National City Bank of St. Louis v. Macon Creamery Co.

• Decision Date: 11 February 1932
• Parties: National City Bank of St. Louis v. Macon Creamery Company, Appellant
• Court: Missouri Supreme Court

46 S.W.2d 127

329 Mo. 639

National City Bank of St. Louis v. Macon Creamery Company, Appellant

Supreme Court of Missouri

February 11, 1932

Appeal from Macon Circuit Court; Hon. Vernon L. Drain Judge.

Affirmed.

Dan R. Hughes and John R. Hughes for appellant.

(1) An agreement between the depositor and the bank with reference to a deposit must determine the intention of the parties, and if an express agreement is made it should prevail. It is a matter of intention. Mudd v. Bank, 175 Mo.App. 398; Polack v. Bank of Commerce, 168 Mo.App. 368; May v. Bank of Hughesville, 291 S.W. 171; Citizens State Bank v. Ferson, 208 S.W. 136. (2) Notwithstanding the bank credits the amount of the check or draft on depositor's pass book, yet, if there was an agreement between the bank and the depositor that the unpaid checks could be recharged, then the acceptance of the checks would be for collection only, and not a transfer of title. Polack v. Bank of Commerce, 168 Mo.App. 368; Mudd v. Bank, 175 Mo.App. 398; Cochrane v. State Bank, 198 Mo.App. 619; Brigance v. Bank of Cooter, 200 S.W. 668; Townsend Grocery Co. v Chamberlain Co., 277 S.W. 217; Midwest Nat. Bank & Trust Co. v. Parker Corn Co., 211 Mo.App. 413; Thomson Bank of Syracuse, 278 S.W. 810. (3) The fact that the bank accepted a draft, with bill of lading attached, and gave plaintiff credit for the amount due him, even if plaintiff had been allowed to check it out, does not preclude defendant from showing that it was taken as a collection merely, with the right to charge back in case the collection was not made through no fault of the bank. Brigance v. Bank of Cooter, 200 S.W. 669; Townsend Grocery Co. v Chamberlain Co., 277 S.W. 217. (4) The indorsement on the drafts in this suit, "Pay any Bank or Banker or order; previous indorsements guaranteed," is a restricted indorsement and does not pass the legal title to the holder. Jackson v. Johnson, 248 Mo. 680; Northwestern Nat. Bank v. Bank of Commerce, 107 Mo. 402; National Bank of Rolla v. First Nat. Bank, 141 Mo.App. 719; Cairo Nat. Bank v. Blanton Co., 287 S.W. 839; 8 C. J. 364, par. 544. (5) This indorsement is merely for collection and does not transfer title. Citizens Trust Co. v. Ward, 195 Mo.App. 223; Bank of Indian Territory v. First Nat. Bank, 109 Mo.App. 665; Nat. Bank of Rolla v. First Nat. Bank, 141 Mo.App. 719; 8 C. J. 366; Johnson v. Scherabaum, 86 Ark. 82. (6) When a draft is sent by one bank to another for collection and remittance, with directions to collect and forward the proceeds to the sender, the relation of principal and agent, and not that of debtor and creditor, is created. Federal Reserve Bank v. Millspaugh, 282 S.W. 706; Federal Reserve Bank v. Quigley, 284 S.W. 164; Cairo Nat. Bank v. Blanton Co., 287 S.W. 839; Midwest Nat. Bank v. Parker Corn Co., 245 S.W. 217; Bank of Buchanan v. Gordon, 250 S.W. 650. (7) When a draft is received for collection by a bank, it does not owe the amount of the draft to the sender until collected, even though it may credit the forwarding bank therefor. Such credit may be treated as provisional, if the paper is afterward dishonored, and the credit may be cancelled. Midland Nat. Bank v. Brightwell, 148 Mo. 358. (8) The title to paper deposited in a bank for the purpose of collection does not pass to the bank. Northwestern Nat. Bank v. Bank of Commerce, 107 Mo. 402; Midland Nat. Bank v. Brightwell Bank, 148 Mo. 358. (9) Where the evidence greatly preponderates against the verdict and where the verdict is opposed by unimpeached documentary evidence and by all reasonable probabilities to the extent that the verdict is manifestly the result of mistake, passion or prejudice, appellate courts will interfere. Yarber v. Conn. Fire Ins. Co., 10 S.W.2d 957.

Jeffries, Simpson & Plummer for respondent.

(1) Defendant, having pleaded that the drafts in controversy were taken by the Farmers Trust Company, with the understanding and agreement that credit was to be immediately given thereon with the right to immediately draw against the same, cannot now contend that title to the instruments did not pass to said trust company. Ayres v. Farmers & Merchants Bank, 79 Mo. 421; Bullene v. Coates, 79 Mo. 426; Dymock v. Bank, 67 Mo.App. 97; Howard Co. v. International Bank, 198 Mo.App. 284; Cottondale Planting Co. v. Diehlstadt Bank, 220 Mo.App. 265; Hendley v. Globe Refinery Co., 106 Mo.App. 20. (2) Where there is an agreement between the depositor of negotiable paper and the bank in which it is deposited that credit is to be immediately extended thereon, with the right to draw against the credit so established, title to the instrument passes notwithstanding the fact that the bank in addition reserves the right to charge back the amount so credited to the depositor if the items are uncollected. Dymock v. Bank, 67 Mo.App. 97; Cottondale Planting Co. v. Diehlstadt Bank, 220 Mo.App. 265; Hendley v. Globe Refinery Co., 106 Mo.App. 20; Flannery v. Coates, 80 Mo. 444. (3) In the case of an indorsement of the instrument by a depositor in blank, the right to so charge back the amount thereof to the depositor when the item is dishonored, exists upon the indorsement regardless of any particular agreement therefor. Ayres v. Farmers & Merchants Bank, 79 Mo. 421. (4) Even where a bank takes negotiable paper under an indorsement which, standing alone, would constitute a restrictive indorsement for collection, if, in addition, it gives the indorser immediate credit therefor with the right to immediately draw thereon, title to the paper passes to the indorsee. Midland Nat. Bank v. Roll, 60 Mo.App. 585; Flannery v. Coates, 80 Mo. 444; Foristel v. Security Nat. Bank, 7 S.W.2d 998; Cairo Nat. Bank v. Blanton Co., 287 S.W. 839; May v. Bank of Hughesville, 291 S.W. 170.

Ferguson, C. Sturgis and Hyde, CC., concur.

OPINION

FERGUSON

The plaintiff, National City Bank of St. Louis, a corporation, instituted this action in the Circuit Court of Macon County against defendant, The Macon Creamery Company, a corporation, seeking to recover upon two drafts drawn by the creamery company on the Kroger Grocery and Baking Company of St. Louis, Missouri.

The drafts were payable to the Farmers Trust Company of Macon, or order, at sight. The petition is in two counts. The draft sued upon in the first count, dated August 6, 1927, was in the amount of $ 3933, while the second count is based upon a draft dated August 9, 1927, in the amount of $ 3488.40. Upon a trial before the court, a jury being waived, the finding and judgment of the court was for the plaintiff on both counts of the petition for the principal sum of said drafts with interest thereon in the aggregate amount of $ 7903.08, from which judgment the defendant appealed.

The Farmers Trust Company was engaged in a general banking business at Macon, Missouri, where the defendant creamery company was located. In the year 1925 the creamery company became a customer and depositor of the trust company, and that relationship continued until the trust company was closed and its affairs and assets placed under the control of the Commissioner of Finance on August 10, 1927. At the time the creamery company began to do business with the trust company the president of the creamery company informed the president of the trust company that the creamery company carried on an extensive business with the Kroger company in St. Louis, shipping its products to that company and drawing drafts on it for the purchase price thereof. It was agreed that the trust company would accept these drafts as a deposit by the creamery company, give immediate credit therefor to the creamery company's account, that the creamery company would be permitted to immediately draw checks thereon, that if the drafts were not paid upon presentment same might be charged against the creamery company's account and that at any time the account was not sufficient to take care of charges against it the creamery company would deposit sufficient funds to meet such charges. On cross-examination of the president of the trust company, who appeared as a witness for defendant, he testified as follows:

"Q. The final agreement between you and Mr. Miller (the president of the creamery company) was that these drafts drawn on the Kroger people were to be deposited along with other items that he might bring to the bank to the Macon Creamery Company's account and that was done? A. Yes, sir.

"Q. And it was agreed at that time that Mr. Miller was to have unlimited right to check upon them and if he over checked at any time or any of the drafts wasn't paid he would make it good? A. Yes, sir; he was to make any good, of course. Any draft; any check.

"Q. And he was given the right to check upon that account and he did do that, exercise that right? A. Yes, sir."

On cross-examination Mr. Miller, the president of the creamery company, testified in reference to the indorsement and deposit of checks and drafts with the trust company:

"Q. Your understanding and agreement with Mr. Phillips (the president of the Trust Company) in the event any of these items were dishonored or not paid you would make them good to the bank? A. Sure.

"Q. And your arrangement was the same with any other draft or any other check as it was with the Kroger drafts? A. Yes, sir."

Thereupon a course of dealing between the creamery company and the trust company was entered upon which continued, as we have noted, without interruption until the trust company was closed in August 1927. When the creamery company made a shipment of its products to the Kroger Company it would draw a draft for the amount of the sale price thereof payable to the trust company, indorse the draft in blank and deposit same with the trust company as an ordinary deposit. The drafts were listed upon a deposit...