Love v. Fulton Iron Works
| Decision Date | 21 March 1932 |
| Docket Number | 29899 |
| Citation | 140 So. 528,162 Miss. 890 |
| Court | Mississippi Supreme Court |
| Parties | LOVE, SUPERINTENDENT OF BANKS, v. FULTON IRON WORKS |
APPEAL from chancery court of Lawrence county, HON. T. PRICE DALE Chancellor.
Petition by the Fulton Iron Works against J. S. Love, superintendent of banks, liquidating agent of Bank of Monticello, for a preference in distribution of bank's assets. From decree granting preference, the superintendent of banks appeals. Reversed and petition dismissed.
Reversed and dismissed.
Flowers, Brown & Hester, and F. W. Bradshaw, all of Jackson, for appellant.
After a bank to which a check was sent for collection collects the same, the relation between such bank and forwarder of the item for collection is that of debtor and creditor and not that of principal and agent.
Love v Federal Land Blank, 157 Miss. 52, 127 So. 720; Alexander County National Bank v. Conner, 110 Miss. 653, 70 So 827; Billingsley v. Pollock, 69 Miss. 759, 13 So. 828, 30 Am. St. Rep. 585.
When a draft is forwarded to a bank for collection and remittance, and collection is made and the proceeds placed in the vaults of the bank, a draft for the amount less charges for the collection payment, such proceeds do not become a trust fund in the hands of the bank.
Morse on Banks & Banking (5 Ed.), sec. 248.
When, however, the paper has once been collected by the correspondent bank, and it has received the proceeds therefor, the relation between the remitting bank and itself is changed from that of principal and agent to that of debtor and creditor, and title to such proceeds will, in the absence of an agreement to the contrary, vest in the correspondent bank.
The holder of a cashier's check of a failed bank is not entitled to a preference claim against the assets of a failed bank. The same rule applies to the holder of a claim against a failed bank where the bank makes a collection and fails, or when some other cause intervenes, to prohibit the bank from issuing a draft or cashier's check for the amount of the collection, and then subsequently fails.
Jourdan v. Bennett, 119 Miss. 576, 81 So. 239.
It is clear from section 1844 of the 1930 Code and subsequent statutes under the subject of garnishment, that the relation of debtor and creditor existing when attachment and/or garnishment is served is not changed but continues to exist and the only effect of an attachment and/or garnishment, when successful, is to require the debtor to pay what he owes his original creditor to the party for whose benefit the attachment or garnishment is levied.
A judgment against a garnishee does not operate as a transfer to the garnishing creditor of the debt owing by the garnishee, nor until payment thereof is it a bar to a suit against the garnishee by the defendant, his creditor.
Railroad Company v. Fulton, 71 Miss. 385, 14 So. 271.
The 96 hour law, however, in no way altered or changed the common-law rule. This section was enacted for the purpose of having the collecting bank remain the debtor of the consignor or its assignee for a sufficient length of time, during which time consignee could examine his purchase and bring suit if necessary at his domicile by attachment and garnishment of the funds in the hands of the collecting bank. But the relation of debtor and creditor between a consignor or his assignee and the collecting bank exists under this statute just as under the common law.
Alexander County National Blank v. Conner, 110 Miss. 653, 70 So. 827.
Ford & McGehee, of Columbia, and E. B. Patterson, of Monticello, for appellees.
Under our chancery attachment statute, the attachment lien exists from and after the time the property is seized under the attachment proceedings.
Slattery v. Renoult Lumber Co., 125 Miss. 229, 87 So. 888.
While it is true that in a garnishment proceeding property is not seized in the sense that it is taken into the manual possession of the officer by whom the writ is executed, nevertheless, it is to all intents and purposes an attachment, being the process by which money and goods due a judgment or attachment debtor by third persons are attached.
First National Bank of Hattiesburg v. Ellison, 135 Miss. 42, 99 So. 573.
The relation of the garnishee to the parties is well defined by the authorities. He stands as a mere stakeholder, and must not voluntarily do anything to the prejudice of the parties.
Brondum v. Rosenblum, 151 Miss. 91, 117 So. 363.
It is not necessary that one claiming a preference shall trace the identical money and identify it in the hands of the receiver.
Sawyer v. Conner, 75 So. 133; Mitchell v. Bank of Indianola, 98 Miss. 659, 54 So. 87.
The doctrine of the modern authorities is that the trust fund is recoverable where an equal amount in cash remained continuously in the bank until its suspension, and passed to the receiver.
Carlson v. Kies, 47 L. R. A. (N. S.) 317.
The Bank of Monticello itself recognized that the relation of the debtor and creditor which arose between itself and the appellee, as the owner of the draft, when the said bank collected the proceeds thereof, was immediately changed by the levy of the attachment and that the fund was thereby converted into a special deposit to be held by the bank subject to the rights of the attaching creditor and to abide the further order of the court.
The Bank of Monticello having agreed with both the litigants and the court that it was holding the said cash and securities in its custody and possession pending the order and direction of the court. The said bank thereby agreed to recognize the said fund as a special deposit pending the orders and directions of the court in the litigation between the attaching creditor and the nonresident defendant, Fulton Iron Works Company, appellee herein.
A garnishee is regarded as an innocent person owing money to or having in his possession property of another, without fault or blame, and he is supposed to stand indifferent as to who shall have the money or property. The garnishee, in the eye of the law, is a mere stakeholder, a...
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