Court Opinion

ID: 6512117
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:23:19.953926+00
Date Added: 2024-06-11T15:54:54.805193
License: Public Domain

■ STONE, C. J.- —
-Within a short time before the Bank of Mobile assigned all its property and effects to Jones for the benefit of its creditors, it sold exchange to Mrs. Eliza A. Jones *332and the other petitioners, which was not presented until after the bank’s assignment was made, and was not paid. The funds with which this exchange was purchased had been on deposit with the said Bank of Mobile, and were checked out in the purchase of the exchange. All the exchange, except that in favor of Rosmanick, was what is called domestic exchange, being drawn on the bank’s New York correspondent. Rosmanick’s bills were drawn on Williams, Deacon & Co., bankers, of London, England. The correspondent bank in the city of New York, on which said domestic exchange was drawn, had ample funds belonging to the Bank of Mobile, with which to pay all said bills drawn on it, and would have done so, had not the payment been countermanded, as hereafter shown. Williams, Deacon & Co. had no funds belonging to the Bank of Mobile; but it is not averred that they would not have accepted and paid the Rosmanick bills, had not the Bank of Mobile, by its assignment to Jones, rendered itself insolvent. Nor is it averred that the Bank of Mobile did not, when it issued the bills, have just grounds for believing they would be accepted and paid by Williams, Deacon & Co., on presentation. It is averred that, when the assignment was made to Jones, he notified the New York correspondent bank not to pay said bills, and on his order the bank’s funds on deposit there were placed- to his credit as assignee. Mrs. Eliza A. Jones, and the other several holders of said dishonored bills of exchange, filed their petitions in the suit of Winston Jones, assignee, against the Bank of Mobile, and therein set forth substantially the foregoing state of facts. They prayed relief in three alternate respects, to be stated hereafter. There was a demurrer to the petitions, and the chancellor held them insufficient.
1. The first form of relief prayed is rested on the assumption, that by giving the several drafts to its customers, the Bank of Mobile had assigned and set apart so much of its New York deposit as was necessary to meet the several drafts, and such moneys thereby, and without more, became the property of the drawees of the bills. This position, as we understand it, is abandoned in the argument. It is manifestly untenable. Sands v. Matthews, 27 Ala. 399; National Commercial Bank v. Miller, at present term; Morse on Banking, 2d ed., 29, 302.
2. The second alleged ground of relief is, that the bank, when it issued these bills, was insolvent, and, by withholding knowledge of that fact from its customers, induced them to purchase its exchange, and pay their money for it. This, it is contended, was a fraud on its customers, which arms them with the option of rescinding the contracts; and electing to do so, that they are thereby remitted to their former status — that of depositors in the bank. The averments of the petitions do not *333bring the cases within this principle. No intention or deception is averred, nor is it inferable from the facts stated that, at the time the exchange was sold, the bank did not have the means and the confident expectation that the drafts would be honored on presentation. The petitions fail to make a case for relief within this principle. — Loeb v. Flash, 65 Ala. 526; Loeb v. Peters, 63 Ala. 243; City National Bank v. Burns, 58 Ala. 267; Donaldson v. Farwell, 93 U. S. 631.
3. The third ground relied on is, that when the bank sold the exchange, it had the means and ability to comply with its contracts, and could have done so, if it had not, by its own voluntary act,- deprived itself of the power to comply. This, it is claimed, was a breach of contract on the part of the bank, which absolved the other contracting parties, remitted them to their former rights, and authorized them to treat the contracts as never having had an existence.
There can be no question, that the bank of Mobile, by its assignment, disabled itself to comply with its contract, and that it thereby armed the drawees of the bills of exchange, whose dishonor was caused thereby, with power to treat the contracts as rescinded. — 2 Parsons on Contr., 6th ed. 678; Pac. Guano Co. v. Mullen, 66 Ala. 582; Anson on Contr. 273. But, what is the result of such rescission ? If property had been the subject of contention, and remained in specie, unaltered and undisposed of, the rights consequent on rescission are, that the parties shall be placed in status quo, if demanded. Can that be done, when money has been paid, and the claim is to have it restored?
As we have said above, there is no averment in the petitions which tend to show intentional fraud or deception, when the bills of exchange were issued by the bank; and in the absence of such averment, we must presume the bank’s intention and expectation, when it sold the exchange, were that the drafts would be honored and paid on presentation. From all that appears, such would have been the result, if they could have been presented before the assignment was made. There was, then, a time when the money was withdrawn, and rightfully withdrawn, from its status as a deposit — when it ceased to be a deposit, and did not constitute a debt against the bank. The bank, during that interval, owed nothing on its account, as a deposit. Money, thus used as currency, has no ear-mark, and can not become the subject of a trust ad rem. It created a simple new debt, and must share the fate of other general debts and legal liabilities. Such is the general result, when money has been paid on a contract, which is afterwards rescinded. — 2 Benj. on Sales, § 1126; Martindale v. Smith, 1 Q. B. 365; 1 Whar. Contr. § 282.
Application for mandamus denied.