Court Opinion

ID: 6863045
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:51:05.058617+00
Date Added: 2024-06-11T16:05:16.619102
License: Public Domain

FITZHENRY, Circuit Judge
(dissenting).
The trial court held: “No trust was created between the bank and Borman by the transactions between them for the reason that the assets of the bank were not augmented by anything that was done. Therefore, Borman is not entitled to a preferred claim. Blakey v. Brinson, 286 U. S. 254 [52 C. St. 516, 76 L. Ed. 1089, 82 A. L. R. 1288].”
The bonds which the bank had purchased (or contracted for) for the Bormans were returned to Jackson & Curtis, for the reason that the cashier’s check' given and accepted as payment for them was not paid when presented to the bank because it had just been closed by the board of directors.
In this case Mrs. Borman had réquested the bank’s officers to purchase, two $1,000 Liberty bonds. Later, -the price of the bonds was agreed upon, and the tentative purchase was confirmed by mail from Jackson & Curtis to the bank on the 17th of June. Immediately the bank called in one of the Bormans, the amount of the purchase price of the bonds was stated, and the commission of the bank fixed. Mr. Borman then executed his check on appellants’ checking account for the amount of the purchase, together with the commission to be paid to the bank for its services. This check was executed on June 18, 1932, and on the same day the bank’s cashier’s check was issued, but Borman’s check was not paid through the bank until the 20th, and on that day the cashier’s check was sent by messenger to the broker, who delivered the bonds to the messenger, who gave a receipt therefor. The next day the bank where the broker deposited the cashier’s check put it through the clearing house and an agent of the clearing house reached the bank just after the board of directors had closed it. There was 'no fraud or misrepresentation about this transaction.
In the case of Blakey v. Brinson, supra, none of these facts appear. There had bedn nothing except a conversation between the depositor and banker generally concerning the purchase of some bonds. The respondent’s deposit in the bank was in a savings account, where the debtor and creditor relation existed between the banker and depositor. On the next day, after an additional deposit had been made by Brinson bringing his balance up to $4,061.31, the officer of the bank informed respondent that the bonds had been ordered, and on the 19th of October said to him “I have your bonds,” and handed him a large slip which stated:
“This is to advise you that we have this day charged your account as follows:
4,000 Fourth L. L. 41/4% Bonds...............$8,960.00
Acct. Int..................................... .60
Commission ......... 4.00
$3,964.60”"
On October 21st the bank charged respondent’s savings account on its books with $3,964.60 and credited a like amount as a “deposit” in a “bond account,” which latter fact was unknown to Brinson for some time. This information with reference to the bonds was entirely false. No bonds had been ordered by the bank, none had been purchased at any price, nor had the charge to his general account been authorized by the depositor. In fact, the whole transac*345tion was imaginary, and the only authority for making the charge against Brinson’s account was the assent after the fact, which was procured through false representations.
In other words, all that Brinson did was to have a conversation on the subject with the banker with no agreement, while in the Borman Case, when it was ascertained how much money it was going to require to purchase the bonds and pay the expense, Mr. Borman, who had an ample checking account with the bank, gave the banker his personal check for the full amount of the purchase price of the bonds and the commission of the bank for performing the services. The execution of the check was a plain token of an intent on the part of Borman to create a trust fund in the hands of the bank to be used for that purpose and was a complete divorcement of that much of his checking account from the debtor and creditor relation.
In the Blakey Case, supra, after reciting all of the facts, the court said: “We can find in this method of discharging a supposed obligation no hint of an intended alteration of the debtor and creditor relationship, with which respondent had been content from the beginning, to that of trustee and cestui que trust.” While in this case the court could truthfully say: “We find in this method of discharging a supposed obligation every token of an intended alteration of the debtor and creditor relationship, with which respondent was not content, to that of trustee and cestui que trust.”
The banker’s books, as shown by the record, disclose that on June 20th the Bormans’ checking account was reduced by the check given to the bank for the bond purchase to the extent of $2,068.48, leaving a balance in the checking account of $3,283.-90 when the bank closed. With that money the bank purchased from itself a cashier’s check payable to Jackson & Curtis and sent it in payment for the bonds purchased. The amount of the check, exclusive of the $2.50 paid to the bank for its services, was the money of Bormans’, to which the debtor and creditor relation did not apply,, put in the hands of the bank to purchase the bonds in question. The bank’s books, appellant’s check, and the cashier’s check are permanent monuments of the character and extent to which the bank’s assets were augmented, at noon of the next day when the board of directors closed the bank. The stipulation of facts conclusively shows there was considerably more than the amount of appellants’ claim in the hands of the bank when it was closed and the receiver took charge.
The only question that has really been litigated in this case is whether or not the funds placed in the hands of the bank by appellants were impressed with a special purpose. As a matter of fact, there is no evidence to the contrary. Everything was done that could be done to create a special deposit. Instead of the case of Blakey v. Brinson, supra, being an authority against the appellants in this case, it is a strong one in support of their contention.