United States Fidelity & Guaranty Co. v. First Nat. Bank, 13102.

• Decision Date: 22 February 1935
• Docket Number: No. 13102.,13102.
• Citation: 81 S.W.2d 213
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. FIRST NAT. BANK OF FORT WORTH.
• Court: Texas Court of Appeals

81 S.W.2d 213

UNITED STATES FIDELITY & GUARANTY CO. v. FIRST NAT. BANK OF FORT WORTH.

No. 13102.

Court of Civil Appeals of Texas. Fort Worth.

February 22, 1935.

Rehearing Denied March 22, 1935.

Error from District Court, Tarrant County; Frank P. Culver, Jr., Judge.

Suit by the United States Fidelity & Guaranty Company against the First National Bank of Fort Worth. To review a judgment for defendant on peremptory instruction, plaintiff brings error.

Affirmed.

Arthur Haddaway, of Fort Worth, for plaintiff in error.

Allen & Gambill, of Fort Worth, for defendant in error.

BROWN, Justice.

The record discloses that for a number of years, prior to the incidents out of which this suit arises, Herbert Graves had been a trader on the stockyards of Fort Worth, operating under a trade-name, and that some three or four months before he failed in business (which was shortly after the transactions were had that brought about the present litigation), he also engaged in the live stock commission business, mixing the funds received in both businesses in two different bank accounts.

The account made with the Stockyards National Bank of Fort Worth was carried in the name of "Herbert Graves," and the checks had printed thereon "Herbert Graves, Cattle Dealer."

The account, in the First National Bank of Fort Worth, during the time the transactions were had which precipitated the instant suit, was carried in the name of "Herbert Graves Commission Company"; the checks having such words and name printed upon them, in the upper left end of each check, and the signature being printed as follows: "Herbert Graves Commission Company, by _______."

Appellant, United States Fidelity & Guaranty Company, was the surety upon Herbert Graves' bond as a live stock commission merchant, or factor.

It appears that the proceeds of all of the live stock, sold by Herbert Graves to the two packing houses, located in Fort Worth, were, by the packers, deposited in the account carried by Graves in the Stockyards National Bank, and that he also deposited in said bank moneys received by him when trading in cattle for himself. When the funds in the "Stockyards Bank" grew to considerable sums, so as to justify his so doing, Graves would draw checks on such account for $1,000, $1,500, or $2,000 payable to the First National Bank, and deposit such sums to the credit of his account in the payee bank. Other deposits were likewise made to Graves' account, in said bank, both from proceeds of commission sales and private sales made by Graves.

On February 2, 1932, Graves borrowed $2,500 from the First National Bank, for the express purpose of personally trading in cattle on the stockyards, gave his note therefor, and promised and agreed to promptly repay the bank out of the proceeds of the sale of the live stock purchased with such funds. The sum of $2,500 was promptly placed to Graves' credit in the lending bank, appellee here. The record discloses that between February 2 and February 9, 1932, Graves made the sales of the cattle purchased with the borrowed money, and made deposits in the First National Bank of proceeds from the sales, in excess of the sum borrowed, together with the proceeds of other transactions, and that on February 8, 1932, Graves drew a check on his account in the Stockyards National Bank for $2,000, made payable to order of the First National Bank, and on February 9, 1932, drew a similar check in the sum of $1,000. The $2,000 check was credited to the account in the First National Bank on February 8, 1932; the $1,000 check was so credited on either February 9th or 10th; the testimony failed to fix the date, but the bank account shows a deposit of $1,019.60 on February 9th, and a deposit of $1,010.41 on February 10th.

On February 8th, Herbert Graves executed a draft payable to the First National Bank in the sum of $2,503.90, drawn upon Herbert Graves Commission Company, to pay off the loan, with interest, made to him by the payee bank; and on February 9th, N. F. Boone, acting with full authority from Graves, drew a check in the sum of $2,509.05 on the account in the First National Bank, carried in the name of "Herbert Graves Commission Company," and made same payable to the order of said First National Bank, for the express purpose of taking up the said draft, and to pay off the note due said bank, covering the loan made one week before.

This suit was brought by the United States Fidelity & Guaranty Company, appellant, against the First National Bank of Fort Worth, appellee, alleging that Graves had been, for some time prior to the happening of the events complained of, doing business as a live stock commission agent, in Fort Worth; that he carried his account with appellee bank under the name "Herbert Graves Commission Company," and in the Stockyards National Bank of Fort Worth under the name "Herbert Graves"; that the greater portion of the sums of moneys deposited in each account was from proceeds of sales of live stock made by Graves as a commission merchant; that "the defendant had full notice and knowledge of the fact that Herbert Graves was in the live stock commission business, and of the method and custom pursued by said Herbert Graves in the operation of his commission business and was well acquainted with the banking methods and the two bank accounts of said Herbert Graves. The defendant had full notice and knowledge that the large majority of moneys deposited in said Stockyards National Bank and in the defendant bank were the property of...