Main Belting Co. v. Corn Exchange Nat. Bank & Trust Co.
| Decision Date | 11 January 1937 |
| Docket Number | 262 |
| Citation | 325 Pa. 168,188 A. 865 |
| Parties | Main Belting Company, Appellant, v. Corn Exchange National Bank and Trust Company |
| Court | Pennsylvania Supreme Court |
Argued November 30, 1936
Appeal, No. 262, Jan. T., 1936, from judgment of C.P. No. 3 Phila. Co., Dec. T., 1930, No. 12868, in case of Main Belting Company v. Corn Exchange National Bank and Trust Company. Judgment reversed.
Assumpsit. Before BROWN, J.
The opinion of the Supreme Court states the facts.
Verdict and judgment for defendant. Plaintiff appealed.
Error assigned, among others, was refusal of judgment n.o.v.
Plaintiff's request for a directed verdict in its favor should have been affirmed. The assignments of error raising the point are sustained. The judgment is reversed and the record is remitted for entry of judgment for plaintiff for $4,650 with interest.
Robert Dechert, of Dechert, Smith & Clark, for appellant.
Philip Wallis, with him Carl W. Funk and Drinker, Biddle & Reath, for appellee.
Before KEPHART, C.J., MAXEY, DREW, LINN, STERN and BARNES, JJ.
Plaintiff, a depositor, brought assumpsit [1] against its bank of deposit for the amount of its checks alleged to have been wrongfully paid by the bank. Forty-five checks are involved, varying in amount from $75.00 to $250.00; 23 of them, $2,575, were drawn by plaintiff on the defendant and to the defendant's order; 22 of them, $2,075, [2] were drawn to the order of defendant on plaintiff's account with another bank -- the Integrity Trust Company. Some were signed by plaintiff's president and the others by its treasurer, Smith. All were presented to defendant's teller by Smith who received cash for them; though drawn payable to defendant or order, the checks were not endorsed by defendant or by Smith. He used the cash for his own purposes and absconded before his embezzlement was discovered. Plaintiff contends that the checks drawn on defendant were not paid according to their terms, and that the proceeds of those drawn on the Integrity Trust Company were misapplied by defendant; that in each instance plaintiff's accounts were charged with the payments made to Smith in violation of the contract governing the relation of banker and depositor.
Defendant contends that the checks were drawn by plaintiff and were properly paid in cash to its treasurer. The verdict was for defendant and plaintiff appeals. The principal question is whether the bank was authorized to pay cash to Smith on the checks.
The plaintiff corporation manufactured canvas belting. Its traveling salesmen obtained money for traveling expenses by drawing on plaintiff. When such drafts were received by defendant bank, the defendant, instead of charging plaintiff's account with the amount of the draft, advised plaintiff by telephone that a draft had been received. Plaintiff, to pay these drafts, would then deliver to defendant its check drawn on the defendant and to the order of defendant, or its check drawn to the order of defendant and payable by the Integrity Trust Company where plaintiff also had a checking account. Though none of the checks given in payment of such drafts is questioned in this suit, the fact is stated as part of the history of prior transactions between the parties. The 45 checks now involved were drawn between March 22, 1929, and January 8, 1930, and, with three exceptions (referred to later) were given when no drafts had been presented to the bank. A typical check is in the following form:
[SEE ILLUSTRATION IN ORIGINAL]
The words "Draft Hiller" in the lower left-hand corner and similar words on other checks were placed there by plaintiff, and, it is contended, should have conveyed information to the bank of the purpose of the check, thus advising the bank that Smith was not intended to receive cash for the check. In view of the conclusion reached on the principal question raised, we need not deal with the arguments presented as to the effect of those identifying words.
The contract between the bank and the plaintiff required the bank to pay plaintiff's checks to the payee designated by the plaintiff and to no one else, save on the order of the payee: United Security Life Insurance Co. v. Central National Bank, 185 Pa. 586, 40 A. 97, and cases following it. The defendant, who was the payee, could therefore apply the proceeds only for the purposes designated by the drawer.
We come then to the authority of the plaintiff's treasurer, Smith, to nullify the written order given to its bank by substituting for plaintiff's order, Smith's oral demand to receive cash. Plaintiff put in evidence an article from the by-laws [3] stating in general terms the duties of the treasurer. When it was read into the record counsel for the plaintiff made the following statement: The admission added nothing that was not contained in the by-law. The resolution of the Board of Directors, also filed with defendant, authorizing the opening of the bank account, was also put in evidence. It is as follows: "At a meeting of the Directors of this Company, held at the office of the Company, on the tenth day of June, 1927, on motion, duly seconded, it was
"RESOLVED, That Walter H. Tobey, the Treasurer of this Company, be and he hereby is instructed and empowered to open and keep an account of deposit and discount with the Corn Exchange National Bank, of Philadelphia, Pa., in the name and for the use of this Company; to deposit in said bank to the credit of this Company from time to time any and all moneys, checks, drafts, notes, acceptances or other evidences of indebtedness (whether belonging to this Company or otherwise) which may now be or may hereafter come into its possession; and until otherwise ordered said bank be and hereby is authorized to make payments from the funds of the Company on deposit with it upon and according to the check of the Company signed by its president or treasurer and the said president and treasurer, singly, are authorized to sign, endorse, accept, make, execute and deliver any and all checks, notes, drafts and bills of exchange." The controlling words of the resolution, as applicable to this record, are as follows: "and until otherwise ordered said bank be and hereby is authorized to make payments from the funds of the Company on deposit with it upon and according to the check of the Company signed by its president or treasurer and the said president and treasurer, singly, are authorized to sign, endorse, accept, make, execute and deliver any and all checks, notes, drafts and bills of exchange." Shortly stated, the bank must pay "according to the check of the Company signed" etc.
The treasurer, Tobey, named in the resolution, was succeeded by Smith.
Plaintiff contends that while defendant was "authorized to make payments from the funds of the [plaintiff] on deposit with [defendant] upon and according to the check of the [plaintiff] . . ." it did not do so; that the checks drawn on the Integrity Trust Company required defendant to collect the proceeds and hold them subject to plaintiff's order and those drawn on defendant required defendant to pay them according to the resolution; that plaintiff had not ordered payment to Smith; that while Smith as treasurer might have drawn, or procured to be drawn checks on plaintiff's funds, to his own order which defendant would have been authorized by the resolution to pay, he did not do so, but that that possibility cannot be regarded as authority to deviate from the express terms of the resolution. Plaintiff's position is supported by principles applied in Graham v. Southington Bank & Trust Co., 99 Conn. 494, 121 A. 812; Sims v. United States Trust Co., 103 N.Y. 472, 9 N.E. 605; Robbins v. Passaic National Bank & Tr. Co., ...
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