action brazen this appeal have backed issues that need to be heard by a jury the record is replete with facts demonstrating that legend bank knew it was holding funds belonging to midwestern cattle and that legend bank knew or should have known that the lin committed a fraud even the district court had knowledge in its st order clearly at some point defendant should have known that tony's conduct constituted a tort and arguably there is a fact issue as to whether it did no those facts as disputed facts are facts that should have been heard by a jury and when viewing those facts in the light most favorable to midwestern cattle this case would have survived summary judgment st with respect to money had receipt the district court erred in finding that mc and negligence barred m c s money hadn't received the claim unclean hands does not defeat a money hadn't received a claim instead it creates a fact issue to be decided by the jury after balancing the equities you just buy the jury money hadn't received an equitable claim right and unclean hands an equitable defense is that right well unclean you can get a jury on equitable climbs but i thought in federal court the supreme court has said federal law controls when you get a jury in for equitable claims in federal diversity cases there is no jury really doesn't go to whether there should be reversed or not to go forward it just has to do with whether you keep saying there be a jury i'm not so sure about that well in this court and bank of cyprus and rejected unclean hands is a complete bar to recovery when the defendant claimed that the plaintiff cause its own injury and that which said unclean hands does not borrow money hadn't received claim when the claimant made an innocent mistake regardless of how stupid or negligent he may have been and because the parties presented conflicting evidence by providing the lines with its checkbook and signature stamp however m c n show that legend knew the lions were using legend to cut checks and that despite knowledge of the check kiting scheme legend bank allowed the scheme to continue and c m show that legend had a duty to detect and report check kiting but failed to do either an m c m's summary judgment evidence so that allowing the kite to continue increase the magnitude of the advances made the cover   after analyzing the judicial interaction between money hadn't received claims and the u c c legenda also argued that m c n was unable to show proof of ownership of the funds however and via rio the district court expressly rejected the view that a claimant must prove ownership in addition to establishing that the other party holds money then an equity and good conscious belongs to the claimant and overall the texas supreme court has rejected technical rules and formalities with respect to money hadn't received click claims point being on m c m's money hadn't received claims it's similar to bank of side can bank of site pay and had transferred its own money so did mc i'm in this case thereby it satisfies a requirement that the claimant have a claim to the fun's in other words  respect to unjust enrichment and constructive trust the district court based its dismissal of m c s unjust enrichment count and prayer for a constructive tut trust and what it wrongly viewed as pleading technicalities with respect to pleading in addition to constructive trust in this climate in this case i mean you might be right you are entitled to it but you're going to begin to bank on it if you win a judgment they're going to be able to pay and what constructive trust trace specific property and say i want that car i gave someone you know it's usually an issue when you don't think someone can otherwise cover a judgment you want to trace the specific property you want why do you really need a constructive trust here to trace these received you get a judgment presumably they can pay it but they're a bank but anyone well we were able if in the complaint we actually made a claim based on what we called unjust enrichment but we identified four specific payments that in the bank utilized those funds for so we were we were in an effort midwestern council was seeking a constructive trust over those or specific payments out of which came over the source of which were midwestern  s unjust enrichment it was this was ruled by the district court as not being a dismissing it because it viewed it as a mere theory of ringback and not as a separate and distinct claim however the texas supreme court has consistently recognized unjust enrichment as an independent basis for recovery and there's there was both an unjust enrichment claim asserted as a cause of action money hadn't received as a cause of action and then as has discussed there was a constructive trust remedy asked for and with respect to tracing the money that was used to satisfy the lines that came from midwestern cattle the tracing facts are undisputed in the record it's clear in the record that the money that came from m c s checks went to satisfy overdraft and other identified debts cnts complaint identified those payments made and a payment of money can be subject to a constructive trust under the restatement of restitution and texas law with respect to  said a disputed fact it's got to be more than it's got to be a genuine disputed material fact you know board summer john yes your honor and in fact we cited to the bank of america versus prize energy resources which held that genuine issues of material fact required a denial of a motion for summary judgment addressing an unjust enrichment claim and here the facts supported in the record did that we satisfy that standard and none of the cases in fact cited by legend on this point were summary judgment cases they were all so to see if edwards versus mid continent office distributors that now legend also argues that they prove detrimental reliance that the court itself found no detrimental reliance in its initial order granting legend's motion district court wrote arguably the funds in the legend account belong to plaintiff as a purportedly represented proceeds of a sale of plaintiff's cattle and there is no reason to believe that defendant changed its position to its detriment i e defendant will be not harmed by returning the offset funds plaintiff has will be in the same position where it stood at the time of deposit then in the nd or to the district court mentioned legend's arguments generally without identifying any particular one so it never expressly mentioned detriment mcbride at the district court level limited his analysis to m c s and mischel negligence argument and that was that legend failed to comply with its duty to exercise reasonable care in monitoring to texting and reporting funnel activity over the district court failed to address and see an alternate negligence claim that when legend detected the fraud it had a duty to stop it or at least not continue to enable it what's your best case for that jury united states  guarantee verses a do and lo bit it's been the law for over one hundred years in texas it's the texas supreme court case and in that case the texas supreme court recognized the duty on the part of the bank to a non customer  quote if the bank has notice or knowledge that a breach of the trust is being committed by an improper withdrawal of funds or if it participates in the profits or fruits of the fraud then the ban undoubtedly be liable to the true owner of the funds so i was a knight to know that a case of the fiduciary relationship even though wasn't a customer they owed if we do sherry duty to the people who had a real benefit from the trust yes that case involved a the non customer had a fiduciary relationship with the customer and that that is the case in this case as well we pled that there was a trust relationship but you sure relationship business together that's a fiduciary relationship no no your honor it has to be more than that and that's what we allege here the complaint alleges that mc and gave its checkbook and sing the tour stamps the line so they could sign checks complaint also alleges that m c m relied on handwritten invoices presented by the lines for each of the transactions in the summary judgment of it all brings up this goes back i guess to the unclean hands and i understand your argument on it but what's in the record as to why your client trusted this this guy who had a felony for bank fraud with with unmonitored and it's one thing on any of the guys nd chance give it be then not even monitoring what he's doing with these checks and invoices not asking to meet the this suppose in the lions and as a result the size and the frequency of the transactions increased as paragraphs eight dollars and nine dollars i believe in that affidavit it tells the story how for several years or for over a year the relationship went smoothly the checkbook wasn't handed over immediately on day one it was after years and months and months of sizable transactions then it's admitted once they got the check book the size of the transactions sure went up and fidelity it contemplates fair dealing in good faith rather than legal obligations as a basis of the transaction the terms includes those informal relations informal relations which exist whenever one party trust throughout its entire case in its brief or in any filing before this district judge there is no question nor is there are claiming that we did not comply with in the manner and means by which we handled these checks i think when this court studies the history of the c c it will find that the reason they use c c was set up the way it was was to allow some some live finding constant manner and means by which a bank has to handle checks and again i emphasize at the risk of repeating myself that there is no claim in this case  that legend bank did not comply with the c c i thought we had cases in coastal agricultural supply from two thousand and fourteen i think there's others that have allowed these money hadn't received claims against banks and saying it doesn't conflict well we're and causes of action that have been asserted but there are two arguably for a court of appeals cases that say exactly that you know i'm in a course i'm so going on i'm sorry and then of course the eerie guess analysis the judge then says well what about other jurisdictions now here's the key when judge prada looked at these other cases and when i think you look at the other texas case of the only cases that have been found i don't care if it's relationship that exists between the customer and the non customer i just don't think there can be any conclusion this court can reach other than that legal proposition that is it they participated in acts such as giving a known criminal a checkbook and letting him write whatever checks he wants going into business with somebody they knew was a criminal  of two people who were the vice customers and think about him that they're claiming well what showed a fiduciary relationship were these acts that they entered into with a criminal that the bank had no reason to know there was no money put in th trust account there was no fiduciary relationship even plagiarist babylift but to suggest to the court in my view that a fiduciary relationship ought to be considered because of what a criminal did with the their own client nothing that is it would allow this court to make any reasonable theory guess that the court would extend money hadn't received constructive trust analysis to supplant not supplement situation but he clearly and there's another thing i want to point out when you're when you're applying equitable claims like m c m is trying to do the standard is abuse of discretion and i've cited a case to the court in my brief that shows that when you're applying it but more principles like money hadn't received like a constructive process there is an abuse of discretion standard the court has the ability to make a determination of whether in that unclean hands is an offense to an equitable point now what i perceive him seems counsel is asking this court to do is instead of applying unclean hands like the law says he wants you know plus some of comparative responsibility analysis well maybe m c enters this but the bank was this and that's just not the law the law is that if the judge determines in his discretion that in his it were just rumors he heard all the evidence and decides there's unclean hands i'm not going toward any relief he rule in summary judgment he said as a matter of law without exercising his discretion just as a matter of law there was an unclean hands defense established but  i also want the court to understand that unclean hands evidence was not disputed it was material and it was not disputed a judge has a right to make a determination based on undisputed material facts they want there was nothing on that issue just cost that could have ever in lightened the court by conducting a jury trial or of interest they just wouldn't spend it on he had the right there was there was plenty briefing of his affidavit he made a determination that that is the evidence that's the material it's comparative there's a lot of disputes about whether your client had any negligence or involvement but there was just but i guess what i'm saying is given the state of the law that's really irrelevant i don't believe that the actions of of the client that i represent rose to that i mean what they tried to do is say well their internal guidelines said this and they didn't comply with that well of course it's a matter of law our internal guidelines do not set a standard of care for us but the point i'm making for summary judgment is is that is legally irrelevant and they can't find one case absent the stablish one of the gooseberry beauty relationship that says to the contrary there just isn't law and you know it makes sense it makes absolute sense in this case think about it in this case involves check kiting provisional credits you know the bank every to the bank every time it provided a provisional credit for one of these chicks it was exposing itself i mean why in the world what a bank carry on actions every time i give them a provisional credit when it was a risk it just the motive for this comparative negligence analysis just makes absolutely no ifs no logical sense if the bank would have done that and when you when you talk about equitable  funds that went into that account were unrestricted and you can point to specific funds now there were some allegations of some smaller amounts of funds less than a couple one hundred thousand dollars w claim well we trace this and trace that but again it's an unrestricted deposit account and unless you can specifically attach a specific piece of property to construct a trust theory just does not apply and this all comes down in my judgment to a question of whether this court is going to allow these kinds of claims to displace the u c c there's nothing unique about this case any different than what dick brought up relied upon to re analyze mississippi law is not materially different than texas law i mean there's just got to be some court that allows the banks to do reasonably rely on what article four says when they hand complains actions and without that guidance from this court what is a bank to do how is a bank to deal with customers every time they turn around that is a well i don't know what this i've got some liability this non customer remember it's a non customer with absolutely zero relationship with this bank that seeks the relief from th it seeks and they're trying to throw the duty off of themselves and on the somebody else to stand up here and say well as between two innocent harding's you ought to comply you ought to apply these equitable rules well with all due respect to suggest that m c m was an innocent party when you dealt with a fraudster that it knew was not a customer of the bank is just not reasonable and i do not think that rises to the level to allow the score to somehow displace or supplant article four of the u c c and put any liability on the bank i mean all the bank was doing was was making some kind of minimal profit from the banking transactions by collecting on sufficient funds it's not that they will say they tipped money from themselves or they lost money this was customers money this was they were just serving as a conduit and when they provide the provisional credit in it just did you get this these millions of dollars from m c m that m c m is basically out because because of the fraud but but it's not the bank's money it was just somebody put the money in there's no fiduciary relationship amount also of the size again there's no pleading for it to share relationship that might change this whole circumstance now doing sir pleading there's not any evidence in the summary judgment evidence that establishes that there was any kind of the share relationship and i harken back to what i said earlier how can they come in here and say we did these things like we trusted this criminal that we knew was a criminal we gave them our checkbook to say that the status is of the despair lation and to go beyond that and say well you should have known that we had no idea there is zero evidence in this record zero evidence that we had any knowledge that tony line was lighting checks for mc and zero we didn't know that how was that supposed the status any kind  complied with article four in this concept in this context i just don't think it reasonable appropriate or legally appropriate to apply or supplant article four to allow these money having received constructive trust claims that they make now finally for what your authority their money had and received claim requires a fiduciary relationship well i go back to the cases i cited initially in order to get around the article form requirement you've got to establish of the share relationship and i do believe the judge problem made that analysis in his opinion that he didn't say money hadn't received disgusted he did not analyze that but he said in order to this to supplant as opposed to supplement you c c you've got to have a fiduciary relationship and so i just don't think the money hadn't received claim which again is an at it's an equitable claim that the judge appliance and i just don't know how they get around the question of are the the analysis of the judge has the discretion to make a determination on these equitable flames and in order to be successful with the claims is my view that they have to prove to you that he abused his discretion in doing so and i really believe that that is the law that's what we cited everything and i just don't not understand how they can come in here and say well let's suppose let's supplant article four by these equitable claims and show no abuse of discretion by the court and  again when you back off from an unjust enrichment how in the world if you just take the common sense of it is the bank unjustly enraged i mean they're not the unjust in rich par the bank was a conduit and when it complied with article four i don't think it appropriate to allow all these other theories were theories equitable theories to take the banks out of their article for responsibility it just it was somebody else's money running through the bank and when they cannot show that we violated some some duty to our non customer through  relationship i just cannot believe that the law hunton plates a recovery in this case the want to be unjust enrichment if it just stayed in the customer's account but it's when the bank takes this money the m c n bought it was going to get repaid and uses it for it to repay the loans they use the advances in that's the firy of unjust in which i mean actually if a bank stuff happening in a customer's account that doesn't enrich the bank at all you know other than unjustly enriched by how can you be unjustly enriching think that in that when you've complied with article four i mean that is just a mistake about in the evidence and to suggest well they should be because they violated their internal guidelines well aside from the factual inaccuracies of that you can't use internal deadlines to show some standard of care anyway but the point being that i do not believe the fact that this  call any pause to somehow edit completely take away article for u c c requirements that the bank and the state address quickly maybe just good academic point but what is your ball on whether this does go back for trial that these equitable claims would be tried to the bench even if a jury is also trying some of the other claims but i haven't given that a lot of proposition that money had a receipt is a legal claim controlled by principles of equity that's a texas bank and trust company versus cousins what that means well that it that it is in fact  it what midwest feeders and justice prado ruled in that case is there are situations when a bank may owe duties to a non customer if a bank knows its customer has diverted funds up along to a known customer it was a negligence case and the court even though the court was citing and applying mississippi law it reviewed a number of cases north carolina new york and florida all of which indorsed that general proposition that the texas supreme court have to be an express trust and that's why we cited to ken's bach kins bach outlines that they express trust under texas law is not required rather a relationship of trust and informal relationship can can lead to that relationship the south central livestock dealers in the stair case were wrong offset cases in which the bank paid itself money to cover preexisting debts but the non customer claimed a right to the same funds here in this case once the legend learned about the fraud it had a duty to not participate in the profits or fruits of the fraud and legend violated that duty now legend there's been a lot of statements that m c n knew that mr l was a convicted felon well the evidence in the record shows that the bank legend bank knew that mr lyon was a convicted felon and there's a significant evidence in the record that legend bank still interacted with mr lyon on at times a day almost a daily basis even though the account was mr lyons parents knowing that mr lyon apartment that mr line had been an ex con there's evidence in the record that legend bank signed off initial all of these checks knowing that they were coming to midwestern cattle being paid to mr midwestern cattle and coming back from midwestern cattle so that goes to the bank of site pan court's ruling which is when you're looking at this issue it is a can do comparative negligence you look at what legend bank knew or should have known you look at what and c m knew or should have know and that's why ultimately this does go to a jury this there were questions about what would the motive have bed for legend bank and its president brennan williams to allow this to go on with a motive  outlined all throughout the record brennan this father had been pasturing cattle of tony alliance for over a month as the overdressed continued to balloon and you'll see in the record and earth in our brief that they orchestrated advances on the line of credit to allow mr williams father to be paid on this transaction when you look at midwest or the midwest feeders that case i'd like to point out that even though the case and that the court in that case ruled there was no duty you have to look at the facts there midwest speeders name wasn't on the checkbook in that case they weren't the pay or or the maker of the check in fact the bank had never had no way of knowing who or what midwestern feeder's midwest peters was in this case the facts are much stronger and so that legend bank knew exactly midwestern cattle