No. 3900 | 5th Cir. | Mar 20, 1923
In the year 1918, Alexander, Geren, Payne & Ingram, a partnership having its principal place of business at Ft. Smith, Ark., was engaged in growing potatoes in the vicinity of Wharton, Tex. It made an arrangement with Jesse M. Martin, who was engaged at Wharton in buying and selling for himself and as broker for others, to sell its 1918 crop of potatoes. Under that arrangement Martin was to be paid $15 a car for his services, was to collect the prices of potatoes sold, and deposit the same, less his commissions, in the Wharton Bank & Trust Company, a bank at Wharton, to the credit of Alexander, Geren, Payne & Ingram. Without the knowledge or consent of said firm, the proceeds of the sale in May and June, 1918, of a large part óf its potatoes, were deposited by Martin to his own credit in the Security Bank & Trust Company, the appellant, a bank at Wharton, and were used in paying l;is individual obligations to appellant and other parties. After Ingram' had withdrawn from said firm and transferred to his copartners all interest
The opinion rendered by the District Judge shows that he found that appellant, when it received from Martin for deposit to his own credit drafts for the price of appellees’ potatoes, and when it accepted and charged against Martin’s account checks given by him to itself for past-due amounts owing by him, knew that Martin was using the money of the appellees to pay his own debts. The evidence on that issue was in sharp conflict. Uncontroverted evidence showed the following:
For several years prior to the transactions in’ question Martin had had dealings with the appellant, having. a deposit and checking account with it. His capital was small. About 90 per cent, of the potatoes he sold and shipped during the 1918 potato marketing season belonged to other parties, for whom he acted as broker. Both the appellant and Martin had their respective places of business in the same small town. It was customary, when Martin presented a draft drawn by him with an attached bill of lading for produce, for the appellant to give him credit on his account for the amount of the draft, less a discount, with the understanding that Martin would take up drafts which were not paid, and pay to the appellant the amount thereof which had been credited on his account. The appellant had some security to protect it from loss by reason of drafts so discounted for Martin not being paid, but that security was inadequate under the circumstances existing in April, 1918. At that time, by reason of the fact that a number of such drafts which had been discounted some time before had not been paid, Martin was liable to the appellant therefor to the extent of about $15,000. Those unpaid drafts were for corn which turned out to be defective, with the result that the consignees would not pay the drafts. For some time pripr to the deposit by Martin of drafts to which were attached bills of lading for potatoes owned by appellees and sold by Martin, appellant’s cashier was calling on Martin to pay the amounts of previously issued drafts which had not been paid. Martin did not have means of his own with which to comply with those demands.
Several times during May, 1918, appellant’s cashier filled out checks payable to itself, dating them in the future, carried such checks to Martin’s place of business, and there procured them to be signed by him. When on subsequent dates Martin’s account was credited with the amount of drafts accompanying bills of lading for potatoes sold by him for appellees, his previously issued checks to appellant were, charged by appellant on his account. In that way appellant, during
There was much testimony inconsistent with the truth of the cashier’s version of the transaction, including testimony tending to prove that the cashier knew, before the potato marketing season opened, that Martin as a broker had the sale of appellees’ potatoes, that Martin did not have means of his own with which to satisfy appellant’s claim, based on outstanding unpaid drafts, that the postdated checks were obtained for the purpose of using them as balances in Martin’s favor were created by his deposit of the proceeds of sales of potatoes the bulk whereof was known to the appellant to be owned, not by him, but by his customers, and that, when those checks were charged on Martin’s account, appellant’s cashier was aware that by that means the price of potatoes owned by Martin’s customers, including appel-lees, was being used to pay Martin’s individual debts.
The record by no means convinces us that the court was not warranted in crediting the phase of the evidence adduced which supported a finding that the appellant, when it applied as above stated deposits made by Martin which represented proceeds of sales of appellees’ potatoes, was aware that funds to which appellees’ firm was equitably entitled were being used to pay Martin’s individual debts. The general rule under which a bank may, in dealings with its depositor, treat as his individual property money deposited by him, does not apply when the bank has knowledge that money so deposited is held by the depositor in a fiduciary capacity. The exception to the rule was stated and applied in the case of Union Stockyards Bank v. Gillespie, 137 U.S. 411" court="SCOTUS" date_filed="1890-12-15" href="https://app.midpage.ai/document/union-stock-yards-bank-v-gillespie-92893?utm_source=webapp" opinion_id="92893">137 U. S. 411, 11 Sup. Ct. 118, 34 L. Ed. 724" court="SCOTUS" date_filed="1890-12-15" href="https://app.midpage.ai/document/union-stock-yards-bank-v-gillespie-92893?utm_source=webapp" opinion_id="92893">34 L. Ed. 724. It was decided in that case that a bank, receiving on deposit from a factor moneys which it must have known were the proceeds of property of the factor’s principal, consigned to him by the principal for sale on the principal’s account, of which moneys the principal was the beneficiál owner, cannot, as against the latter, appropriate the deposit to the payment of a general balance due to the bank from the factor. The following was said in the opinion in that case in reference to a bank’s.relation to its depositors:
“It is not ordinarily bound to inquire whence the depositor received the moneys deposited, or wbat obligation such depositor is under to other parties. It is only when there gather around any deposit, or line of deposits, circumstances of a peculiar nature, which individualize that deposit or line of deposits, and inform the bank of peculiar facts of equitable cognizance, that it is debarred from treating the deposit as that of moneys belonging absolutely to the depositor.”
After appellees’ firm learned of Martin’s misappropriation of the proceeds of the sale of part of its potatoes, it accepted from Martin small payments on what he owed, and for the remainder took notes, signed by Martin and indorsed by others. Appellant was not a party to those transactions, and it was not proved that the acceptance of such notes was intended to operate as a release of Martin’s original obligation or that they have been paid. The appellees did not thereby lose the right to enforce the liability of the appellant which is asserted by this suit. 29 Cyc. 1132 et seq.
In reference to a suggestion that the appellees are estopped to enforce the liability asserted, it is enough to say that the evidence did not show that the appellees or their firm did or said anything which appellant was entitled to rely upon in changing its position in its relations with Martin, or the existence of any ground of estoppel. Brant v. Virginia Coal Co., 93 U. S. 326, 23 L. Ed. 927.
As the court, in determining the amount for which the appellant was held to be liable, adopted a suggestion made by appellant’s counsel, the propriety of the method adopted need not be considered; the decree not being complained of in'that regard.
No reversible error is shown. The decree is affirmed.