U.S. Cold Storage Corp. v. First Nat. Bank of Fort Worth

Decision Date20 October 1961
Docket NumberNo. 16256,16256
Citation350 S.W.2d 856
PartiesUNITED STATES COLD STORAGE CORPORATION, Appellant, v. FIRST NATIONAL BANK OF FORT WORTH et at., Appellee.
CourtTexas Court of Appeals

Bowyer, Thomas, Crozier & Harris, and H. T. Bowyer, Dallas, for appellant.

Cantey, Hanger, Johnson, Scarborough &Gooch, and Sloan B. Blair, Fort Worth, for appellee The First National Bank of Fort Worth.

Harry H. Ward, Fort Worth, for appellee North Fort Worth State, bank.

BOYD, Justice.

United States Cold Storage Corporation sued Rosenthal Packing Company, First National Bank of Fort Worth, hereinafter called National Bank, and North Fort Worth State Bank, hereinafter called State Bank. Judgment was rendered for the plaintiff against Rosenthal, but summary judgment was rendered for both banks. The plaintiff appeals from the summary judgment.

On May 11, 1960, appellant issued its check, drawn on National Bank, payable to Rosenthal in the amount of $30,000. The check, which represented a loan, was issued on Rosenthal's assurance that it would on that day or the day following store in appellant's plant, as collateral, meat products of market value greatly in excess of the amount of the check. Rosenthal stored no products in appellant's plant.

On the day the check was issued Rosenthal deposited it in State Bank, the check bearing the indorsement 'for deposit only'. Steddum, State Bank's executive vice president, testified by deposition that he sent the check with other items by messenger to National Bank late in the afternoon of May 11th. On the morning of May 12th, appellant, having learned that State Bank was refusing payment on Rosenthal's checks, some of which were payable to appellant, orally instructed National Bank to stop payment on the $30,000 check which it had issued to Rosenthal. National Bank did not stop payment, but paid the check on May 13th and charged it to appellant's account.

Appellant alleged that Rosenthal was insolvent; that it ordered payment stopped before the check had been presented to National Bank for payment, and that National Bank agreed to stop payment; that National Bank waived the statutory provisions regarding stop payment instructions; that State Bank was not a holder in due course, since it took the check for collection only and for deposit, and also acted in bad faith, knowing that Rosenthal was overdrawn on its books, and was insolvent, and said bank had on May 11th refused payment on Rosenthal's checks, and was chargeable with knowledge that Rosenthal was not entitled to the proceeds of the check. Appellant asked for judgment against National Bank, and, in the alternative, against State Bank, and , in the further alternative, against Rosenthal.

By points of error appellant contends that there was an issue of fact as to whether National Bank was negligent in paying the check; and issue as to whether State Bank was holder of the check in due course; that National Bank waived the provisions of the Statutes concerning stop payment instructions; and that neither bank should have judgment because the check was restrictively indorsed and placed in State Bank for collection only.

When Rosenthal deposited the check in State Bank its account was overdrawn in excess of $90,000, and the bank credited the overdraft with the amount of the check. We may assume that had the check been returned by National Bank it would have been charged back to Rosenthal's overdraft.

We have reached the conclusion that the judgment should be affirmed. Even though National Bank should have stopped payment if it agreed to do so, we are unable to see how appellant has been injured by National Bank's action in paying the check if State Bank was a holder in due course. Brady on Bank Checks, 2nd Ed., p. 363. Had the check not been paid by National Bank, State Bank would have had a claim for $30,000 against appellant, who issued the check and put it into the stream of commerce. It is true that State Bank would in that event also have had a cause of action against Rosenthal, the insolvent indorser of the check. Appellan...

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7 cases
  • Peoria Sav. and Loan Ass'n v. Jefferson Trust and Sav. Bank of Peoria, 52747
    • United States
    • Supreme Court of Illinois
    • September 15, 1980
    ...648; Laurel Bank & Trust Co. v. City National Bank (1976), 33 Conn.Supp. 641, 365 A.2d 1222; United States Cold Storage Corp. v. First National Bank (Tex.Civ.App. 1961), 350 S.W.2d 856; Bath National Bank v. Eli N. Sonnenstrahl, Inc. (1928), 249 N.Y. 391, 164 N.E. Peoria Savings next conten......
  • Citizens Nat. Bank of Englewood v. Fort Lee Sav. & Loan Ass'n
    • United States
    • Superior Court of New Jersey
    • September 3, 1965
    ...against the deposited check. N.J.S. 12A:1--201(19) and (25); N.J.S. 12A:3--304, N.J.S.A. See United States Cold Storage Corp. v. First Nat'l Bank of Fort Worth, 350 S.W.2d 856 (Tex.Civ.App.1961), declaring the bank a holder in due course where it applied a deposited check against a large ov......
  • Lynnwood Sand and Gravel, Inc. v. Bank of Everett, 7929-8-I
    • United States
    • Court of Appeals of Washington
    • June 29, 1981
    ...Bank, 33 Conn.Supp. 641, 365 A.2d 1222 (1976); St. Paul Fire & Marine Ins. Co. v. State Bank, supra; United States Cold Storage Corp. v. First Nat'l Bank, 350 S.W.2d 856 (Tex.Civ.App. 1961); Bowling Green, Inc. v. State Street Bank & Trust Co., 307 F.Supp. 648 (D.Mass.1969). Cf. Peoria Savi......
  • Peoria Sav. and Loan Ass'n v. Jefferson Trust and Sav. Bank of Peoria, 79-52
    • United States
    • United States Appellate Court of Illinois
    • October 5, 1979
    ...Trust Co. v. City National Bank of Connecticut (1976), 33 Conn.Supp. 641, 365 A.2d 1222; United States Cold Storage Corp. v. First National Bank of Ft. Worth (Ct.Civ.App.Tex.1961), 350 S.W.2d 856; Bath Nat'l Bank v. Sonnenstrahl, Inc. (1928), 249 N.Y. 391, 164 N.E. 327 (Dicta ); Annot. (195......
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