DocketNumber: No. 1352
Citation Numbers: 260 P. 534, 37 Wyo. 216
Judges: KIMBALL, Justice.
Filed Date: 11/1/1927
Status: Precedential
Modified Date: 4/15/2017
The plaintiff, Vermont Loan and Trust Company, of Spokane, Washington, having a claim in the sum of $4698 against the defendant, the insolvent First National Bank of Cheyenne, obtained in this action a judgment for the amount, which was declared to be a preferred claim entitled *Page 219 to payment ahead of claims of the general creditors. The defendant bank and its receiver have appealed.
The only contested point was the right to a preference. The case was heard on an agreed statement of facts. The plaintiff was the owner and holder of a cash warrant of the State of Wyoming in the sum of $4698, payable to plaintiff. About the first of July, 1924, plaintiff placed the warrant in the hands of the Old National Bank of Spokane for collection. By that bank the warrant was sent to the Spokane Branch of the Federal Reserve Bank which in turn sent it to the Omaha Branch of the Federal Reserve Bank by whom it was received July 5, 1924. The Omaha Branch of the Federal Reserve Bank, on July 6, 1924, sent the warrant for collection to the defendant bank, after endorsing it thus:
"Pay to the order of any bank or banker for collection and remittance. All prior endorsements guaranteed.
The warrant was received by the defendant bank July 7, 1924. On the same day the State Treasurer, whose duty it was to pay the warrant, did so by giving his check on the defendant bank with whom he had on deposit more than sufficient funds to make the payment. The check was charged against the State Treasurer's account, and for the amount so collected the defendant bank then, on the same day, issued and transmitted to the Omaha Branch of the Federal Reserve Bank a draft drawn on the Omaha National Bank. The draft was received by the Omaha Branch of the Federal Reserve Bank on the afternoon or evening of July 8, and presented for payment the following day. Before its presentation, payment thereof had been stopped by a National Bank Examiner who, on July 9, had taken charge of the defendant bank which was then insolvent and soon passed into the hands of the receiver. When the State Treasurer gave his check in payment of the warrant, *Page 220 and at all times thereafter, the amount of money in the vaults of the defendant bank and taken over by the receiver, was greatly in excess of the amount of the plaintiff's claim.
It is conceded that, under the law in this state as announced in Foster v. Rincker,
We are not asked to overrule the foregoing cases, and the principles which they announce must be considered as settled in this jurisdiction. It is contended, however, that those principles are not applicable to a case where the collection is made by a check on the collecting bank.
It is further conceded, as we understand, both by counsel for the receiver and by some of the authorities on which he relies, that, if the State Treasurer had demanded the cash for his check and on receiving the cash had immediately returned it to the bank in payment of the warrant, the bank then, under the above cited cases, would have held the money as a trust fund, which, being traced into the hands of the receiver, could be recovered as a preferred claim. As the money to meet the State Treasurer's check was in the vaults of the bank when the check was presented, we must assume that the State Treasurer might *Page 221
have taken the money out and paid the warrant in cash. The bank was authorized to collect the warrant in money only, and the transactions of July 7, 1924, were in legal effect a collection of the money. Wagner v. Spaeth, (Wyo.)
While the defendant bank held the warrant there can be no doubt that the relation between the bank and the plaintiff was that of agent and principal. That relation, under the law in this jurisdiction, would continue after the collection was made, and the collected moneys were just as much the property of the principal as the warrant itself was. Foster v. Rincker,
There are many cases holding that the relation of principal and agent existing between the owner and the collecting bank is changed to that of debtor and creditor when the money is collected. In most of these cases the note was sent for "collection and credit," or with the understanding that the proceeds were to be retained and used for a time by the collecting bank. Such cases are not opposed to the views of this court, as heretofore expressed.
There are other cases holding to the general proposition that the bank, upon receipt of the money due its principal becomes a debtor instead of a fiduciary. From the fact that the collection is sent to a bank it is presumed or inferred that the owner has consented that the bank may use the money. For discussion and citation of cases supporting this view, see Scott's Cases on Trusts (1919) note, p. 63 et seq.; 21 Columbia Law Rev. 507, 514; note, 86 Am. St. Rep. 786; Hecker-Jones-Jewell Mill. Co. v. Cosmopolitan Trust Co.,
In cases from other jurisdictions where, as in this state, it is held that the relation of principal and agent is not changed to that of debtor and creditor by the collection of the money, it is also held to be immaterial whether the money is received in cash or by check as in the case at bar. State Nat. Bank v. First Nat. Bank,
To the same effect is Goodyear Tire Rubber Co. v. Hanover State Bank,
We now come to the Federal cases chiefly relied on by defendants. We shall not list all the cited cases, but those only that seem to us to be particularly in point. Other earlier cases will be found in the opinions in the cases listed. Larabee Flour Mills v. Bank,
These cases seem to hold or assume that the relation of principal and agent between the parties continues after the receipt by the agent of the proceeds of the collection if received in cash, but hold that the relation becomes that of debtor and creditor if the bank receives payment by a check on itself. We are not cited to any decision of the United States Supreme Court approving the reasons for such a distinction, and from the dissenting opinion in Larabee Flour Mills v. Bank, supra, it appears that those reasons are not always accepted without question in the other Federal courts.
The usual argument to support the rule of these cases is that the payment by check on the collecting bank does not increase the assets of the bank, but is a mere matter of bookkeeping, a mere shifting of liability. *Page 224
When the State Treasurer paid the warrant to the defendant bank by giving his check, we think the relation between the plaintiff and the bank continued to be the same as it would have been if the State Treasurer had gone through the formality of paying the warrant in cash after drawing out the money called for by the check. If the money to meet the check had not then been in the bank, or if the transaction had been one by which the money of one depositor was placed to the credit of another depositor, then it truly might be said that there had been simply a shifting of liability. But here money owing by the bank to a depositor was appropriated to the payment of an obligation held by the bank as agent for collection and remittance. Wagner v. Spaeth, (Wyo.)
If, in this case, following our previous decisions, we are right in holding that the relation of principal and agent continued after the collection of the warrant, there would in our opinion be no good reason for following a rule that would lead to a different result because of the manner in which the warrant was paid.
The judgment of the district court will be affirmed.
Affirmed.
BLUME, Ch. J., and POTTER, J., concur. *Page 225
American Nat. Bank of Nashville v. Miller , 33 S. Ct. 883 ( 1913 )
Nyssa-Arcadia Drainage Dist. v. First Nat. Bank of Vale , 3 F.2d 648 ( 1925 )
Lusk Development & Improvement Co. v. Giinther , 32 Wyo. 294 ( 1925 )
Wagner v. Spaeth , 36 Wyo. 279 ( 1927 )
Bank of Poplar Bluff v. Millspaugh , 313 Mo. 412 ( 1926 )
Corporation Commission v. Bank. , 137 N.C. 697 ( 1905 )
The People v. . the City Bank of Rochester , 1884 N.Y. LEXIS 464 ( 1884 )