Paul v. Farmers' & Merchants' State Bank of Russell
| Decision Date | 09 December 1932 |
| Docket Number | No. 28959.,28959. |
| Citation | 245 N.W. 832,187 Minn. 411 |
| Parties | PAUL v. FARMERS' & MERCHANTS' STATE BANK OF RUSSELL et al. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Lyon County; Chas. T. Howard, Judge.
Action by J. G. Paul against the Farmers' & Merchants' State Bank of Russell and others. From an order denying a motion for a new trial, defendants appeal.
Order reversed, with directions.
Hall & Catlin, of Marshall, for appellants.
J. V. Williams, of Marshall, for respondent.
Defendants appeal from an order denying their motion for a new trial.
The action is brought to recover $163.58, being the amount of a draft purchased by plaintiff from the defendant bank on September 26, 1930, on which payment had been refused by the bank upon which the draft was drawn. On September 26, 1930, the plaintiff came to the defendant bank and presented to the assistant cashier certain checks from a number of concerns, payable to plaintiff, amounting in all to $172 and some cents. He informed the cashier that he wanted to send a remittance or draft to the Federal Land Bank at St. Paul, to pay $163.58 interest coming due on a mortgage to that bank. The cashier first made out a cashier's check for $163.58. Plaintiff said the land bank preferred a good draft. The cashier then made out a draft for the amount on the First National Bank of Minneapolis. Plaintiff objected that it was not a draft on the St. Paul bank, but was informed that the defendant bank was doing business that way. He then accepted the draft, put it in an envelope himself, and mailed it to the Federal Land Bank. The cashier paid to plaintiff in cash $9, the balance of the amount of the checks received from plaintiff, less a few cents charged as exchange on the draft. Plaintiff was not a depositor of, and had no account in, the defendant bank. The draft was not paid because, on September 29, 1930, before the draft, in due course, reached the First National Bank of Minneapolis, the defendant bank was closed and taken over by the commissioner of banks. The draft was then returned to plaintiff unpaid. Plaintiff filed claim for the amount of the draft with the commissioner of banks, and asked that it be allowed as a preferred claim. The commissioner refused to allow the claim as a preferred claim, but allowed it as a general claim.
The trial court held that, by the transaction stated, a trust fund in the amount of the draft came into the hands of the defendant bank; that plaintiff became a preferred creditor of the bank and is entitled to recover the full amount of the draft. That the amount paid for the purchase of the draft increased the funds of the bank and augmented the funds coming into the hands of the commissioner of banks is conceded.
The first question presented is whether the court erred in finding that plaintiff became a preferred creditor of this bank. There is no material dispute as to the facts. It is true that plaintiff informed the officers of the bank that he wanted the draft for the purpose of paying interest on a mortgage to the Federal Land Bank, and stated he wanted a good draft. The draft was good when issued. The facts shown are insufficient to create any trust fund, or to make plaintiff a preferred creditor. The transaction between the plaintiff and the bank was completed and closed when the draft was sold and delivered to plaintiff. The bank did not undertake to forward the money to the Land Bank or to do anything further in connection with the payment. It is not claimed or shown that the bank did not have funds in the Minneapolis bank sufficient to pay the draft. Payment was not made because, before the draft reached the Minneapolis bank, the commissioner of banks had taken over the defendant bank. The plaintiff was simply a purchaser from defendant bank of a draft, which has not been paid. The rule is well settled that, in the absence of any fraud, and where the bank does not undertake to act as agent for the purchaser for any purpose, or agree to hold or apply the fund for any special purpose, the purchaser of a draft becomes only a general creditor of the bank in case the draft is not paid. Hjelle v. Veigel, 169 Minn. 173 210 N. W. 891; Milne v. Veigel, 170 Minn. 66, 211 N. W. 954; Standard Oil Co. v. Veigel, 174 Minn. 500, 219 N. W. 863; American Exp. Co. v. Cosmopolitan Trust Co., 239 Mass. 249, 132 N. E. 26; Spiroplos v. Scandinavian-Am. Bank, 116 Wash. 491, 199 P. 997, 16 A. L. R. 181; Legniti v. M. & M. Nat. Bank, 230 N. Y. 415, 130 N. E. 597, 16 A. L. R. 185; In re Security Savings Bank, 205 Iowa, 171, 217 N. W. 831; Grammel v. Carmer, 55 Mich. 201, 21 N. W. 418, 54 Am. Rep. 363; Harrison v. Wright, 100 Ind. 515, 58 Am. Rep. 805; Jewett v. Yardley (C. C.) 81 F. 920; Clark v. Toronto Bank, 72 Kan. 1, 82 P. 582, 2 L. R. A. (N. S.) 83, 115 Am. St. Rep. 173; Citizens' Nat. Bank v. Dowd (C. C.) 35 F. 340; People v. M. & M. Bank, 78 N. Y. 269, 34 Am. Rep. 532; Lamro State Bank v. Farmers' State Bank, 34 S. D. 417, 148 N. W. 851.
Such cases as Stein v. Kemp, 132 Minn. 44, 155 N. W. 1052; Blummer v. Scandinavian Am. State Bank, 169 Minn. 89, 210 N. W. 865; Blythe v. Kujawa, 175 Minn. 88, 220 N. W. 168, 60 A. L. R. 330; Eastman v. Farmers' State Bank, 175 Minn. 336, 221 N. W. 236, and Winkler v. Veigel, 176 Minn. 384, 223 N. W. 622, arose on different facts, where there was no purchase of a draft, and where the money...
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