222 P. 1079 | Or. | 1924
Where a certain specific sum of money is delivered to a bank with directions to transmit that particular money or to substitute other money in place of it and then transmit the substituted money to a particular person or bank, the relation of principal and agent, as well as that of bailor and bailee, arises from the transaction. The bank’s possession of the money is that of a bailee, and in carrying out the instructions of the owner of the money the bank acts as agent for the owner. This fiduciary relation of the bank in respect to the money is in the nature of a trust, and the trust continues until the money is sent in conformity to the given directions.
The contract between the two banks, as evidenced by the telegrams, was that if the Shreveport Bank would credit the account of William E. Hopkins in that bank with the sum of $3,000 and pay him that sum, the State Bank, in payment thereof, would remit that amount by mail. The evidence discloses that there had been similar transactions between the State Bank and the Shreveport Bank, pursuant to which Hopkins had been credited with various sums under like directions and promises, and that settlement therefor had always been made by drafts drawn by the State Bank of Portland upon the National City Bank of New York, payable to the order of the Shreveport Bank, and this method is customary in dealings between banks. Giving to these telegrams that meaning which the parties themselves, through their previous dealings, placed upon them, and that which accords with the usual course of dealings between banks, the undertaking of the bank was that it would remit the amount by mail, not in actual money, but in drafts upon its correspondent, and that if the correspondent failed to pay the drafts when presented, the State Bank would take up and pay them on de
The distinction between the contract where the banker agrees to send money and one where he agrees ±o send a telegram establishing a credit with his correspondent is pointed out by the court in Legniti v. Mechanics’ etc. Bank, supra, in these words:
“There is a marked distinction between these transactions which I have just described and a direction to a bank or other person to transmit a certain specific sum of money to a person abroad. In such cases the bank or transmitter is the agent of the person paying the money, and until the money is sent holds it as agent or trustee for the owner. Such were the cases of Musco v. United Surety Co., 132 App. Div. 300 (117 N. Y. Supp. 21), and People ex rel.*608 Zotti v. Flynn, 135 App. Div. 276 (120 N. Y. Supp. 511). In these latter transactions the intention of the payer is that the money he gives to his agent shall be sent abroad. It is the amount which he gives that is to be transmitted. How it is sent may be immaterial to him. If there be time, currency might be purchased and sent. If not, it may be transmitted in any form recognized in financial circles. It is not at all necessary that the sender or agent have credit in the place to which the money is to be sent. On the other hand, in the contract for credit it is not a specific sum which is to be sent, but rather a specific credit which is to be purchased. The amount paid varies with the market. The actual thing that is done by the sender in both of these cases may or may not be the same, but the practice of the merchants and banks has recognized a difference; so have the courts.”
Where an officer of a bank, knowing it to be insolvent, receives money for a draft on a correspondent who has no funds for its payment and the bank has no assurance that the draft will be honored, the receipt of the money is wrongful and the bank holds the same as trustee, but where, as in the instant case, it clearly appears from the undisputed evidence that at the time of the transaction complained of, the bank had sufficient funds in the hands of its correspondent to pay the drafts when presented,, and having no reason for believing that the drafts would not be honored, the rule seems to be established that the holder of the draft is not entitled to preference: See annotation, 16 A. L. E. 190 et seq.
The lower court decided that the Shreveport Bank was entitled to be subrogated to the rights of a depositor in said bank for the amount of its credit, thus placing that bank on an equality with the unpaid depositors of the bank. The ruling of. the court upon this point has not been appealed from, and we are not
The decision of the Circuit Court is therefore affirmed.
Affirmed. Rehearing Denied.