Morton v. Woolery

• Decision Date: 27 June 1922
• Citation: 189 N.W. 232,48 N.D. 1132
• Parties: MORTON v. WOOLERY et al.
• Court: North Dakota Supreme Court

48 N.D. 1132

189 N.W. 232

MORTON

v.WOOLERY et al.

Supreme Court of North Dakota.

June 27, 1922.

Syllabus by the Court.

Where a person makes a deposit in a bank for the specific purpose of meeting certain checks to be thereafter issued, the bank on accepting the deposit becomes bound by the conditions imposed, and, if the money so deposited is misapplied, it can be recovered as a trust deposit.

Certain assignments of error predicated upon instructions given to the jury and rulings made in the admission and exclusion of evidence examined, and for reasons stated in the opinion held to be nonprejudicial.

Appeal from District Court, Dunn County; Berry, Judge.

Action by George Morton against Albert Woolery, Fred W. Brendemuhl, and the Farmers' Bank of Dunn County. Judgment for plaintiff, and last-named defendant appeals. Affirmed.W. A. Carns, of Manning, and Alf. O. Nelson, of Dunn Center, for appellant.

T. F. Murtha, of Dickinson, for respondent.

CHRISTIANSON, J.

Plaintiff brought this action to recover upon a check drawn on the defendant bank by the defendant Woolery and payable to the plaintiff or his order. The evidence shows that the plaintiff is a farmer who lives about 15 miles from Dunn Center, where the defendant bank is located. The defendant Woolery is a cattle buyer, and in the fall of 1920 and prior thereto he had been buying cattle in the vicinity of Dunn Center. He carried on his banking business with the defendant bank, wherein he had two accounts, one of which was carried on the books in his own name, and the other as “A. Woolery, cattle account.” It was his custom to make a notation on each check given for cattle to the effect that it was given for cattle, and the checks so marked would be charged to the account carried as “A. Woolery, cattle account.” It appears that in September, 1920, this account was overdrawn as a result of some losses in the cattle business. About the middle of October, 1920, Woolery purchased 17 head of cattle from the plaintiff, agreeing to pay therefor the sum of $620. He arranged with the plaintiff to have the cattle delivered at Dunn Center on October 21, 1920, where Woolery agreed to pay for the same. The plaintiff, Morton, drove the cattle to Dunn Center on the day agreed upon and delivered the cattle to Woolery and received from him a check for $620 dated on that day, namely, October 21, 1920, payable to plaintiff and drawn on the defendant bank. In the lower left-hand corner of the check appeared the words “17 cattle.” Plaintiff deposited this check with the bank where he carried his account at Manning, in this state, and in due time it was presented to the defendant bank, but payment was refused for want of funds. According to the testimony of the assistant cashier of the defendant bank, the defendant Woolery came to the bank prior to October 21, 1920, and asked the assistant cashier if the bank would honor his checks to be issued in payment of a carload of cattle that were to be delivered to him in Dunn Center that day for shipment, provided that he (Woolery) would draw and deposit a sight draft for $1,600 on the Prouty Commission Company, to whom the cattle were to be consigned. At the time Woolery told the assistant cashier that the checks he would issue in payment of cattle which he would purchase for such shipment would aggregate some $1,600, and might exceed that sum, but would not exceed $1,700. The assistant cashier thereupon ascertained the status of Woolery's account and found that he had a balance in the cattle account of about $145. The assistant cashier agreed to the proposition made by Woolery. The $1,600 sight draft was drawn by Woolery and handed to the assistant cashier for deposit, he prepared a deposit slip crediting the $1,600 to the “cattle account,” and it was carried by the bank as a cash item until the close of business on October 23, 1920, when it was deposited and credited on the books of the bank to “A. Woolery, cattle account.” It appears that on that day the bank paid two checks drawn upon such account in payment of cattle included in the shipment, namely, one to Minneau for $1,030, and one to Joslyn for $40. It appears further that there were a number of checks that had been drawn by Woolery during September, 1921, against the cattle account, and which had previously been presented to the bank, and payment of which had been refused for want of funds. Some of these checks were again presented on or about October 23 or 24, 1921, and the bank paid out practically all the balance of the funds on hand in the cattle account upon such checks; and when the check drawn in favor of the plaintiff Morton was presented some time between October 28th and November 1st there were not sufficient funds in such “cattle account” and payment thereof was refused. Thereafter this action was brought against the bank by the plaintiff, claiming that the bank had no right to pay the old dishonored checks; that the funds in the cattle account on October 21, 1921, and subsequent thereto realized from the $1,600 sight draft, and the $145 on deposit at the time Woolery made the arrangement with the assistant cashier of the bank, was, under such arrangement, held for the special purpose of paying checks issued for cattle contained in the particular shipment against which the sight draft was drawn. The case was tried to a jury, which returned a verdict in favor of the plaintiff. Upon the return of the verdict defendant moved for judgment notwithstanding the verdict. The motion was denied. Thereafter judgment was entered pursuant to the verdict, and defendant has appealed from the judgment.

The principal contention advanced by the defendant on this appeal is that the evidence is insufficient to sustain the verdict, and that the court should have directed a verdict in its favor, or ordered judgment notwithstanding the verdict. The motion for a directed verdict was in substance that the plaintiff had failed to show that the $1,600 deposited by Woolery in the defendant bank was a trust fund, and had failed to prove that there was any agreement that such funds should be retained as a trust fund for the payment of any particular check or checks.

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