Western Shoe Co. v. Amarillo Nat. Bank

• Decision Date: 07 October 1931
• Docket Number: No. 3656.,3656.
• Citation: 42 S.W.2d 469
• Parties: WESTERN SHOE CO. v. AMARILLO NAT. BANK.
• Court: Texas Court of Appeals

42 S.W.2d 469

WESTERN SHOE CO. v. AMARILLO NAT. BANK.

No. 3656.

Court of Civil Appeals of Texas. Amarillo.

October 7, 1931.

Appeal from District Court, Potter County; W. E. Gee, Judge.

Suit by the Western Shoe Company against the Amarillo National Bank. From a judgment in favor of defendant, plaintiff appeals.

Reversed and remanded.

Dorenfield, Foster & Fullingim, of Amarillo, for appellant.

Cooper & Lumpkin, of Amarillo, for appellee.

JACKSON, J.

This suit was instituted in the district court of Potter county, Tex., by the plaintiff, Western Shoe Company, a corporation organized under the laws of Texas, against the Amarillo National Bank of Amarillo, a banking corporation organized under the laws of the United States, to recover $511.99 evidenced by a check of date April 11, 1929, given to the plaintiff by the H. L. Barnard, Inc. Departments, on the defendant bank.

The plaintiff pleads in detail the alleged facts on which it bases its cause of action and upon which it seeks a recovery.

The defendant answered by general demurrer, general denial, and pleaded the alleged facts relied on by it as a defense.

A written agreement, signed by the attorneys for the parties, discloses the following facts: That the plaintiff, at the times involved, was engaged in the mercantile business in Amarillo, Tex., buying and selling shoes at retail. That H. L. Barnard, Inc., was, on April 11, 1929, engaged in the general business of operating a department store in Potter county. That on April 11, 1929, H. L. Barnard, Inc., executed and delivered to plaintiff the following check:

                "H. L. Barnard, Inc. Departments
                    "905 Polk Street, Amarillo, Texas
                                                 No. 140
                           "Amarillo, Texas, 4-11-1929
                

"Pay to the order of Western Shoe Co. Inc. $511.99. The sum of $511 and 99 cts. dollars "To The Amarillo National Bank, Amarillo,

                  Texas
                     "H. L. Barnard Inc. Departments
                    "By Milton L. Hirschfeld, President."
                

That in due course of business the check was presented to the defendant bank and payment thereof demanded, which was refused for want of sufficient funds. That at the time of the execution and delivery of the check, H. L. Barnard, Inc., was a depositor of the bank and carried therein two accounts one under the name of H. L. Barnard, Inc., and one under the name of H. L. Barnard, Inc. Departments.

That on and prior to April 11, 1929, there was on deposit with the bank in the H. L. Barnard, Inc. Departments, account a sum of money in excess of $511.99. That on said day H. L. Barnard, Inc., was indebted to the defendant bank on a note for the sum of approximately $2,500, which note was past-due and unpaid. That for the purpose of paying said note or a part thereof, the bank applied on the payment of the note the sum of $511.99 out of the H. L. Barnard, Inc. Departments, account, which left an amount in said account insufficient to pay the check in full and payment on the check was refused because of insufficient funds.

That on April 6, 1929, an officer of the bank entered on the ledger sheet of the H. L. Barnard, Inc. Departments, account: "See C. T. Ware or A. H. Ware before paying check. Show sheet each day." That the entry of such set-off was not made on the ledger sheet until April 16, 1929, and the check of the plaintiff was presented on April 13, 1929, for payment and was refused. That had the bank not made such application of the funds of the H. L. Barnard, Inc. Departments, account, there would have been sufficient money in said account to pay the amount of the check. That H. L. Barnard, Inc., was not made a party defendant for the reason that shortly after April 11, 1929, it filed a voluntary petition in bankruptcy and was thereafter adjudged a bankrupt and all of its property sold and the proceeds thereof applied to the liquidation of its indebtedness.

That on December 10, 1928, H. L. Barnard, Inc., executed to the defendant bank its note for the sum of $2,500, payable on January 15, 1929. That during the month of April, 1929, and for some time prior thereto, H. L. Barnard Inc., was a customer of the bank, carrying an account subject to check. That on March 7, 1927, H. L. Barnard, Inc., opened an account with defendant bank in the name of H. L. Barnard, Inc. Departments. That this account was closed June 20, 1928, and opened again on April 2, 1929. That on said day H. L. Barnard, Inc., withdrew from its account the sum of $1,500 and deposited it to the account of H. L. Barnard, Inc. Departments. That on April 3, 1929, it withdrew from this account the sum of $217.75 and deposited it to the account of H. L. Barnard, Inc. Departments. That on April 4, 1929, it withdrew from its account the sum of $122.92 and deposited it to the H. L. Barnard, Inc. Departments account. That said sums so withdrawn were all the funds that went into the account of H. L. Barnard, Inc. Departments. That the intention of the officer of the bank in making the notation on the H. L. Barnard, Inc. Departments, account: "See C. T. Ware or A. H. Ware before paying check. Show sheet each day," was to set off by the bank the amount of money in the H. L. Barnard, Inc. Departments, account and credit the same to the H. L. Barnard, Inc., note due the bank.

The testimony discloses that H. L. Barnard, Inc., was conducting a mercantile business in a leased building at 905 Polk street in Amarillo, Tex. That the plaintiff, the Western Shoe Company, as lessee, by written contract rented from H. L. Barnard, Inc., as lessor, certain space in said building to be used exclusively by lessee for the purpose of operating a shoe and hosiery department. Under the terms of the written lease the lessee was to purchase, without liability upon the lessor, all merchandise used in such shoe department. That all moneys received from customers through the sale of merchandise by the lessee should be paid to the cashier of the lessor each day and a full, true, accurate, and separate record thereof kept of such moneys; and the lessor agreed to place such money to the credit of the lessee on the day of sale and that the money so received would be held in trust by the lessor for the lessee and an accounting made to the lessee on the 5th and 20th of each month for such funds, but before making remittance thereof, the lessor was authorized to make certain deductions as consideration for the lease, which it is unnecessary to set out.

M. L. Hirschfeld testified, in substance, that H. L. Barnard, Inc., handled all the moneys and accounts and took all the checks paid for merchandise of the Western Shoe Company, depositing such checks and money to the account of H. L. Barnard, Inc., and withdrew the money due the Western Shoe Company from such account and deposited it in the department's account. That the Western Shoe Company owned the merchandise that was sold in the shoe department in the H. L. Barnard, Inc., store. That at the time he opened up the account with the defendant bank for H. L. Barnard, Inc. Departments, he advised an officer of the bank that it constituted a trust fund. That on April 2, 1929, the day the $1,500 was transferred from the H. L. Barnard, Inc., account to the account of H. L. Barnard, Inc. Departments, and on April 3d and 4th, the dates the other two sums were transferred, he did not talk to any one in the bank relative to the accounts, but made the deposits through the teller's window. That $511.99 of the money transferred from the H. L. Barnard, Inc., account to the H. L. Barnard, Inc. Departments, account, belonged to and was the money of the Western Shoe Company, but that he did not tell any one of that fact at the defendant bank when the money was transferred from one account to the other.

C. H. Berwald, the manager and treasurer of the Western Shoe Company, testified that in April or May, 1927, shortly after opening the business of the Western Shoe Company, he went to the defendant bank and sought a loan in the amount of $1,500. That at that time he advised an officer of the bank that he was operating as a leased department in the store with H. L. Barnard, Inc., and the Western Shoe Company deposits did not reflect the sales of his company, but that the money of the Western Shoe Company was held in trust by H. L. Barnard, Inc., and was paid by it to his company at certain periods. That he had with him the lease...