Lebanon Bank & Trust Co. v. Grandstaff

• Decision Date: 27 January 1940
• Citation: 141 S.W.2d 924,24 Tenn.App. 162
• Parties: LEBANON BANK & TRUST CO. v. GRANDSTAFF et al.
• Court: Tennessee Court of Appeals

141 S.W.2d 924

24 Tenn.App. 162

LEBANON BANK & TRUST CO. v. GRANDSTAFF et al.

Court of Appeals of Tennessee, Middle Section.

January 27, 1940

Certiorari Denied by Supreme Court April 6, 1940.

Rehearing Denied by Supreme Court June 29, 1940.

Appeal from Chancery Court, Wilson County; S. A. Marable Chancellor.

Bill of interpleader by Lebanon Bank & Trust Company against W. D Grandstaff, T. A. Young, trustee, and Robert L. Forrester wherein the defendant filed a cross bill and wherein Fred Cox was brought in by a cross bill. From the decree, T. A. Young individually, and as trustee and W. D. Grandstaff appeal.

Decree affirmed and cause remanded with directions.

Jesse Cantrell and C. C. Davis, both of Watertown, for appellants.

L. H. Walker and A. A. Adams, Sr., both of Lebanon, for Lebanon Bank & Trust Co.

Harry Phillips and Robt. L. Forrester, both of Watertown, and E. R. Woolard, of Lebanon, for Fred Cox and Robert L. Forrester.

FELTS Judge.

This is a controversy over a deposit in the Watertown Branch of the Lebanon Bank & Trust Company.

T. R. Patton by a deed of trust had conveyed a tract of land to T. A. Young, trustee, to secure certain indebtedness. On January 25, 1935, T. A. Young, trustee, made a foreclosure sale of the land. Fred Cox became the purchaser at the price of $1,225. On January 29, 1935, he gave the trustee his check for $1,225, drawn on the Watertown office of the Lebanon Bank & Trust Company. This check was payable to "T. A. Young, Trustee," and it recited it was "In full payment of land purchased under foreclosure of deed of trust 1/25/ 1935 of T. R. Patton land as per trust deed recorded in Trust Book 65 page 514 R. O. W. C. Tenn. to be disbursed as per deed of trust."

On the same day, January 29, 1935, T. A. Young took this check to the bank on which it was drawn, indorsed it, received from the bank $61.25 in cash, his trustee's fee, deposited the balance, $1,163.65, to the account of "T. A. Young, Trustee;" issued two checks on this account, one for $405.30 to W. D. Grandstaff and one for $753.65 to Fred Cox, as the amounts to which they were respectively entitled as the holders of the indebtedness secured by the deed of trust. Cox deposited the $753.65 check to his account and Grandstaff deposited the $405.30 check to his account in the same bank; and each of them received from the bank a deposit slip in the form customarily issued by the bank, showing the date and amount of the deposit and the conditions upon which it was received by the bank. Among other things, the deposit slip stipulated that "in receiving items for deposit or collection this bank acts only as depositors' collecting agent;" that "all items are credited subject to final payment in cash or solvent credits;" and that the bank "may charge back any item at any time before final payment, whether returned or not, also any item drawn on this bank not good at the close of business on day deposited."

These transactions all occurred on the morning of January 29, shortly after the bank opened. On the same day about noon Robert L. Forrester wrote and delivered a letter to the bank, in which he stated that he was entitled to an attorney's fee of $406.50 out of the proceeds of the foreclosure sale, represented by the $1,225 check given by Cox to the trustee; that such proceeds, as shown by the check, were a trust fund which it was the trustee's duty to disburse according to the terms of the deed of trust; that one of such terms was: "To pay all costs and charges of executing this trust, including attorney's fees and expenses of any litigation which may arise on account of the execution and enforcement of this trust;" that under this provision and by agreement of the parties his attorney's fee was payable out of the fund; that the trustee had refused to pay it; and that the bank should guard the fund accordingly.

Thereupon, before the close of business that day, the bank returned to Cox and to Grandstaff the trustee's checks they had deposited, advised them of Forrester's written demand upon it against the trust fund, and stated it could not safely pay these checks until the matter should be adjusted.

However, later that day, Cox and Forrester met at the bank and Forrester withdrew his objection against the payment of the check the trustee had given Cox; and that item is not now involved. Also the trustee paid $4.80 for circulars to advertise the sale and for revenue stamps on his deed; and this item is likewise not in dispute.

A few days later Grandstaff undertook to withdraw the $405.30 by check, which the bank refused to pay. Thereafter, on April 27, 1935, he sued the bank for $475.04 (the $405.30 plus $69.74 standing to his credit in the bank). This suit was before a justice of the peace, and was set for trial April 30, 1935. On that day the bank filed the present bill, setting out the matters above stated, averring that it had $405.30 on deposit to the account of T. A. Young, trustee, and praying that the trustee, Grandstaff, and Forrester be required to interplead and litigate among themselves the right to this fund, that it be allowed to pay the fund into court and be discharged with its costs, and that the suit before the justice be enjoined. Accordingly a temporary injunction issued.

T. A. Young, trustee, answered, admitting the bill of interpleader was properly filed and should be sustained, and bringing in Fred Cox by crossbill in order that the rights of all the parties should be determined and the trustee exonerated. Cox disclaimed any interest in the fund on deposit. Robert L. Forrester filed an answer and crossbill, alleging that the amount secured by the deed of trust was the expenses of executing the trust, including attorney's fees, a note totaling $4,065 held by Fred Cox and a note totaling $2,186.07 held by W. D. Grandstaff; that he was employed to collect the Fred Cox note, with the understanding and agreement that the fee provided in the note, $406.50, would be paid to him out of the proceeds of the sale; that Cox, Grandstaff and the trustee all understood and agreed to this; but that after the sale the trustee refused to pay the fee and undertook to dispose of the fund so as to deprive him of the fee agreed on by the parties and provided for in the note and deed of trust; that he was entitled to recover this amount of the trustee and to have the recovery declared a lien on the fund of $405.30 on deposit to the trustee's account in the bank. And he prayed this relief. W. D. Grandstaff filed an answer and crossbill, denying that there had been any agreement to pay an attorney's fee, charging that the Cox note had been transferred to Cox by Forrester to enable the latter to claim such fee, and alleging that the bank had accepted and paid the $405.30 check given by the trustee to Grandstaff by placing the amount thereof to his credit; and that thereafter the bank had no right or authority to charge back the amount of said check to his account and credit it to the trustee's account, as it had undertaken to do. He prayed for a decree against the bank for $475.04, interest and costs.

On December 5, 1935, Chancellor Stout sustained the bill as a bill of interpleader and ordered that defendants interplead and settle the controversy among themselves, and that complainant bank pay the fund into court and be discharged with its costs, such costs to be paid out of the fund.

On May 29, 1936, there was a reference to the master, and thereafter more than 900 pages of depositions were taken and filed. On June 9, 1938, Chancellor Marable overruled the exceptions to the master's report, confirmed the report, and in addition filed written findings of fact, and decreed that the bank pay to the master the fund "tendered by it under the bill of interpleader, heretofore sustained as such," and be discharged; that T. A. Young's crossbill be dismissed at his costs; that Robert L. Forrester's crossbill be sustained and he be allowed $142.16, this being the proportionate part of his attorney's fee chargeable against the fund here involved; that W. D. Grandstaff's crossbill be dismissed and he and his surety, Frances Pitts, pay all the costs not already otherwise adjudged; and that the master from the fund pay $142.16 to Robert L. Forrester, $50 to A. A. Adams, Sr., and L. H. Walker, solicitors filing the bill of interpleader, all of the costs not otherwise adjudged, and the balance, if any, to W. D. Grandstaff.

T. A. Young, individually and as trustee, and W. D. Grandstaff appealed, but Young has not assigned error. Grandstaff has assigned nine errors, each of which presents some phase of his contention that the fund of $405.30 should have been decreed to him. None of them makes any question as to his balance of $69.74 in the bank or complains of the decree for not allowing him a recovery for this item. Upon the assignments of error the sole controversy is over this fund of $405.30.

Grandstaff's first insistence is that the bank could not maintain a bill of interpleader because it was not in the position of a stakeholder, but had incurred an independent or special liability to him. Gibson's Suits in Chancery (3rd Ed.) sec. 1110; Pomeroy's Eq.Jur. Vol. 4, secs. 1322-1326; Bank of Whitehouse v. Baldridge, 134 Tenn. 7, 183 S.W. 158; Newsum v. Interstate Realty Co., 152 Tenn 302, 278 S.W. 56. The bank urges, as a preliminary objection, that the decree of December 5, 1935, sustaining the bill as a bill of interpleader, was a final decree and was not appealed from; that it settled the bank's right to maintain the bill of interpleader; and that the present appeal did not bring up this question and it is not now open to review. Allen v. Shanks, 90 Tenn. 359, 377, 16 S.W. 715; Citizens' Bank & Trust Co. v. Bayles, 153...