Court Opinion

ID: 8800523
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:29:44.750179+00
Date Added: 2024-06-11T17:03:52.787005
License: Public Domain

AMIDON, District Judge
(dissenting). I am unable to concur in the reversal of the judgment in this case. Blitz, the bankrupt, was a jeweler at Topeka, Kan. He was largely indebted to the bank, which had liens upon all his property with the exception of his stock in trade. It also held about $2,000 worth of diamonds, the most valuable quick asset of his stock, as collateral. For some weeks prior to the sale of his stock to Friedberg, Blitz had been conducting a forced sale. It had been advertised as a, sale on behalf of his creditors, and was in charge of attorneys representing his creditors, and the proceeds of the sale, after paying the expenses of the store, were deposited by these attorneys and not by Blitz. The bank had been entirely familiar with this sale, and had made arrangements to get a part of the proceeds. At about the time of the conclusion of the forced sale, the bank recommended to Friedberg that he buy the Blitz stock. Friedberg said he had not the money and the bank offered to furnish it to him. This i't did. Blitz and Friedberg met at the bank. The bank gave Friedberg credit for the amount needed. Blitz delivered him the bill of sale of the stock and fixtures. Friedberg drew a check for $5,000, the purchase price, and delivered it to Blitz. He presented this at the window of the bank as a deposit, and received a deposit slip for the amount. This occurred at 4 o’clock in the afternoon, just as the bank, was closing The following morning the bank applied the $5,000 credit produced by the deposit in partial payment of Blitz’ indebtedness to it.
Two features show that this transaction was not a deposit in due course:
First. Blitz had no current account at the bank. The evidence shows clearly that, for more than a year previous to the transaction here involved, his account had been closed. The last entry in his passbook was December 19, 1911. Blitz, however, continued to draw checks upon the bank, and send them to his creditors. When these checks, were presented for payment the bank would notify Blitz, and he would come in and take them up with cash. Neither these checks nor the cash with which they were paid were ever entered in Blitz’ account. This is the nature of the account, as shown by the uncontradicted evidence. Blitz so testified, and he was in no way contradicted by any *507officer of the hank. It was a suspicious circumstance that the ledger leaves of the hank showing Blitz’ account had mysteriously disappeared.
Second. The bank, rather than Blitz, was the dominating power in the deposit of the $5,000. The bank brought about the sale; it furnished the money, and took scrupulous care that the fund should never get beyond its immediate control.
To apply to such a transaction the doctrines applicable to a regular current account between banker and depositor, such as was involved in New York County Bank v. Massey, 192 U. S. 138, 24 Sup. Ct. 199, 48 L. Ed. 380, and Studley v. Boylston National Bank, 229 U. S. 523, 33 Sup. Ct. 806, 57 L. Ed. 1313, cited in the majority opinion, is to confound things essentially different. This transaction, read in the light of its attendant circumstances, shows clearly that the money was received by the bank as a payment, and that the form of deposit was a mere subterfuge. The history of the transaction, the manner and place in which it was consummated, showed that it was the intent of The bank officers that the money should he immediately applied to the payment of the bank’s indebtedness. The fact that this was not done on the evening when the deposit was made, does not change the real character of the transaction, but simply shows an intent to defeat the Bankruptcy Law by a colorable shift, and enable a local bank to appropriate the entire estate of a bankrupt merchant, and leave his mercantile creditors, with claims amounting to more than $14,000, without a farthing. There was, in my judgment, no substantial evidence requiring the trial court to submit to the jury the question whether the transaction was a deposit in the due course of business. Upon the evidence it would have been the plain duty of the court to set aside such a verdict, if returned.
The judgment was right, and it seems to me a miscarriage of justice to reverse it for the mere purpose of seeing whether a jury will do its plain duty.