Court Opinion

ID: 9653710
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:52:20.625842+00
Date Added: 2024-06-11T18:13:00.867536
License: Public Domain

John A. Fogleman, Justice, dissenting. I respectfully dissent because I feel that there was a failure of proof of an element essential to establishment of a prima facie case for recovery by appellees. Appellant argued there was error in that evidence relative to the ownership of the account was not sufficient to sustain the verdict of the jury, in the giving of an instruction that the bank was held to strict accountability to plaintiff unless the funds deposited were paid out in strict compliance with the terms and conditions agreed upon as to signatures required for withdrawal, and in admitting evidence with regard to the tax assessment on certain real estate. In order to put the matter in proper perspective, we must examine the evidence showing the interest of S & H, Inc., the real party in interest, in the funds deposited. Regardless of any conversations had among the interested parties, the interest of this appellee in these funds was established by the lease between S & H, Inc., and Jack Starnes. The extent to which these terms were made known to appellant is wholly immaterial, because if appellees had no interest in the funds, they suffered no loss and had no cause of action. Even Hobbs clearly stated that the bank account, along with a lot west of Longview, Texas, conveyed to S & H by Starnes’ mother, and still owned by it, constituted security for performance of the lease. He also said that any money left in the account after the bills were paid would be the property of Starnes. Paragraph 3 of the lease agreement provided that the bank account should secure and insure the payment of rentals and performance of other covenants in the lease. Clearly S & H had only a security interest in the account. The only showing of loss or damage to S & H, Inc., under the covenants of the lease was Hobbs’ testimony that he had to pay bills incurred by Starnes in the Holiday Inn operation in the amount of $23,000. Appellees offered no evidence as to the value of the lot, and the only evidence to show its value was evidence relating to a tax assessment. Under the instructions given by the court, and particularly the instruction objected to by appellant, the jury was told that the bank was held to strict accountability for failure to require the signatures agreed upon, which, in effect, permitted S & H to recover the full amount of the account without regard to the extent of its loss. This could result in an unjust enrichment at the expense of the bank of a secured party who suffered no loss. S & H was not entitled to be unjustly enriched. There must be a loss to enable recovery by a beneficiary of funds deposited in a bank and known by it to be trust funds even though the bank permitted diversion of these funds, because the beneficiary is not entitled to unjust enrichment. Bray Bros. v. Marine Trust Company, 35 N. Y. S. 2d 356 (1937). Under the circumstances existing here, it seems to be generally held that the burden is upon the claimant to prove his damage or loss as well as his interest in the funds deposited in the bank account.1 In Amarillo National Bank v. Harrell, 159 S. W. 858 (Tex. Civ. App. 1913), it was held that a partner suing a bank to recover for wrongful conversion by transfer of a partnership bank account to the credit of the other partner could not recover the entire account but that he must allege and show his individual damage and interest. In Moore v. First National Bank of Kansas City, 154 Mo. App. 516, 135 S. W. 1005 (1911), the bank appropriated funds on deposit to the credit of a depositor in his capacity as receiver of a corporation by honoring checks drawn on the account by the receiver for the payment of his individual debts to the bank. The court held that the burden was on the successor receiver to show that by reason of the misappropriation the trust had been depleted to the extent that there was an insufficient amount in the receiver’s hands to pay existing liabilities or that the original receiver was delinquent to the estate in some amount. In L. W. Cox & Co., Inc. v. Chemical Bank and Trust Co., 175 Misc. 1063, 26 N. Y. S. 2d 38 (1941), it was held that the payee of checks converted by a bank’s honoring an unauthorized endorsement was not entitled to recover the full amount of the checks, but only to the amount by which the proceeds of the checks exceeded benefits received by the payee from the transaction. In Butler Produce and Canning Company v. Edgerton State Bank Company, 159 Ohio 267, 112 N. E. 2d 23 (1953), it was held that an employer was not entitled to recover from a bank for funds obtained by his employee by forgery of the employer’s name when' the employee had made restitution, because the employer was only entitled to be reimbursed once. It has also been held that no recovery could be had from a bank for conversion of collateral security in the absence of proof that the claimant thereto suffered loss. Porter v. Levering, 330 Pa. 392, 199 A. 482 (1938). The only evidence offered to indicate that the lot was not of sufficient value to reduce the amount of the loss suffered by S & H was the tax receipts purporting to show a tax assessment on the property. The tax assessment was not admissible for the purpose of showing the value of the land. St. Louis I. M. & S. Ry. Co. v. Magness, 93 Ark. 46, 123 S. W. 786; Springfield & Memphis Railway v. Rhea, 44 Ark. 258; Texas & St. Louis Ry. v. Eddy, 42 Ark. 527. In this state of the record the admission of this evidence over the objection of the appellant was prejudicial error. I would reverse the judgment and remand the case for a new trial.  Even if Ark. Stat. Ann. § 85-4-103(5) (Add. 1961) applies as suggested by appellant, the Committee comment on this section clearly shows that this rule still applies.