State Nat. Bank v. Wheeler & Motter Mercantile Co.

• Decision Date: 24 June 1912
• Parties: STATE NAT. BANK v. WHEELER & MOTTER MERCANTILE CO.
• Court: Arkansas Supreme Court

148 S.W. 1033

STATE NAT. BANK v. WHEELER & MOTTER MERCANTILE CO.

Supreme Court of Arkansas.

June 24, 1912.

Appeal from Circuit Court, Little River County; J. H. Evans, Special Judge.

Action by the Wheeler & Motter Mercantile Company against D. A. Rimes, in which a writ of garnishment was sued out against the State National Bank. From a judgment against the garnishee, it appeals. Reversed and remanded.

A. D. Dulaney, of Ashdown, and W. H. Arnold, of Texarkana, Ark., for appellant. Jno. H. Mosier, of Muskogee, Okla., and Rush Greenslade, for appellee.

McCULLOCH, C. J.

D. A. Rimes was a merchant at Winthrop, Ark., and became insolvent; appellant, a banking corporation of Texarkana, Ark., and appellee, a mercantile corporation of St. Joseph, Mo., being among his largest creditors. He sold his stock of goods in bulk for the sum of $1,010, and turned it over to B. H. Kuhl for the purpose of distributing the same pro rata among all his creditors; the transaction being verbal, and not evidenced by any written assignment. Kuhl was vice president of appellant bank, and deposited the money in that bank; the same being placed to his credit on the books of the bank. The amount was sufficient to pay 25 per cent. of the Rimes indebtedness. Most of the creditors agreed to accept the pro rata of 25 per cent. to be paid out of said fund rather than to resort to bankruptcy proceedings, but appellee, whose debt amounted to the sum of $385.87, declined to accept the sum offered, and instituted in the circuit court of Little River county an action against Rimes to recover the amount of his account, and sued out a writ of garnishment against appellant, commanding it to answer what goods, chattels, moneys, etc., it had in hand belonging to Rimes, the debtor. Appellant answered, denying that it held any money, or other property, belonging to Rimes. An issue was made on the truth of that answer, and in a trial before a jury the court peremptorily instructed a verdict against appellant, as such garnishee, for the full amount of appellee's account against Rimes. It appears from the testimony adduced that at the time of the service of the garnishment most of the creditors of Rimes had signified their acceptance of the proposed pro rata of the sum placed in the hands of Kuhl, but the same had not been paid over to them, and was paid at some time subsequent to the service of the writ, and the balance was paid back to Rimes. The amount of the balance so paid back is not disclosed in the testimony, but, as appellee is the only creditor shown to have declined to accept the proposed sum, it is inferable that 25 per cent. of its debt was the amount returned to Rimes.

Appellee insists that, though the money was placed with Kuhl and by him deposited in the bank in his own name, he received it as an officer of the bank, and that the latter was the real custodian for Rimes. They invoke the rule announced by the authorities that, when money is deposited by an agent for another in his own name, it cannot be taken under garnishment for his debt, but is subject to garnishment for a debt of the principal. 2 Shinn on Attachment & Garnishment, § 580; 20 Cyc. 1022.

But even if the bank, and not Kuhl, be treated as the custodian of the fund for Rimes, it was not merely an agent for the latter. It was more than that. It was trustee for Rimes and his creditors for whose benefit it was held. The bank being the trustee for the benefit of all the creditors of Rimes, the funds could not be taken by a garnishment at the instance of one of the creditors. The authorities seem to be agreed that a trustee cannot be made a garnishee at the instance of a creditor of the cestui que trust....