Zollinger v. First Nat. Bank
| Decision Date | 06 April 1926 |
| Docket Number | 16529. |
| Citation | 259 P. 141,126 Okla. 182,1926 OK 342 |
| Parties | ZOLLINGER et al. v. FIRST NAT. BANK OF OKLAHOMA CITY. |
| Court | Oklahoma Supreme Court |
Rehearing Denied June 15, 1926.
Second Petition for Rehearing Denied July 5, 1927.
Syllabus by the Court.
The right of the defendant to exercise its banker's lien in the application of funds held by the bank to the payment of indebtedness owing by a depositor presupposes, first, that the fund deposited in the bank by the debtor was the property of the latter; second, that the fund was deposited without restrictions, and was not a special fund; third, an existing indebtedness then due and owing by the depositor to the bank.
The banker's lien, under section 7434, C. O. St. 1921, does not attach to funds of a stranger placed in the bank by a depositor, and such funds cannot be applied in satisfaction of the indebtedness of the depositor, when the bank had probable notice of the trust fund character of the deposit and therefore did not induce the advancement of the credit to which it was applied, or cause the bank to alter its relation to the debtor. And the question of the bank's notice or knowledge is a question of fact for the jury, to be determined from the evidence.
Where a bank loans money to a customer on a promissory note and takes collateral security for the payment of the note when due, the bank cannot appropriate the depositor's money and apply it upon the note before the same is due, in the absence of a clear showing that, at the time of making the appropriation of the deposition money, the collateral security so taken was not of sufficient value to pay the amount due on such note but must first exhaust its remedy against such collateral security.
When a bank loans money to an investment company and has knowledge in a general way, that the investment company is making negotiating, and selling notes secured by mortgage on real estate, the question of whether the bank's knowledge of the fact that the investment company is collecting interest and principal on such notes, and depositing the same in the bank, and checking against the deposit in favor of the holder of the notes and mortgages, is such as to put it on notice of the trust fund character of the deposit, is a question of fact for the jury, and it is error of the court to sustain a demurrer to plaintiffs' evidence, where there is any evidence reasonably tending to sustain the allegations of notice or knowledge in the plaintiffs' petition.
Commissioners' Opinion, Division No. 3.
Appeal from District Court, Oklahoma County; William H. Zwick, Judge.
Action by Sam Zollinger and another against the First National Bank of Oklahoma City to recover money intrusted to the Collins Investment Company to pay certain mortgages and deposited in defendant bank. From a judgment sustaining defendant's demurrer to plaintiffs' evidence, plaintiffs appeal. Reversed and remanded, with directions.
J. B. Dudley and Kent Shartel, both of Oklahoma City, for plaintiffs in error.
Wilson & Wilson, of Oklahoma City, for defendant in error.
Sam Zollinger and Belle Zollinger brought their action against the First National Bank of Oklahoma City, seeking to recover $1,087.82 on deposit with the defendant bank in the name of the F. B. Collins Investment Company. Plaintiff had secured a loan of $1,000 from the investment company secured by mortgage which mortgage had been assigned by the investment company to the American Life Insurance Company of Des Moines, Iowa, which, in turn, assigned it to the American Life Insurance Company of Detroit, Mich. About February 21, 1923, plaintiff made application to the Kansas-Oklahoma Joint Stock Land Bank, of Kansas City, Kan., for a loan of $11,000 to take up the $1,000 loan and a mortgage loan of $8,500 on other lands. The application was approved for $10,000 and the land bank forwarded its check for $10,410.20 to the Collins Investment Company, being the amount necessary to pay off the two loans, and requested the Collins Investment Company to pay these loans and forward releases.
The land bank's check was made payable to the order of the Collins Insurance Company, which company deposited it in the defendant bank and issued its checks against the same. One check for $1,087.72 was forwarded to the assignee of the $1,000 mortgage, and, when it was presented to defendant, payment was refused because of "insufficient funds," and the check was duly protested on May 11, 1923.
The Collins Company was engaged in the farm loan business and was making, negotiating, and selling mortgages on real estate, which fact was known to the defendant. The Collins Company had on February 27, 1923, made arrangements with the defendant for a loan of $40,000 and gave its note for that amount, due May 27, 1923, and it deposited with defendant, as collateral, second mortgage and commission notes representing a face value of $71,760.53. The agreement further provided that the Collins Company was, at all times during the life of the note, to keep a balance of 20 per cent. of the loan on deposit with defendant. Under the agreement, had it been insisted upon and enforced, the defendant was only actually loaning the investment company $32,000, as defendant was always to have $8,000 of the Collins Company money in its possession. However, the defendant breached this portion of the agreement by permitting the balance to fall far below the 20 per cent., but this is not material to the issues.
On May 10, 1923, the Collins Investment Company had on deposit with defendant $2,708.11, and plaintiff alleges the check of the Collins Company to the American Life Insurance Company of Detroit was presented on this date. A receiver was appointed for the Collins Company about noon on May 10, 1923, and the defendant appropriated the $2,708.11 and applied it upon the Collins Company $40,000 note, which was not then due and for which defendant held the collateral. This transfer or appropriation was not actually recorded by the bank until May 11, 1923, when the check was protested, and the record is not perfectly clear as to whether it was presented the 10th or 11th of May, before or after this transfer was actually recorded, and no one but the officials of the defendant bank knew the exact hour of its presentation.
All these facts were proved at the trial, the vice president of defendant bank testifying, however, that while the bank officials knew, in a general way, the business of the Collins Company, they did not know it was receiving money to pay off loans and was collecting...
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