Merchants' Nat. Bank v. Dorchester

• Decision Date: 17 March 1911
• Parties: MERCHANTS' NAT. BANK OF HOUSTON v. DORCHESTER et al.
• Court: Texas Court of Appeals

136 S.W. 551

MERCHANTS' NAT. BANK OF HOUSTON v. DORCHESTER et al.

Court of Civil Appeals of Texas.

March 17, 1911.

Rehearing Denied April 6, 1911.

Appeal from District Court, Harris County; Norman G. Kittrell, Judge.

Action by Chester B. Dorchester, receiver, against the Merchants' National Bank of Houston, Tex., and another. From a judgment for plaintiff against the defendant named, it appeals. Reversed and rendered.

Lane, Wolters & Storey and Wm. A. Vinson, for appellant. Andrews, Ball & Streetman, for appellees.

McMEANS, J.

The following statement of the case made by appellant in its brief, and which is approved by the other parties to this appeal, is adopted:

On September 14, 1908, Chester B. Dorchester, as receiver for the Waters-Pierce Oil Company, instituted suit in the district court of Harris county against the Texas Lamp & Oil Company to recover the sum of $1,563.33 on a verified account. On the 17th day of April, 1909, the defendant filed its first amended original answer, admitting the purchase of the goods, as alleged in the plaintiff's petition, and further alleging that the amount claimed remained unpaid until on October 15, 1907, when it drew its check payable to the order of the plaintiff in the sum of $1,563.33 on the bank of T. W. House, in the city of Houston, and delivered it to the plaintiff on said date; that the defendant on said date, and on each and every day thereafter, and continuously up to the closing of said bank at 3 o'clock p. m. October 17, 1907, had on deposit in said bank funds to the amount of or more than $1,563.33, which were subject to withdrawal on the order of the defendant, and that if said check so drawn and delivered to the plaintiff had been presented at any time, or within a reasonable time after its delivery to the plaintiff, it would have been paid; that the plaintiff received said check on the 15th day of October, 1907, or at an early hour on October 16, 1907, and long before the failure of the T. W. House bank, and retained said check, and did not return or offer to return the same, and did not refuse to accept the same prior to the failure of said T. W. House bank; that after the close of said bank at 3 o'clock p. m. October 17, 1907, the bank of T. W. House failed and became insolvent, and on application of creditors was adjudged a bankrupt by the District Court of the United States for the Southern District of Texas. Defendant also alleged that plaintiff received said check on the morning of October 16, 1907, and did not present the same for payment during that day, although it had ample opportunity to have done so during business hours; that thereafter, on or about October 17, 1907, the plaintiff deposited said check in the Merchants' National Bank of Houston, a bank situated next door to the bank of T. W. House, and separated therefrom by a partition or wall, and that said Merchants' National Bank failed to present said check or to return it to the defendant within a reasonable time, and did not present it for payment at the bank of T. W. House before the closing of business hours at 3 o'clock p. m. October 17, 1907, and thereafter, on that day, the bank of T. W. House failed and became insolvent, and that the failure of the plaintiff and the said Merchants' National Bank to present said check for payment within a reasonable time, or to return the same to the defendant until the said bank of T. W. House had failed, had damaged the defendant in the sum of $1,563.33.

Upon the coming in of the first amended original answer of the defendant Texas Lamp & Oil Company, the plaintiff Chester B. Dorchester, receiver, by supplemental petition, impleaded the Merchants' National Bank, a national banking corporation having its place of business in the city of Houston, Tex., alleging substantially that on the morning of October 16, 1907, he received by mail from the Texas Lamp & Oil Company the latter's check for the sum of $1,563.33, drawn on T. W. House, banker, payable to the order of Waters-Pierce Oil Company; that on that morning he also received a large number of checks from other parties, and as soon as the mail received was opened and the checks, including the check in question, were separated from the remaining portion of the mail, in the ordinary course of plaintiff's business, said checks were listed upon the books of plaintiff, and the proper and usual entries made on said books, and all of said checks, including the one in question, were, as soon as practicable, placed in the hands of plaintiff's messenger, who went with said checks to the place of business of the Merchants' National Bank for the purpose of depositing them with said bank; that the check in question was deposited with the Merchants' National Bank at about 1:30 p. m. October 17, 1907, and that the same was deposited by plaintiff in the regular course of his business, as soon as it was practicable to do so; that the said Merchants' National Bank gave credit to the plaintiff in his pass book for the sum of $10,045.36, which included the check in question; that the plaintiff's place of business was located many blocks distant from the place of business of both the Merchants' National Bank and the T. W. House bank; that neither of said banks were easily accessible to said place of business, and plaintiff had in his employ a messenger whose duties were to each day carry to and deposit in the said Merchants' National Bank all checks received on that day by plaintiff, and that said messenger used a bicycle for that purpose; that, by reason of the great number of checks received by the plaintiff, it was impracticable for him to visit each bank in person, and that it was his custom to regularly and promptly deposit all checks received by him with the Merchants' National Bank, with which he was at that time doing business, and thereupon it became the duty of the Merchants' National Bank to promptly and diligently present the check in question for payment, and to collect the amount thereof; that the Merchants' National Bank at that time adjoined the bank of T. W. House, and that same could have been presented by said Merchants' National Bank for payment, and could have been collected by the latter, either before the close of business hours on October 15, 1907, or before the close of business hours on the day following; that said check was in fact presented by the said Merchants' Bank to said T. W. House, banker, before the close of business hours on October 17, 1907, and was in fact paid by said T. W. House, banker, to said Merchants' National Bank, either in cash or by the said T. W. House, banker, offsetting against the same checks which he held drawn on the said Merchants' National Bank or otherwise. It was further alleged that on the morning of October 18, 1907, the plaintiff was advised by the Merchants' National Bank that the check in question was uncollectible, and that, in accordance with the custom existing between the plaintiff and said bank for the plaintiff to forward to said bank a remittance to cover such checks as had been by said bank credited to plaintiff's account and were uncollectible, plaintiff, upon being so advised that the check in question was uncollectible, and relying upon such advice, and in ignorance of the true facts, forwarded to said bank his draft for the sum of $1,563.33 for the purpose of offetting the credit given by said bank to the plaintiff at the time of the deposit of the check in question, which check was applied by said bank for that purpose, and that, therefore, the said Merchants' National Bank became liable to the plaintiff in the sum of $1,563.33, together with interest thereon.

The Merchants' National Bank of Houston, having been thus impleaded by the plaintiff, filed its original answer on April 17, 1909, in which it made the following allegations among others: "This defendant avers that if it ever had or handled the check described in plaintiff's petition, it took the same in due course of business, and that in handling the same it handled it in the ordinary, customary, and usual manner in which such matters are handled by banks doing business in the city of Houston, state of Texas, and elsewhere; that if it ever handled said check, it used due diligence and all care necessary and proper and such as is customary in an effort to collect the same; that it was not negligent in any particular or in any manner or in any way in its efforts to collect said draft; that, if it ever handled said draft, it presented the same promptly for payment in the usual and customary manner in which such items are handled by the banks of Houston, and in such prompt, usual, and customary manner as plaintiff knew the said check would be handled by said bank when the same was deposited with it for collection; that, if it ever handled said check, the same, when presented promptly and properly and through the proper channels, was dishonored, not paid and returned to this defendant and immediately by it reported dishonored and returned to the plaintiff, and this defendant denies that it has been guilty of any negligence, neglect, or carelessness whatever in connection with the handling of said check or its presentation for payment, and denies that it is liable to the plaintiff in any sum whatever in this case, and of this it puts itself upon the country."

Robert J. Eckhardt, having been appointed receiver of the Waters-Pierce Oil Company by the district court of Travis county, Tex., and having qualified as such, was substituted as plaintiff in lieu of his predecessor, Chester B. Dorchester, and succeeded to all of the rights of Chester B. Dorchester, receiver, herein. On the 22d day of January, 1910, the cause came on for trial before the court without a jury and judgment was rendered in effect that the plaintiff take nothing by his suit against the Texas Lamp & Oil Company, and said company go hence without day and recover its costs, but that the plaintiff have...