Mothersead v. Harris

• Decision Date: 28 April 1931
• Docket Number: Case Number: 21082
• Citation: 1931 OK 193,298 P. 602,148 Okla. 285
• Parties: MOTHERSEAD et al. v. HARRIS et al.
• Court: Oklahoma Supreme Court

1931 OK 193

298 P. 602

148 Okla. 285

MOTHERSEAD et al. v. HARRIS et al.

Case Number: 21082

Supreme Court of Oklahoma

Decided: April 28, 1931

Syllabus

¶0 1. Banks and Banking--Failed State Banks--Status of Assets in Hands of Bank Commissioner.

The State Bank Commissioner in charge of the assets of a failed bank acts in the capacity of a receiver and holds the property of the failed bank coming into his hands by the same right and title as the bank, of whose property he is such receiver, subject to the liens, priorities, and equities existing at the time of the failure of the bank.

2. Same--Proof of Preferred Claim--Trust Funds.

Before a claim can be allowed as a preferred claim against the State Bank Commissioner in charge of a failed bank, it is necessary to establish that the claim is against a fund which is a part of the assets of the bank and which passed into his hands as such State Bank Commissioner and which is a trust fund.

3. Assignments--Effect of Bank Draft--Drawee not Liable Until Acceptance.

Under the provisions of sections 7665, 7796, and 7797, C. O. S. 1921, a bank draft does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof, and the drawee is not liable thereon unless and until drawee accepts the same.

4. Same--Proof of Intent to Assign Deposit Account.

An intent to assign a deposit account cannot be shown by acts which are obviously done in conformity to the usages and rules of the law merchant.

Appeal from District Court, Bryan County; Porter Newman, Judge.

Action by G. W. Harris and E. C. Harris, doing business as Harris Brothers, against O. B. Mothersead, State Bank Commissioner, et al. Judgment for plaintiffs, and defendants appeal. Reversed and remanded, with directions.

M. B. Cope, for plaintiffs in error.

MacDonald & MacDonald, for defendants in error.

ANDREWS, J.

¶1 The defendants in error instituted a suit in the district court of Bryan county against the plaintiffs in error to recover the amount of two drafts issued by the First State Bank of Calera, as a preferred claim against that bank, and recovered judgment therefor. From that judgment the plaintiffs in error appealed to this court. The parties will be hereinafter referred to as plaintiffs and defendants.

¶2 The agreed facts are that on January 6, 1927, the plaintiffs had a checking account in the First State Bank of Calera and the balance therein was $ 4,000; they owed two wholesale houses; on that date they drew a check upon their account in that bank for $ 366.76 which they presented to that bank, in exchange for which that bank issued a draft on the First National Bank of Durant payable to one of their creditors; on the same date they issued a check for $ 270.32 upon their account which they presented to that bank, in exchange for which that bank issued a draft on the First National Bank of Durant payable to Peters Shoe Company; the plaintiffs forwarded the two drafts to the payees therein named; in due course the same were protested by the drawee bank, the bank having been found insolvent on January 10, 1927, at which time it was taken over by the State Bank Commissioner; at the time the drafts were drawn and at all times thereafter up until the bank closed, the drawer bank had on deposit in the First National Bank of Durant, subject to draft, sufficient funds to pay the two drafts, and that balance passed to the State Bank Commissioner when he took over the failed bank as insolvent.

¶3 The State Bank Commissioner in charge of the assets of a failed bank acts in the capacity of a receiver and holds the property of the failed bank coming into his hands by the same right and title as the bank, of whose property he is such receiver, subject to the liens, priorities, and equities existing at the time of the failure of the bank. Mothersead v. Wiley, 114 Okla. 105, 243 P. 718.

¶4 Before a claim can be allowed as a preferred claim against the State Bank Commissioner in charge of a failed bank, it is necessary to establish that the claim is against a fund which is a part of the assets of the bank and which passed into his hands as such State Bank Commissioner and which is a trust fund. Thomas v. Mothersead, 128 Okla. 157, 261 P. 363; First State Bank of Bristow et al. v. O'Bannon, 130 Okla. 206, 266 P. 472.

¶5 The agreed facts show that the two drafts in question were drawn against the First National Bank of Durant. The failed bank had on deposit in that bank sufficient funds to pay those drafts at the time they were drawn, and that fund as a part of the assets of the failed bank, passed into the hands of the State Bank Commissioner. There remains but one question, and that is, Did the fund against which this claim was made constitute a trust fund?

¶6 The plaintiffs asserted that the fund constituted a trust fund in that the issuance of the two drafts by the First State Bank of Calera constituted an assignment pro tanto of the amount thereof in the First National Bank of Durant, Okla., to the payees in the two drafts.

¶7 The plaintiffs rely on a statement made by this court in Thomas v. Mothersead, supra, but neither the statement quoted by them nor the opinion in that case supports their contention that the issuance of a draft amounts to an assignment of the amount thereof. The issue in that case was the relationship existing after the collection of a check drawn on a bank which had been forwarded to that bank for collection and remittance. This court therein held that under those circumstances the bank acted as the agent of the forwarder to collect the check and remit the proceeds, and that the relationship of principal and agent thereby established continued until the completion of the transaction. The remittance by the bank in the form of a draft was held not to change the relationship of principal and agent to debtor and creditor. Such has been the holding of this court in Hall v. Sullivan, 123 Okla. 233, 253 P. 45; Kansas Flour Mills v. New State Bank, 124 Okla. 185, 256 P. 43; State ex rel. Mothersead v. Excello Feed Milling Co., 131 Okla. 100, 267 P. 833; and First State Bank of Bristow v. O'Bannon, supra, cited by defendants. In no one of those cases was the issue presented that is presented by the record in this case.

¶8 The plaintiffs cite 7 C. J. 751, and quote therefrom as an authority the portion of the text as follows:

"But one who purchased drafts from a bank when it was insolvent and had no reason to expect the drafts would be honored has been held entitled to a preference."

That is the exception to the general rule therein stated that:

"One who holds a check or draft of a bank which becomes insolvent before such check or draft is paid is not entitled to any preference over other creditors."

¶9 The agreed facts show that the issuing bank was insolvent on January 10, 1927. There is nothing in the record to show that it was insolvent on January 6, 1927, at the time of the issuance of the drafts. For that reason the authority cited by the plaintiffs, if otherwise applicable, has no application here. The cases cited in support of the exception quoted deal with the issuance by insolvent banks of drafts which are known to be worthless at the time of their issuance.

¶10 The defendants present the question of want of subrogation, but we do not need to consider that question in view of our decision on the main question submitted. However, in discussing the question of subrogation, the plaintiffs say in their briefs, "* * * in the case at bar no question is raised that the bank was not solvent on the day the checks were issued, and it was not taken over until a number of days later. * * *" That contention was necessary in order to support the theory of the plaintiffs that they were subrogated to the rights of the payees of the two drafts. We refer to it here only for the purpose of showing that the cases cited by the plaintiffs dealing with drafts issued by insolvent banks have no application here.

¶11 The plaintiffs cite no case or authority which, in our judgment, is controlling in this case. They think that the rights of the parties should not be determined...