in a bank through which it reached the drawee.

Bennett R. Wheeler, S. M. Brewster, and John L. Hunt, all of Topeka for the appellants.

N. J. Ward, of Belleville, for the appellees.

MasonJ. Mason, J., Burch, J., dissenting.

OPINION

MASON, J.:

This is a companion case to The Goodyear Tire & Rubber Company v. The Hanover State Bank et al., which has just been decided.(Ante p. 772.)It grows out of the same bank failure and involves a similar question.Here John Kesl and his two brothers, doing business at Cuba, Kan., under the name of Kesl Brothers, received in the course of business three checks drawn upon the Hanover State Bank by William Doebele(doing business as the Standard Produce Company) for $ 487.20, $ 6.84 and $ 612.90.These checks were deposited by Kesl Brothers in a bank at Cuba, which forwarded them for collection to a bank at St. Joseph, which forwarded them for collection to a bank at Kansas City, which sent them to the Hanover State Bank with directions to collect and remit.One of the checks was received by the Hanover State Bank on May 12, 1920, and the other two the next day, when all of them were charged to Doebele's account, and drafts covering the amount, drawn against an Atchison bank in which the Hanover bank had funds, were sent to the Kansas City bank.On May 17, before these drafts could be collected in due course of business, the Hanover State Bank was closed, possession being taken by Dugald Spence, a deputy bank commissioner, who was afterwards appointed receiver.At the time the checks were presented Doebele had a checking account for more than their aggregate, although he was indebted to the bank in a larger sum upon a note.The bank had cash on hand in excess of the amount of the checks at all times, besides considerable sight exchange.Kesl Brothers brought this action against the bank and its receiver, asking to be paid in full out of the assets on the ground of their claim being a preferred one on the trust-fund theory.They were given judgment in accordance with their prayer and the receiver appeals.

1.In line with the reasoning in the Goodyear Tire & Rubber Company case the court concludes that the transaction concerning the collection of the checks belonging to the plaintiffs had the same effect as though the Hanover State Bank, in its capacity as agent for the plaintiffs, had presented the checks to itself in...