Laclede Bank v. Schuler Schuler v. Same

• Decision Date: 07 March 1887
• Citation: 30 L.Ed. 704,120 U.S. 511,7 S.Ct. 644
• Parties: LACLEDE BANK, and another, Assignee, etc., v. SCHULER. 1 SCHULER v. SAME
• Court: U.S. Supreme Court

120 U.S. 511

7 S.Ct. 644

30 L.Ed. 704

LACLEDE BANK, and another, Assignee, etc., v. SCHULER.¹

SCHULER

v. SAME.

March 7, 1887.

J. E. McKeighan, for Laclede Bank and another.

D. P. Dyer, for Schuler.

MILLER, J.

This is an appeal and cross-appeal from a decree of the circuit court of the United States for the Eastern district of Missouri. Harrison B. Schuler, a citizen of the state of Kansas, brought his bill in that court against the Laclede Bank, a corporation under the laws of the state of Missouri, and J. T. Craig, a citizen of the state of Texas. The substance of the bill is that the plaintiff is the owner and holder of a draft, or bank check, drawn by C. W. Israel & Co. on the Laclede Bank, for the sum of $11,250, dated at Henrietta, Texas, October 20, 1885, in favor of the plaintiff, which was duly presented for payment on the twenty-sixth day of that month; and that payment was refused, as the Lacede Bank alleged, on the ground that C. W. Israel & Co., the drawers of the draft, had, on October 24, 1885, made an assignment under the laws of Texas for the benefit of their creditors, of which the said Laclede Bank had been advised by telegraph. The bill proceeds upon the idea that there were funds in the hands of the Laclede Bank to the credit of C. W. Israel & Co., on the presentation of said check for payment, which ought to be applied for that purpose, and charges that, notwithstanding the general assignment for the benefit of creditors made by C. W. Israel & Co. on October 24, 1885, the check in question, made in favor of the plaintiff on October 20, 1885, was an assignment or appropriation of so much of those funds to the benefit of complainant which he is entitled to enforce in this suit. J. T. Craig, who had become substituted for Davidson, the assignee of C. W. Israel & Co., was also made a party to the suit, and appeared and filed an answer.

The answer of the Laclede Bank, while admitting most of the statements made in the bill, is very long, and recites many things not material to the issue as we look upon it, but relies upon two substantial defenses to the suit. The first of these is that on the morning of the twenty-sixty day of October, 1885, it received the following telegram from C. W. Israel & Co.: 'HENRIETTA, Texas, 24, [meaning the twenty-fourth of October.] Laclede Bank, St. L.: We assigned this day in favor of S. Davidson; hold funds subject to his order. C. W. ISRAEL & CO.' It alleges that this telegram was forwarded to the bank as a night message on Saturday night, and, although duly received at the telegraph office, was only delivered at 8 o'clock on Monday morning, and that the check in favor of complainant was presented at the opening of the bank at 10:15 on the same morning, which was the first notice that they had of it. The answer insists that the general assignment, with the notice of it by telegraph, was a complete revocation of the Schuler check, as well as all other checks drawn against this defendant by C. W. Israel & Co., and that the assignment, with this prior notice to the bank, vested in the assignee the better right to any funds of said C. W. Israel & Co. in the hands of the bank. The answer also sets up transactions between C. W. Israel & Co. and the bank by which said C. W. Israel & Co. would be indebted, on a settlement of the transactions between the two banks, to the Laclede Bank in a sum beyond anything which they then held on deposit to the credit of C. W. Israel & Co. A part, however, of the trana ctions which go to make up this claim of set-off against C. W. Israel & Co. consisted of a note or notes discounted by the Laclede Bank for said C. W. Israel & Co., but which had not yet matured. The answer also sets up that C. W. Israel & Co. and the Laclede Bank were corresponding banks, one being in Texas and the other in St. Louis, Missouri, and that there had been a long course of dealing between them, and for this reason they had discounted the notes of C. W. Israel & Co. without any other sufficient security. Craig, as assignee for C. W. Israel & Co., filed a separate answer, in which he sets out mainly the same matters found in the answer of the Laclede Bank, and he also makes a part of his answer the assignment of C. W. Israel & Co. to Davidson for the benefit of all their creditors. There were no replications to either of these answers, but a stipulation is filed in regard to facts that are agreed upon by the parties, which closes with this paragraph: 'All other facts in the bill and answer not inconsistent herewith are to be taken as part of this agreed statement.'

The decree of the court was as follows: 'This cause came on for hearing at this term of the court on the bill of complaint, answers of defendants, and stipulations on file, and the court, being fully advised concerning the premises, finds that at the date of the presentation to the said Laclede Bank of the check set out in the bill of complaint there was to the credit of the account of C. W. Israel & Co. in said bank the sum of $5,912.41 subject to the payment of said check, and that said check operated in equity as an assignment of said sum, as against said defendants, to said complainant. It is therefore ordered, adjudged, and decreed that the said complainant have and recover of and from said defendants the said sum of $5,912.41, together with interest at six per cent. per annum from the twenty-sixth day of October, 1885, amounting to $6,073.99, and it is further ordered that execution issue therefor against said defendant the Laclede Bank.'

From this decree both Schuler and the bank appealed. The assignee, craig, did not appeal.

The question of how far and under what circumstances a check of a depositor in a bank will be considered an equitable assignment to the payee of the check, of all or any portion of...