Manhattan Bank of Memphis v. Walker Walker v. Manhattan Bank of Memphis

Decision Date08 April 1889
Citation32 L.Ed. 959,130 U.S. 267,9 S.Ct. 519
PartiesMANHATTAN BANK OF MEMPHIS v. WALKER. WALKER v. MANHATTAN BANK OF MEMPHIS. 1
CourtU.S. Supreme Court

S. P. Walker and C. W. Metcalf, for plaintiff.

Thomas B. Turley, for defendant.

BLATCHFORD, J.

This is a suit originally brought in the chancery court of Shelby county, Tenn., by Eliza Walker against the Manhattan Bank of Memphis, a Tennessee banking corporation. The suit was removed by the plaintiff into the circuit court of the United States for the Western district of Tennessee. The bill of complaint and the answer were both of them put in before, and the replication was filed after, the removal of the cause. The bill prays for a decree for the return to the plaintiff of $3,000 of the second mortgage bonds of the Memphis & Charleston Railroad Company, and $2,200 of the second mortgage bonds of the Mississippi Central Railroad Company, and of a promissory note for $5,000, made by Edward Goldsmith, and of certain shares of the capital stock of the defendant, amounting to $6,000, attached to the said promissory note as security therefor. The bill alleges that the defendant, in the course of its business, and on the 27th of November, 1880, received on special deposit the above-named bonds, promissory note, and shares of stock, belonging to the plaintiff, together with a certificate of the stock of the People's Insurance Company for $1,100, and four promissory notes for $325 in the aggregate; that the said bonds had coupons attached thereto for the interest payable thereon at certain stated periods; that the defendant gave its obligation in writing, as evidence of the receipt, on special deposit, from the plaintiff, of the said securities, and was bound to deliver them to the plaintiff on demand; and that the stock of the People's Insurance Company, and the $325 of notes, were returned to her, but the bonds and the coupons attached thereto, and the note of Goldsmith, and the bank-stock, were never returned to her, although she made demand upon the defendant for them. The bill prays for a decree for the return of the property, and for the amount of the decline in its value from the time when she demanded it until the time when it shall be restored; and, if not restored, then for a personal decree against the defendant for the highest value of it at any time since she first made demand for it to the date of the decree, with interest. The answer sets up in defense that for some time prior to November, 1880, Mr. G. H. Judah, a brother-in-law of the plaintiff, kept an account and had transactions with the defendant, in which he styled himself sometimes 'agent' and sometimes 'guardian,' but without disclosing for whom he was agent or guardian; that he made deposits and drew checks in that way on his account, as the other depositors with the defendant did, and, at different times prior to November, 1880, bought the bonds and insurance company's stock named in the bill, and paid for them by checks on his account with the defendant; that, as he would buy those securities, he would leave them on deposit with the defendant, without taking any receipt for them; that in the fall of 1880 he left with the defendant the Goldsmith note, and the collateral therefor, and the four other notes mentioned in the bill; that those notes were payable to the said G. H. Judah as agent simply, without saying for whom he was agent; that prior to November 27, 1880, he had never told the defendant whether he had any principal or not, or who his principal was, or for whom he was guardian, if for any one; that on or about that date he asked the defendant to give to him, as agent for the plaintiff, a receipt for the bonds, stocks, and notes, telling it at the time that he was the plaintiff's general agent for the management and control of those securities and notes; that the defendant gave to him a receipt as such agent; that after the receipt was given some of the notes described in it were paid while they were on deposit with the defendant, and the said Judah, as agent of the plaintiff, drew out the money in the ordinary way, and from time to time, as agent of the plaintiff, withdrew from the custody of the defendant the items mentioned in the receipt, until he had withdrawn them all, when he gave to the defendant a receipt for them, in which he acknowledged having received them as agent for the plaintiff; that, if the plaintiff owned the items, Judah had authority from her to control and manage them as fully as she could have done as owner if they had been in her actual possession, instead of in his possession as her agent; that he was her general agent with reference to them, and had power not only to deposit them, but also to withdraw them from deposit, if he saw fit; that when he demanded them from the defendant, his agency was still in force, and the defendant could not legally have refused to give them up to him as the agent of the plaintiff; that upon returning them to Judah, as such agent, all liability of the defendant with reference to them ceased; and that the defendant is not indebted to the plaintiff on account of said securities. Proofs were taken on both sides, and the cause was heard, and the court made a decree adjudging to the plaintiff a recovery against the defendant of $5,000, being the amount of the Goldsmith note, with $1,175 interest thereon from the date of its maturity, November 1, 1881, on the ground that the defendant had collected the amount of that note, and appropriated the same to its own use, and further decreeing that the defendant was not liable to the plaintiff for any of the other items mentioned in the bill, and that neither party should recover costs from the other. Each party has taken a separate appeal to this court.

The answer does not set up as a defense that the defendant was not authorized to receive the property in question as a special deposit, or to give the receipt therefor. It was stipulated between the parties that the defendant received no compensation, as bailee, for the custody of the property sued for that the Memphis & Charleston Railroad bonds bore 7 per cent. interest, payable semi-annually, and evidenced by interest coupons maturing January 1st and July 1st in each year, the bonds maturing on the 1st of January, 1885; and that the Mississippi Central Railroad bonds bore 8 per cent. interest, payable semi-annually, and evidenced by coupons maturing February 1st and August 1st in each year, the bonds maturing on the 1st of February, 1885. The suit is plainly one of equitable cognizance, the bill being filed to charge the defendant, as a trustee, for a breach of trust in regard to a special deposit. The opinion of the circuit court, reported in 25 Fed. Rep. 247, contains so full and accurate a statement in the main of the facts of the case, developed by the proofs, that we repeat and adopt it, as follows:

'The firm of Walker Bros. & Co., composed of the plaintiff's husband, his brother, and G. H. Judah, was a large mercantile house in Memphis that disastrously failed and made an assignment. The plaintiff and the wife of the other brother, being creditors of the firm for large amounts due them for loans to the firm, owned the book-accounts, which were bought for their use by Judah in the name of Maas, the book-keeper, at the assignee's sale, the husband of plaintiff paying for her share. These books, with the knowledge and consent of plaintiff and her husband, who afterwards died,—but it seems without any specific instructions of any kind, were left with Judah to collect the debts and manage the fund for the two beneficiaries, who resided in other cities. His control over the funds was of the most plenary character. He married a sister of the two brothers, and had been the most active member of the firm, and was best acquainted with its business. The collections were deposited with the defendant bank in his name as 'guardian,' or in the name of Maas, the former book-keeper of the firm, who became the book-keeper and assistant cashier of the defendant bank. Prior to November 27, 1880, Judah had purchased certain securities with the funds, which he kept on special deposit with the bank or in the name of Maas. On that day he came to the bank, and asked Maas for a receipt showing the special deposit, to send to the plaintiff. The bank was not in the habit of giving receipts or certificates for these special deposits, but kept them noted by numbers in a book used for that purpose. Maas wrote a receipt on a sheet of the bank's letter-paper, and, according to his and Judah's testimony, placed it in one of the bank's envelopes, addressed to the plaintiff, and put it with the bank's mail. The plaintiff and her daughter swear that it was accompanied by a letter from Maas. What was in the letter does not appear, and, not being preserved, it has not been produced, but is supposed to have been burned as useless. The routine of the bank was that Goldsmith, the cashier, personally signed and inspected every letter, and himself enveloped and addressed them. This letter he did not see or sign, and it was never copied into the letter-press. The receipt was as follows:

"MANHATTAN BANK OF MEMPHIS.

"L. Levy, President; L. Hanauer, Vice-President; E. Goldsmith, Cashier; M. Maas, Asst. Cashier.

"MEMPHIS, TENN., November 27, 1880.

"G. H. Judah, Esq., agent for Mrs. Eliza Walker, of Philadelphia, has placed with us on special deposit:

"$3,000, Memph. & Charl. R. R. 2d Mtg. Bonds.

"$2,200, Miss. Central R. R. 2d Mtg. Bonds.

"$1,100, People's Insurance Co. Stock.

"$5,000, Note E. G., and collateral attached, $6,000 M. Bank Stock.

"$325, Interest notes, (4 @ $81.25.)

"MAURICE MAAS, Asst. Cashier.'

'Some time in 1880 the son of the plaintiff and a son of the other Walker, both young men, commenced business at Memphis as Walker, Sons & Co. This firm kept an account with the defendant bank, and later with the Bank of Commerce. It was 'never very strong' financially,...

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