Security State Bank of Comanche, Okl. v. W.R. Johnston & Co.

• Decision Date: 20 February 1951
• Docket Number: No. 33986,33986
• Citation: 204 Okla. 160,228 P.2d 169,1951 OK 40
• Parties: SECURITY STATE BANK OF COMANCHE, OKL. v. W. R. JOHNSTON & CO., Inc., et al.
• Court: Oklahoma Supreme Court

Page 169

228 P.2d 169

204 Okla. 160

SECURITY STATE BANK OF COMANCHE, OKL. v. W. R. JOHNSTON & CO., Inc., et al.

No. 33986.

Supreme Court of Oklahoma.

Feb. 20, 1951.

Syllabus by the Court.

1. The relation of debtor and creditor between the bank and the depositor is contractual, and no one can create this relation between the bank and depositor without authority from the depositor, express or implied, and, where a deposit is made in the bank by a third person to the credit of another without his knowledge or consent, and without authority, the relation of debtor and creditor does not exist.

2. The general rule is that costs and expenses of litigation, other than the usual and ordinary court costs, are not recoverable in an action for damages, and such costs are not recoverable in a subsequent action; but, where the wrongful acts of defendant have involved plaintiff in litigation with others, or placed him in such relations with others as make it necessary to incur expense to protect his interest, such costs and expense should be treated as legal consequences of the original act.

Bond & Bond, of Duncan, for plaintiff in error.

Jerome Sullivan, of Duncan, for defendant in error W. R. Johnston & Co., Inc.

J. P. Speer, of Duncan, for defendants in error J. P. Branch & Home Lumber Co.

GIBSON, Justice.

The facts necessary to a decision of the case may be summarized as follows:

Home Lumber Company, a copartnership, composed of J. P. Branch and A. N. Harley, Jr., was the owner of real property described as Lot Eight (8) in Block Two (2) of Branch Subdivision of Wilson Addition to the town of Comanche, Oklahoma. In order to facilitate the handling thereof during the absence of Harley, who was in military service, the title thereto was held in the name of Branch. In September 1946 Branch, by parol contract, sold the lot to N. E. Taylor for a consideration of $350.00 and agreed to convey the lot, by deed of general warranty, upon payment of the consideration. It was understood at the time that Taylor intended to erect a dwelling thereon and to undertake to sell same as improved property. On March 10, 1947, at which time the erection of the improvements was near completion, Taylor informed Branch that he had sold the premises to one James H. Hobson and requested that the deed to the premises be made to Hobson as grantee. Branch executed the deed accordingly and on that day deposited same as an escrow with Security National Bank of Comanche, Oklahoma, to be delivered upon the payment to said bank of said sum of $350.00, the purchase price, and the further sum of $4214, owing said lumber company for materials theretofore furnished in the construction of the improvement. On March 15, following, said Taylor and Hobson executed in writing a contract for the sale of the premises at the price of $6800.00 which was also deposited in said bank. Under the terms thereof the purchase was conditioned upon Hobson being able to secure a loan upon the premises. If so, the said deed and abstract showing merchantable title were to be delivered to Hobson upon payment to the bank of said $6800.00. Hobson obtained from W. R. Johnston & Company, Inc., a loan in the amount of $6300.00 and he, together with his wife, executed a mortgage upon the premises to secure the same. At that time, the period within which mechanics or other liens could be filed had not expired. The loan company was well acquainted with Branch and believing that he by reason of his warranty of the title to the lot would be as interested as it, the company, was in protecting the property from such liens, made its check payable to Branch and transmitted same to him for disposition of the proceeds. On receipt thereof Branch withdrew said deed from the bank and got in touch with Taylor with a view of satisfying all claims, that could become liens, before delivery of said deed. At that time no liens had been filed but the following amounts were owing for which the claimants were entitled to file liens: H. H. Thompson, $523.75; Cunningham and Coggins Hardware Company, $781.74; Stanley J. Box, $170.50, and said Home Lumber Company, the further sum of $70.00 for materials furnished since March 10. It was agreed between Branch and Taylor that Branch by his endorsement should make the check payable to the order of the lumber company and that the latter should negotiate the same through said bank and on doing so have the bank credit the account of the Home Lumber Company with $4564.04, representing the total of the amounts for which the deed was held as escrow, and pay the remainder thereof in cash to the lumber company who, in conjunction with Taylor, would with that sum and other moneys to be provided by Taylor, discharge said remaining indebtedness. A written memorandum of the plan was made. The plan was pursued and the lumber company through its bookkeeper presented the check and memorandum to said bank which accepted the same. By reason of the revenue stamps required the value of the check was reduced to $6292.30. The bank placed to the credit of the lumber company $4564.04, as requested, but declined to pay in cash the remainder thereof, $1728.26. As reason therefor the president of the bank declared that removing the money in cash was an unbusinesslike way of handling an escrow and that the balance should be deposited to the credit of Taylor and by him checked on in making the payments. Upon being informed thereof Branch and Taylor, each acting on the belief that the bank was acting in good faith and that checks drawn by Taylor would be honored, agreed that the matter be so handled and in pursuance thereof Taylor drew separate checks thereon payable to said named claimants, other than the lumber company, and delivered same in payment of their respective claims. All of said checks were dishonored by the bank when presented for payment by the payees. The bank treated the balance as a deposit to credit of Taylor and applied same as a credit upon past due indebtedness of Taylor to the bank which was evidenced by his note. Branch and Taylor each remonstrated with the president of the bank against the dishonor of the checks and requested and demanded that the checks be honored or that said balance be made available to the lumber company, and at the same time advised him of the factual situation and that expensive litigation would necessarily ensue on default of compliance. The bank refused to alter the situation. Thereafter each of said claimants, other than the lumber company, perfected liens upon the property and filed actions for judgment and foreclosure of his lien,...