Trotter v. Merchants & Farmers Bank

Decision Date11 June 1936
Docket Number14311.
PartiesTROTTER v. MERCHANTS & FARMERS BANK.
CourtSouth Carolina Supreme Court

Appeal from Common Pleas Circuit Court of Kershaw County; G. Duncan Bellinger, Judge.

Action by T. K. Trotter, Receiver of the Bank of Bethune, a banking corporation in liquidation, against the Merchants and Farmers Bank. From a judgment for plaintiff, defendant appeals.

Affirmed.

The master's report and the confirming decree of Judge Bellinger, requested to be reported, follow:

Findings of Fact.

1. I find that for some time prior to the closing of the Bank of Bethune, that it and the Merchants & Farmers Bank were the only two banks in that town and that they had a daily clearing and/or settlement at the end of each business day when the cashier of the Bank of Bethune would take all checks and drafts he had on the Merchants & Farmers Bank and the cashier of the Merchants & Farmers Bank would take all checks and drafts he had on the Bank of Bethune that they would go through them and those checks or drafts which were good, or which each of them desired to accept were added up and for the difference, the one having the lesser amount would give to the other for the difference a check drawn on some out of town bank where that bank kept funds on deposit.

2. I find that on the 29th day of January, 1930, Mr. G. E Parrott, as cashier of the Bank of Bethune, delivered to J D. Lafitte, cashier of the Merchants & Farmers Bank, a check for $830.51, drawn on the National Loan & Exchange Bank of Columbia, in settlement of the balance due on the daily clearing and/or settlement between them, and, on the 30th day of January, 1930, Mr. G. E. Parrott, as cashier of the Bank of Bethune, delivered to J. D. Lafitte, as cashier of the Merchants & Farmers Bank, a check for $3,612.02, on the National Loan & Exchange Bank of Columbia, in settlement of a balance due on the daily clearing and/or settlement between them, that when the check for $830.51 was given on the 29th day of January, 1930, the Bank of Bethune had on deposit in the National Loan & Exchange Bank of Columbia the sum of $442.57, according to the ledger sheet offered in evidence showing the account of the Bank of Bethune in the National Loan & Exchange Bank of Columbia, and in addition to this cash balance, at the time the said National Loan & Exchange Bank had a $900 school claim for collection, which was owned by the Bank of Bethune. This school claim was later turned over to G. E. Parrott, receiver of the Bank of Bethune, together with the $442.57 which the Bank of Bethune had on deposit in the National Loan & Exchange Bank of Columbia; that when the check for $3,612.02 was given on the 30th day of January, 1930, the cashier of the Bank of Bethune, on that same date, mailed to the National Loan & Exchange Bank of Columbia a check for $700, drawn on the American Trust Company of Charlotte, N. C., which was to be placed to the credit of the account of the Bank of Bethune in the National Loan & Exchange Bank of Columbia. On January 30, 1930, the Bank of Bethune failed to open for business and has remained closed ever since.

3. I find that on the 24th day of February, 1930, G. E. Parrott was appointed receiver of the assets of the Bank of Bethune by an order of the court of common pleas for Kershaw county, said order being on file in the office of the clerk of court for Kershaw county.

4. I find that on February 26, 1930, J. D. Lafitte, as cashier of the Merchants & Farmers Bank, filed a verified proof of claim with G. E. Parrott, as receiver of the Bank of Bethune for $4,445.53, being the total of the two checks hereinabove mentioned which were given by the cashier of the Bank of Bethune to the cashier of the Merchants & Farmers Bank on the 29th and 30th days of January, 1930, in payment of balances due on the clearing and/or settlement for those two days, which checks were not paid by the National Loan & Exchange Bank of Columbia but were returned to the Merchants & Farmers Bank with the notation thereon "Bank of Bethune closed," and with a protest charge of $3 added thereto.

5. I find that on March 12, 1930, G. E. Parrott, as receiver of the Bank of Bethune, paid to J. D. Lafitte, as cashier of the Merchants & Farmers Bank, the sum of $4,445.53, payment in full of its claim hereinabove mentioned.

6. I find that on August 22, 1933, T. K. Trotter was appointed receiver of the Bank of Bethune to succeed G. E. Parrott; that on September 12, 1933, T. K. Trotter, as receiver of the Bank of Bethune, made formal demand upon the Merchants & Farmers Bank for the sum of $4,445.53, being the amount paid to the Merchants & Farmers Bank by G. E. Parrott, former receiver of the Bank of Bethune, which the Merchants & Farmers Bank refused to do.

7. I find that no dividend has been paid to the general creditors; that a stock assessment has been levied resulting in some collections and that it appears that the creditors and depositors of the Bank of Bethune will only receive a part payment of their claims and deposits.

Conclusions of Law.

1. I conclude that the payment of $4,445.53 by G. E. Parrott, as receiver of the Bank of Bethune, to the Merchants & Farmers Bank on March 12, 1930, was made without any authority of the court of common pleas and said payment has not been ratified. The order hereinabove referred to wherein G. E. Parrott was appointed receiver of the Bank of Bethune is the only authority he had for taking charge of the assets of the said Bank of Bethune and the only authority he had was derived from said order.

2. I conclude that the claim of the Merchants & Farmers Bank hereinabove referred to is not a preferred claim, but is an unsecured claim and should share equally with all other general and unsecured creditors of the Bank of Bethune.

3. I conclude that T. K. Trotter, as receiver of the Bank of Bethune, is entitled to recover from the Merchants & Farmers Bank the said sum of $4,445.53, with interest from September 12, 1933, being the date upon which demand was made upon the Merchants & Farmers Bank for the return of said sum.

Conclusion.

The attorneys for the plaintiff filed with the master numerous authorities defining the powers of a receiver, and a number of South Carolina cases dealing with the restitution of funds paid by an official of the state or some subdivision thereof under a mistake of law. The attorneys for defendant filed a written argument with the master and therein set forth that the payment of this money to the defendant was a voluntary payment made under a mistake of law, the former receiver having testified that he considered the defendant's claim a preferred claim and that he had been instructed to pay same by one of the assistant state bank examiners, and that no question had been raised as to this payment being made under duress, nor was the transaction tainted with fraud or collusion, therefore, the payment to defendant could not be recovered, even though it was a preference, which the defendant's attorneys do not concede, as the doctrine of voluntary payment under a mistake of law in the absence of duress, fraud, or collusion should apply to a receiver as well as to an individual; that a receiver has the same rights in court as an individual, and only those remedies and defenses which are available to individuals.

While the principles cited in the argument of the defendant's attorneys are good law as applied to individuals, but, I do not think that a receiver can make a voluntary payment of money under a mistake of law when he had no title to the money and it is not his own and he has no beneficial interest in same. The receiver paid the money to the defendant, but the title to same did not pass, and his successor is entitled to restitution of the amount so paid with interest from the date on which demand for return of same was made. The same situation would apply if the receiver was to deliver personal or real property to a creditor under a mistake of law and thereby give said creditor a preference, without authority of the court of common pleas to make said transfer or without a ratification of same. If the defendant was to bring a suit against the plaintiff upon its claim, there could be no recovery under any view of the case, as...

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  • Oeland v. Kimbrell's Furniture Co.
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    ... ... 524, 140 S.E. 161; ... Holly Hill Lumber Co. v. Federal Land Bank, 160 S.C ... 431, 158 S.E. 830, 831; McLaurin v. Hamer, 165 S.C ... Soc. of United States, ... 177 S.C. 148, 181 S.E. 33; Trotter v. Merchants & Farmers ... Bank, 180 S.C. 449, 186 S.E. 371, 105 A.L.R ... ...

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