Mayfield Co. v. First Nat. Bank of Terrell , 287 S.W. 510 ( 1926 )

The Mayfield Company, appellant herein, sued the Hale Company, a foreign corporation, to recover the sum of $1,132.26 and at the same time sued out a writ of garnishment against appellee First National Bank of Terrell, alleging that it was indebted to said Hale Company.

The record discloses that the Hale Company sold a carload of beans to the Mayfield Company for the sum of $3,813.81; that it attached an invoice thereof, together with a railroad bill of lading therefor, to a draft drawn by it on the Mayfield Company in favor of the American National Bank of San Francisco for the amount of said invoice; that it delivered said draft to said bank and received credit therefor in its current checking account; that said American National Bank indorsed said draft and sent the same, with the papers attached thereto, to the First National Bank of Terrell, to be there presented to the Mayfield Company for payment, and instructed said Terrell bank to remit the proceeds, when collected, to the Boatmen's Bank of St. Louis to be credited to said San Francisco bank. The Terrell bank presented said draft to the Mayfield Company, which promptly paid the same. After the proceeds of said draft were impounded by the service of the writ of garnishment herein, the San Francisco bank gave the Terrell bank a bond of indemnity, in consideration of which the Terrell bank remitted the entire proceeds of said draft to the St. Louis bank, as originally instructed. The Terrell bank made said American National Bank of San Francisco a party to the suit. During the pendency of the suit, said San Francisco bank was succeeded by the American Bank of San Francisco, and that bank made itself a party to the garnishment proceeding instead of said original San Francisco bank.

The Mayfield Company recovered a judgment against the Hale Company and the garnishment proceeding came on for trial. The Mayfield Company, plaintiff in garnishment, alleged that said draft was delivered to the San Francisco bank for collection and that the proceeds of the same in the hands of the garnishee when said writ was served were the property of the Hale Company. The American Bank assumed the burden of the defense and alleged that its predecessor, the American National Bank, purchased said draft with the papers attached thereto from the Hale Company and gave said company unrestricted credit at the time of purchase for the amount thereof; that said Hale Company was liable to it only in event said draft was not paid by the Mayfield Company, upon which it was drawn; that said draft was duly paid when presented; that said Hale Company was thereby released from all liability to said American National Bank on account thereof; and that the proceeds of said draft were the property of said bank and not the property of the Hale Company, at the time the writ of garnishment was served.

The case was tried before a jury. At the close of the evidence, the court instructed a verdict for the defendants and rendered judgment in accordance with said verdict.

Opinion. Appellant contends that the court erred in instructing a verdict against it. The only witness who testified to the circumstances attending the delivery of said draft to the San Francisco bank, and the entry of credit therefor in the account of the Hale Company, was a Mr. Sanborn, who testified that he was vice president of the bank at that time and that he held the same position in the American Bank, which succeeded to the assets of the original San Francisco bank. He testified by deposition, taken at the instance of appellant. His testimony was in part as follows:

"I am familiar with the transactions involved in this matter. * * * Yes; the Hale Company was a regular customer of our bank and had a deposit account with us. Well, it was the ordinary commercial account, statement of debits and credits covering transactions passing through it. * * * We had no general or specific understanding or agreement with the Hale Company, at the time of the transaction in question, as to the manner in which the proceeds of drafts, such as the one in question, were to be handled; merely, in the ordinary course of events, they were given credit for the item, subject to its presentation for payment. Proceeds of the draft unpaid [when paid] were to reimburse us for the amounts advanced. There was no agreement in writing. This agreement was all in regular routine according to general bank practice, just as we handle entries of these items every day. * * * The Hale Company was given credit for the amount indicated and had full privilege to draw against any funds to their credit. * * * Yes; there was an agreement between the Hale Company and the American National Bank that the Hale Company should pay interest to our bank upon the amount of said draft from the time it was deposited in our bank until remittance of the proceeds thereof to said bank by the collecting bank. We collect interest for the amount of our advance during the time it is outstanding. The nature of the agreement or understanding our bank had with the Hale Company with reference to charging up the item in question to the Hale Company, in event such draft should not be paid by the drawee, was that it would be under the general warranty that the drawer of a draft would reimburse us in the event the payee declined to pay on presentation, which, however, was not the case as the draft was paid by the payee. There was no discount charged by the bank for handling the item in question. Our rate of interest was 6 1/2 per cent. on the advance made during the time it was outstanding. We actually did charge interest for the time the funds were outstanding, a total of $40.77. The amount advanced Hale Company on account of the draft in question was $3,813.81. We must have been familiar with the financial status, in general, of the Hale Company during the period of time intervening from January to June, 1923, to have made the credits above extended. In our judgment, at that time Hale Company was wholly solvent and financially responsible. * * * This was an entirely independent transaction. The Hale Company brought us in a draft for which we gave them credit, and it had no relation to any other obligation whatever."

Said witness further testified that the credit or balance in favor of the Hale Company at the close of business on January 13th, the day said draft was delivered to the bank and credit therefor entered in the account of the Hale Company, was $45,170.75. In this connection, he further testified as follows:

"In answer to the question requesting that I attach hereto, mark, and identify exact copies from the books and ledgers of our bank of the account of the Hale Company, showing deposits made by the Hale Company with our bank as well as all checks and charges against the same during the time intervening from the 10th of January, 1923, to the 10th of May, 1923, I would say that a statement of the account of the Hale Company covering the period from January 10, 1923, to May 10, 1923, would show various debits and credits without any explanation as to the character of the items, and for that reason, unless there is some special need for their production, does not seem to have any particular bearing upon this action."

Whether the title to the draft under consideration in this case passed to the San Francisco bank at the time said bank received the same and credited the account of the Hale Company with the amount thereof depends upon the intent of the parties to said transaction at the time it occurred, and such intention is a question of fact to be determined from the evidence. Heid Bros. v. Commercial Nat. Bank (Tex.Com.App.)240 S.W. 908, 24 A.L.R. 904; Commercial Nat. Bank v. Heid Bros. (Tex.Civ.App.) 257 S.W. 913 (writ dismissed); Howe Grain Mercantile Co. v. A. B. Crouch Grain Co. (Tex.Civ.App.) 211 S.W. 946, 948 (writ refused); 3 R.C.L. pp. 632, 633, § 201; 11 A.L.R. note, page 1045; 47 L.R.A. (N.S.) note, pages 552, 553; Fayette Nat. Bank v. Summers,105 Va. 689, 54 S.E. 862, 7 L.R.A. (N.S.) 694 and note.

The evidence in this case does not show an express agreement that said draft was accepted for deposit as cash, nor that the title to said draft should pass to the San Francisco bank. Neither does it show an express agreement that said draft was taken for collection. The intent of the parties in said transaction must be gathered from a consideration of all the circumstances attending the same. The fact that the draft was payable direct to the bank and credit therefor given the Hale Company in its current checking account is not conclusive that title to said draft and the proceeds of the same, when collected, were intended to pass to said bank. Heid Bros. v. Commercial Nat. Bank, supra; Commercial Nat. Bank v. Heid Bros., supra. The vice president of said bank testified that said draft was accepted and credited, "subject to its presentation for payment." He spoke of the credit given therefor as an "advancement," and said that the bank was to be reimbursed out of the proceeds of the draft when paid. He further stated that there was an agreement that the Hale Company would reimburse the bank, if said draft was not paid on presentation. All these qualifications tended to show that the credit in favor of the Hale Company, in its account with said bank, was tentative and for convenience only, and that the same was dependent on the ultimate payment of said draft. The evidence shows that the balance in favor of the Hale Company in its current checking account was, at the close of business on the day said draft was deposited, more than ten times the amount of said draft. There was no contention that the money represented by the credit given on the deposit of said draft was ever drawn from the bank. Its vice president, on being asked to give the status of said account day by day up to the date of the service of the writ of garnishment, said, in substance, that such account showed a succession of debits and credits and that he deemed a detailed statement thereof immaterial to any issue in the case.

In addition to the foregoing facts, it was shown affirmatively that the bank charged and the Hale Company agreed to pay and did pay interest on the amount of said credit, until the proceeds of said draft were returned to said bank. This was, in itself, a circumstance tending to show that the bank held said draft for collection and not by purchase and absolute ownership. First Nat. Bank of Roswell v. Smith Bros. Grain Co. (Tex.Civ.App.) 276 S.W. 951, 953. We think the evidence in this case, under the authorities above cited, raised an issue of fact as to the ownership of said draft and of the proceeds of the same when paid, and that such issue should have been submitted to the jury for determination. See, also, 11 A.L.R. pages 1054 to 1060, inclusive, note 4, subdivision (a). The attending circumstances in evidence in this case show something more than the mere deposit of the draft and the giving of credit therefor in a current checking account, and they make the rule relied on by appellees and the authorities cited by them inapplicable.

Appellant offered in evidence and the court excluded a printed slip purporting to have been issued by the Hale Company and found in the Terrell bank in the package of papers pertaining to this particular collection, and containing instructions concerning the manner of handling the collection and a request that certain Dallas brokers be notified, in case the draft was dishonored. We think a sufficient predicate was laid and that the court erred in refusing to admit said slip in evidence.

The judgment of the trial court is reversed and the cause is remanded.