Case Name: ANHEUSER-BUSCH BREWING ASS'N v. CLAYTON
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1893-05-22
Citations: 56 F. 759
Docket Number: No. 71
Parties: ANHEUSER-BUSCH BREWING ASS’N v. CLAYTON.
Judges: Before PARDEE and McOORMICK, Circuit Judges, and TOUL-MIN, District Judge.
Reporter: Federal Reporter
Volume: 56
Pages: 759–762

Head Matter:
ANHEUSER-BUSCH BREWING ASS’N v. CLAYTON.
(Circuit Court of Appeals, Fifth Circuit.
May 22, 1893.)
No. 71.
1. Banks and Banking — Com.kcttons—Insolvency.
A bank holding a draft for •'collection and returns,” which accepts a check of the drawee, one of its depositors, and, without separating the amount from the general inass of iis moneys, charges the same to the drawee, and credits the drawer on its books, holds the money as agent for the drawer, and not as trustee; and after the bank bicornes insolvent the drawer is a mere general creditor, and not entitled to priority of payment out of the bank's assets.
2. Same.
Nov is the drawer entitled to priority under Const. Ala. art 11, § 17, providing that “depositors who have not stipulated for interest shall for such deposits be entiiied, in case of insolvency, to preference of payment over all other creditors.”
Appeal from the Circuit Court of the United States for the Middle District of Alabama.
In Equity. Bill by ihe Central Railroad & Banking Company against Ihe John McÑab Bank and John W. Tullis for a receiver of the bank. The Anheuser-Busch, Brewing Association intervened, and claimed the amount of a draft collected by the bank on intervener’s account, and asked that the same he paid to it by Henry D. Clayton, receiver of the bank. The matter was referred to a master, who reported that, the intervener was a general creditor. From a decree confirming the masters report the intervener appeals.
Affirmed.
W. O. Swanson, for appellant.
A. H. Merrill, (Roquemore 8c White, of counsel,) for appellee.
Before PARDEE and McOORMICK, Circuit Judges, and TOUL-MIN, District Judge.

Opinion:
TOTJLMIN, District Judge.
The appellant, a corporation, having its chief place of business in the city of St. Louis, Mo., on the 20th of March, 1891, drew its draft for the sum of #793.80, with exchange, on one P. II. Morris, who resided at Eufaula, Ala., and sent the draft to the McNab Bank for "collection and returns." On the 26th of March, 1891, Morris paid the draft with his check on the McNab Bank. He had at that time about #3,000 to his credit as a depositor in said hank, and there was as much as $10,000 in cash in the vaults of the bank belonging to it. On the same day — the 26 th of March, 1891 — the McNab Bank forwarded to appellant its exchange drawn on the Hanover National Bank of New York, wbicb, being sent forward by appellant for collection in New York, was protested for nonpayment, tbe McNab Bank baying failed and máde an assignment between tbe time it forwarded tbe draft to St. Louis and tbe date of its presentation in New York. It appears tbat tbe McNab Bank was insolvent at tbe time of this transaction, but was engaged in business as a "going concern" down to tbe 30tb of March, 1891. While tbe McNab Bank was largely indebted to tbe Hanover National Bank of New York, it bad a line of credit with it, and all drafts drawn on said bank by tbe McNab Bank were duly paid - down to and including tbe date of tbe latter's suspension. On tbe 30tb of March, 1891, tbe McNab Bank made an assignment for tbe benefit of its creditors of all its property and assets. A short time thereafter, on a bill filed by a large creditor, tbe assignee was removed from the control and possession of tbe bank's estate, and the appellee was appointed receiver in his stead, to take charge of and administer the same. Tbe assignee delivered to the receiver all tbe property and assets transferred to him by tbe bank. Among tbe assets so delivered was a sum in cash of $9,200.
Appellant's contention is tbat in tbe collection of its draft on Morris tbe McNab Bank acted as its agent and trustee, and tbat it is entitled, as against other creditors of tbe bank, to priority of payment out of tbe bank's assets; tbat, notwithstanding the money collected from Morris was intermingled with tbe general assets of tbe bank, or was in a common mass with moneys of tbe bank, and cannot be identified or specifically traced into the bands of tbe receiver, yet a court of equity will subtract the amount due appellant from tbe funds in tbe bands of tbe receiver, and will compel him to restore it to appellant, because tbe amount bad been collected by tin' bank as its agent and trustee, and bad increased pro tanto its general assets. And appellant further contends tbat, if not entitled to this relief, it at least has a right to be classed among depositors who bad not stipulated for interest on deposits, these being a class preferred for payment out of the general assets of tbe bank under tbe constitution of tbe state of Alabama. Article 14, § 17.
Tbe relation between appellant and tbe McNab Bank as to tbe draft on Morris sent by the former to tbe latter for collection was tbat of principal and agent; but, in order to enforce a trust in favor of appellant as to any money collected on said draft, it must be specifically traceable into the bands of tbe receiver. Commercial Nat. Bank v. Armstrong, 39 Fed. Rep. 684; same case in supreme court of the United States, (Oct. term, 1892; not yet officially reported,) 13 Sup. Ct. Rep. 533. Accepting Morris' check in payment of bis debt to appellant, and charging tbe amount of it on Monis' account by the bank, was but a shifting of its liability, whereby it became appellant's debtor, and assumed tbe obligation to pay to it tbe amount of tbe check less exchange. There is nothing to indicate that this amount was separated and kept unmingled with the bank's own money; but, on tbe contrary, it is conceded that it is undistinguishable from the mass of the hank's own money, and cannot he traced to and identified in the hands of the receiver. This being so, appellant has no better equity than the other creditors of the bank, and is entitled to no priority over them. It can only come in as a general creditor, unless it was a depositor in contemplation of article 14, § 17, of the constitution of the state of Alabama, which provides that "depositors who have not stipulated for interest shall for such deposits be entitled, in case of insolvency, to preference of payment over all other credit- or's.'' Such are the decisions in Alabama, where the transaction occurred, and tlie text-books and the decisions in the federal courts are in accord with Huí Alabama decisions. Maury v. Mason, 8 Port. (Ala.) 212; Goldsmith v. Stetson, 30 Ala. 164; Parker v. Jones, 67 Ala. 236; 2 Story, Eq. Jur. 1259; Bolles, Banks, § 474 ; 2 Morse, Banks, § 590; Wait, Insolv. Corp. § 659; Illinois Trust & Savings Bank v. First Nat. Bank, 15 Fed. Rep. 858; Bank v. Dowd, 38 Fed. Rep. 172; Bank v. Russell, 2 Dill. 215; Commercial Nat. Bank v. Armstrong, supra; First Nat. Bank v. Armstrong, 42 Fed. Rep. 193; Commercial Nat. Bank v. Armstrong, (Oct. term, 1892; opinion rendered March 6,1893; not yet officially reported,) 13 Sup. Ct. Rep. 533.
Was appellant a depositor who was entitled to preference of payment over all other creditors? "A hank depositor is one who delivers to or leaves with a hank money subject to bis order." And. Law Dict. 343, 344; New mark, Bank Deposits, § 12. Deposits made with hankers are either general or special. In the case of a special deposit of money the bank merely assumes the charge or control of it, without authority to use it, and the depositor is entitled to receive hack the identical money deposited. 1 Morse, Banks, § 183. The relation thus created is that of bailor and bailee. Money received by a bank on general deposit becomes the property of the bank, and can he used by it as other moneys belonging to it, the relation between the hank and the depositor being that of debtor and creditor; "that kind of deposit of money peculiar to banking business, in which the depositor, for his own convenience, parts with the title to bis money, and loans it to the banker." Commercial Nat. Bank v. Armstrong, supra; Wray v. Insurance Co., 34 Ala. 58; Alston v. State, 92 Ala. 124, 9 South. Rep. 732.
The contention of the learned counsel for appellant is that his case meets this definition of a general depositor. We cannot agree with this contention. Appellant did not leave its money with the McNab Bank subject to its order, or to be returned to it on call. It did not, for its own convenience, part with the title to its money, and loan it to the bank. There was no contract, express or implied, that the collection from Morris on appellant's account was to be a, deposit of any kind, but it is clear that it was intended that the money received from Morris should he remitted in "a reasonable time" from date of collection. Appellant inclosed its draft on Morris to the McNab Bank "for collection and returns." Morris took up the draft with his check on the McNab Bank, and on the same day the latter forwarded to appellant exchange on a New York bank for tbe amount of Morris' indebtedness. Tbe draft was not paid, but tbis did not alter tbe relation between appellant and tbe McNab Bank. Tbe bank still owes tbe debt. But we find that under tbe facts of tbe case appellant bas no lien on tbe funds of tbe bank in tbe bands of tbe receiver, and was not a depositor entitled to preference over tbe other creditors of tbe bank, witbin section 17, art. 14, of tbe constitution of tbe state of Alabama. Tbe decree of tbe court below is affirmed.