delivered the opinion of the Court.
The facts, so far as it is necessary ^to state them, ■are as follows:
During the latter part of 1911, Toberman, Mackey ■& Co., dealers in hay and other provender in St. Louis, Mo., sold a lot of hay to Baldwin Feed & Implement Company of Johnson City, Tenn., at the price of
The Mercantile National Bank forwarded the draft and bill of lading to the Unaka National Bank at Johnson City, Tenn., for collection. The collection was made, but before the collecting bank could forward the money, it was attached in the hands of that bank, by garnishment process, as the property of Tober-man, Mackey & Co., to enforce .payment of a demand of about $295 asserted against that firm by the plain
Sneh proceedings were had in the trial, court as that the plaintiff recovered a personal judgment against Toberman, Mackay & Co., that firm having entered its personal appearance, for the sum of $200, but relief against the money attached was denied; that court adjudging that the money belonged to the Mercantile National Bank, which had intervened. The case was then appealed to the court of civil appears, where the judgment in favor of the Mercantile National Bank was reversed, and judgment rendered in favor of the plaintiff, subjecting the money attached to the satisfaction of plaintiff’s debt and costs against Toberman, Mackey & Co. The case was then brought to this court on the writ of -certiorari. . ;
. It was not shown that Toberman, Mackay & Co. had ever drawn on this deposit, or that the sum to their credit in the bank was ever at any time less than $318,50. . . . . .
The question for decision is whether the Mercantile National Bank became the absolute ownér of the draft, or whether the draft was' received by it only for collection.
■ This is to be determined by the intention of the parties, as evidenced by their acts. We are. of the opinion that the agreement to charge back in case the paper should be returned is a controlling consideration. It is irreconcilable, with absolute ownership on the part ■of the bank.. An agreement in advance to charge back
Some important consequences flow from this situation.
The paper is subject to garnishment for the debts of the customer, to the extent of the customer’s interest at the time the garnishment notice is served. His interest is measured by the extent to which he- has drawn on the deposit based on faith of the paper. If at any time there is to his credit on the books of the bank a sum less than that of the deposit, his beneficial interest in the paper is, to that extent, decreased. If at the date of the' garnishment he has wholly drawn the
In the present case the bank has not shown that anything had been drawn from the deposit at the time the ganrishment notice was served on the Unaka National Bank. It must therefore be held that the fund collected on the draft was subject to garnishment as the property of Toberman, Mackey & Go.; the bank having under its control the amount credited to that firm, and having the right to protect itself therein.
It is insisted that when the collection was made the right of the bank in any event at that moment became absolute, and the right to charge back ceased. The right to charge back, however, at the inception of the contract, in connection with the credit then entered, determined the nature of the bank’s interest. If at the date of such collection by a correspondent of the bank, and before coming to the hands of the bank, a garnishment notice is served, and the bank has paid out nothing on the deposit, it owes the customer the amount of the deposit, which it must yet pay to him or to his
• The parties have submitted extensive arguments on the relation of the bill of lading to the controversy. We see no occasion for this. The bill of lading was merely a security for the draft, only to be delivered to the consignee on payment of the draft. This is true whether the bill of lading be made out to the consignee directly, or to the shipper’s order. In the first case, the bill of lading being attached to the draft, the consignee could obtain it only on payment of the draft. In the second ease the drawee would, even upon payment of the draft, only be able to gain complete ownership of the property and rights represented by the bill of lading by having it indorsed or assigned to him by the shipper. In this latter case, it is not even necessary that a draft should accompany the bill of lading in order to protect the shipper’s rights. It is sub
It is further insisted that the present case is controlled by the case of Bank v. Hays, 119 Tenn., 729, 108 S. W., 1060, 14 Ann. Cas., 1049. This is a mistaken view. In that case it appeared there had been an out and out sale of the draft to the bank. On page 733 of 119 Tenn., on page 1061 of 108 S. W. (14 Ann. Cas., 1049), the court said: “These drafts were purchased by the complainant bank, and said grain company was given credit therefor by the bank, and checked against that credit in the regular way. According to the weight of the testimony, there was a straight purchase of these drafts by the bank; the drawers thereof reserving no interest in the property represented by the bill of lading. ’ ’
The court of civil appeals reached the same result we have reached, but by a different line of reasoning. That court based its conclusion on the fact that To-berman, Mackey & Co. had shown great solicitude in the management of the matter in Johnson City, with a view to enabling the Mercantile National Bank to hold the funds collected on the draft. As pointed out in Bank v. Hays, supra, this is not a significant circumstance. “The grain company was, of course,” said
On the grounds stated herein, we are of the opinion that the result reached by the court of civil appeals was correct, and that its judgment should be affirmed.