Shell Petroleum Corp. v. Sturdivant Bank

• Decision Date: 03 December 1935
• Docket Number: No. 23032.,23032.
• Parties: SHELL PETROLEUM CORPORATION, RESPONDENT, v. STURDIVANT BANK IN CHARGE OF O.H. MOBERLY, STATE FINANCE COMMISSIONER, APPELLANT.
• Court: Missouri Court of Appeals

87 S.W.2d 1064

SHELL PETROLEUM CORPORATION, RESPONDENT, v. STURDIVANT BANK IN CHARGE OF O.H. MOBERLY, STATE FINANCE COMMISSIONER, APPELLANT.

No. 23032.

St. Louis Court of Appeals. Missouri.

Opinion filed December 3, 1935.

Appeal from Circuit Court of Cape Girardeau County. — Hon. Frank Kelly, Judge.

AFFIRMED.

R.F. Baynes for appellant.

Sale of draft does not entitle the purchaser thereof to a preference as the consideration paid passes into the issuing bank's general assets and debtor and creditor relation is established. Bank of Republic v. Republic State Bank et al., 42 S.W. (2d) 27; Cormaney v. Wells-Hine Trust Co. et al., 44 S.W. (2d) 172; McClure Garage v. Sturdivant Bank, 76 S.W. (2d) 438; Hoffman v. Sturdivant Bank, 76 S.W. (2d) 441.

C.S. Gentry and Charles H. Wager for respondent.

(1) Oil companies are allowed preferences under circumstances similar to the one in which respondent finds itself here. Salzburger Bank v. Standard Oil Co. (1931), 173 Ga. 722, 161 S.E. 584. (2) Under the law announced by the high courts of this State the preference should be granted. Bank of Poplar Bluff v. Millspaugh (1926), 313 Mo. 412, 281 S.W. 733; Federal Reserve Bank v. Millspaugh (1926), 314 Mo. 1, 282 S.W. 706; Bank of Republic v. Republic State Bank (1931), 328 Mo. 848, 42 S.W. (2d) 27; Fletcher v. Cantley (Spr. App. 1932), 226 Mo. App. 1060, 47 S.W. (2d) 217; Gentry County Drainage Dist. v. Farmers & Mechanics Bank (K.C. App. 1928), 222 Mo. App. 882, 5 S.W. (2d) 1110. (3) The three drafts involved here were obtained in exchange for checks by a depositor on its account in the bank. Ellerbe v. Studebaker Corp. (C.C.A. 4, 1927), 21 Fed. (2d) 993; See, also, United States Circuit Judge John J. Parker's comment reported on in the December, 1934, Commercial Law Journal (Vol. 39), at page 626, which is hereafter set out at length. (4) Under the Bank Collection Code respondent is entitled to a preference. R.S. Mo. 1929, Sec. 5575 (Mo. Stat. Ann., Vol. 11, p. 7715, Sec. 5575); Schrier v. Joplin State Bank (1933), 63 S.W. (2d) 179. (5) Three drafts are involved here. Two of them were obtained after the usual closing hour on the day before the day the bank failed to open. Respondent is entitled to a preference on these two drafts bcause of the circumstances under which they were issued. Missouri Public Service Co. v. Cantley (Sp. App. 1933), 57 S.W. (2d) 755.

SUTTON, C.

This is an action for the establishment of a preferred claim against the Sturdivant Bank, of Cape Girardeau, which is in charge of the finance commissioner for liquidation.

The trial resulted in a judgment allowing plaintiff's claim as a preferred claim in the sum of $458.34. The defendant appeals.

The cause was tried on an agreed statement of facts. According to this statement, the Sturdivant Bank, of Cape Girardeau on Saturday, November 5, 1932, closed for business at three o'clock P.M., the usual time for closing. It never re-opened, and on the following Monday was taken over by the commissioner of finance.

For some time prior to September 22, 1932, the Peoples Oil Company of Cape Girardeau, a jobber handling petroleum products marketed by the Shell Petroleum Corporation, was in financial difficulties and owed said Shell Petroleum Corporation and others various sums of money. On September 22, 1932, the Shell Petroleum Corporation established an agent, L.I. Warren, at Cape Girardeau, to assist the Peoples Oil Company in various matters and to work out such plans as he could for the reduction of the account of the Peoples Oil Company with the Shell Petroleum Corporation, commencing with September 22, 1932, and from time to time petroleum products would be shipped to L.I. Warren as agent for the Shell Petroleum Corporation at Cape Girardeau, and he would turn them over to the Peoples Oil Company when it paid for them. Commencing with September 22, 1932, and from time to time thereafter, the financial condition of the Peoples Oil Company would become such that payments of varying amounts could be made, and were made, on its account with the Shell Corporation. In paying for petroleum products and in making payments on its account the Peoples Oil Company would issue checks to the Shell Petroleum Corporation on the Sturdivant Bank, and these in turn would be handed to L.I. Warren and he would endorse them on behalf of the Shell Petroleum Corporation for exchange only, that is, he would stamp on the back of the checks, "Endorsed for exchange only — payable to the order of Shell Petroleum Corporation — L.I. Warren. Jobber's Service Department — Employees not authorized to endorse for any other purpose," after which he would take the checks to the Sturdivant Bank and receive from said bank drafts in amounts equal to the amounts of the check. Thereafter, L.I. Warren would forward the drafts to the home office of the Shell Petroleum Corporation in St. Louis, where in the usual course they would be deposited and paid to the Shell Petroleum Corporation.

On November 4, 1932, L.I. Warren in accordance with his custom presented to the Sturdivant Bank a check dated November 3, 1932, in the sum of $177.23, drawn by the Peoples Oil Company on its account with the Sturdivant Bank, payable to the Shell Petroleum Corporation, and endorsed by him on behalf of the Shell Petroleum Corporation in the manner hereinbefore outlined, and received in exchange therefor a draft payable to the Shell Petroleum Corporation for the amount of $177.01, which amount equals the amount of the Peoples Oil Company check less exchange charges. The Peoples Oil Company had on deposit to its credit with the bank an amount sufficient to pay the check issued by it, and the check was marked paid and charged to the account of the Peoples Oil Company on November 4, 1932.

On November 5, 1932, at three-four P.M., which time was four minutes after the usual closing time of the Sturdivant Bank, L.I. Warren presented to the Sturdivant Bank two checks of the Peoples Oil Company, dated November 4, 1932, and November 5, 1932, payable to the ...