Thack v. First Nat. Bank & Trust Co.
| Decision Date | 14 August 1953 |
| Docket Number | No. 14381.,14381. |
| Citation | 206 F.2d 180 |
| Parties | THACK et al. v. FIRST NAT. BANK & TRUST CO. et al. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Warren E. Wood, Little Rock, Ark., Wood & Smith, Little Rock, Ark., for appellants.
C. Delbert Hosemann, Vicksburg, Miss., Brunini, Everett, Grantham & Quin, Vicksburg, Miss., for appellees.
Before HUTCHESON, Chief Judge, and RUSSELL and STRUM, Circuit Judges.
This suit was brought by appellants, trading as McGehee Livestock Auction, against the appellee bank and J. W. Cockrell, to recover damages for alleged negligence and self preferment on the part of the bank in the handling of two drafts drawn on Cockrell by appellants, and forwarded for collection through appellee bank at Vicksburg, Mississippi, near which city Cockrell also had his home.
Appellants assert that the bank did not use due diligence in presenting the drafts; that it breached its duty to appellants in failing to notify them of certain facts known to the bank but unknown to appellants, to which we will refer hereafter; and that the bank applied in payment of Cockrell's indebtedness to it, funds in Cockrell's checking account, to which appellants say they are entitled as trust funds. The issues were resolved below in favor of the bank.
Cockrell was a cattle buyer. He was indebted to the bank on an unsecured note for $5,000, due December 19, 1949.
On December 20, 1949, Cockrell purchased cattle from appellants of the value of $9,201.77, for which sum appellants drew a draft on Cockrell and forwarded it for collection through appellee bank. The draft was received by the bank on Saturday, December 24, 1949, Christmas eve. Instructions from the forwarding bank, accompanying this draft, directed the appellee bank to wire notice of non-payment.
Upon receipt of the draft, appellee bank, on December 24, 1949, called Cockrell's home by telephone four times, and also attempted to reach him by messenger, but was unable to do so because Cockrell was at his hunting camp some 25 miles away. The bank also made an unsuccessful effort to reach him there by telephone. The bank did not wire notice of non-collection, but on December 24, 1949, it reported by airmail to the forwarding bank that it had been unable to contact Cockrell, and was holding the draft unless otherwise advised.
In an effort to clear his desk of collection items before the approaching Christmas weekend, the transit teller of appellee bank, on December 24, 1949, charged the amount of this draft, $9,201.77, to Cockrell's account, which was then sufficient to pay it, and made out the bank's check in that amount with which to pay the draft. This check was never released, but was held by the bank pending Cockrell's acceptance of the draft. The item remained in this status until December 29, 1949.
Sunday, December 25, and Monday, December 26, 1949, were holidays. The bank again attempted to contact Cockrell several times on December 27, 1949, but was unable to do so. An officer of the bank made personal visits to Cockrell's home on December 28, 29, 30 and 31, 1949, in an effort to contact him, but could not find him. On December 28, 1949, the appellee bank wired the forwarding bank that the draft could not be presented, and that it would be held until December 30, 1949. The forwarding bank later requested appellee bank to hold the draft until January 4, 1950, which was done, and on that day the draft was returned to the forwarding bank with the information that Cockrell could not be reached.
On December 29, 1949, Cockrell's account with the above item charged to it, was $2,666.71 overdrawn, because a draft for $16,000 drawn by Cockrell on a Commission Company in Memphis, Tennessee, was dishonored and charged back to his account by appellee bank. Next day, December 30, 1949, appellee bank cancelled its above mentioned check for $9,201.77, credited that amount back to Cockrell's account which, after satisfying the overdraft, left a balance of $6,535.06 in that account.
The following day, December 31, 1949, appellee bank charged against Cockrell's account $5,025.31, representing with interest, Cockrell's note due it, which matured on December 19, 1949, thus leaving a balance of $1,509.75 in Cockrell's account. As already stated, the draft for $9,201.77 was, at the request of the forwarding bank, held for collection until January 4, 1950, and then returned.
On December 29, 1949, appellee bank received from another forwarding bank, for collection, a second draft for $5,146.24, drawn by appellants against Cockrell, representing another purchase of cattle. On December 30, 1949, appellee bank notified this forwarding bank that it had been unable to present this draft after repeated efforts to do so. On January 3, 1950, this second draft was returned to the forwarding bank, with the notation: "Unable to present, Mr. Cockrell out of town."
During the period from December 24, 1949, to January 2, 1950, Cockrell remained at his hunting camp located 25 miles from appellee bank. On January 2, 1950, Cockrell returned from his hunting camp, and received his December bank statement from appellee. He immediately left for another city, and did not return to his home until January 4, 1950, during which interval appellee continued its efforts to contact him. Cockrell finally came into the bank on January 15, 1950, to discuss his financial problems, until which time the bank regarded him as in satisfactory control of his finances.
On January 11, 1950, the forwarding bank returned the $5,146.24 draft to appellee bank to make further efforts to collect the same. Appellee held it until January 14, 1950, in an unsuccessful effort to collect it, and it was then returned to the forwarding bank.
The district judge found that the bank acted in good faith, that it had been diligent in its efforts to present the drafts to Cockrell, and that in applying the funds on deposit in Cockrell's account on December 31, 1949, to the payment of its own matured and past due debt, it had not unlawfully preferred itself over appellants.
In making these findings, the trial judge is well...
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