Court Opinion

ID: 6673480
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:14:07.491139+00
Date Added: 2024-06-11T16:00:37.178117
License: Public Domain

The opinion of the Court was delivered by
Willard, A. J.
The only question before us comes up on the appeal in behalf of the Royal Bank of Liverpool from the Circuit decree, and involves the right of the petitioners to have their drafts *274paid out of the proceeds of the securities in question in preference to the claims of the Royal Bank to such securities. On this question we are satisfied with the conclusions stated and reasons assigned by the Referee in his report, and hold the decree of the Circuit Court reversing such conclusions erroneous.
The securities were taken exclusively for the benefit of the Royal Bank. The deposit in the State Bank was a mere bailment, not inconsistent with a special property in the Royal Bank under the agreement by which they were put in pledge. The place of deposit was optional with the Royal Bank. The proceeds of that portion of the securities recovered must be regarded as standing in the same position as the securities themselves previous to the removal from the place of original deposit. Holders of • drafts drawn upon the Royal Bank, at least previous to acceptance, had neither a legal nor equitable claim against nor lien upon this specific fund, nor privity with the agreement between the banks. They could not claim that their drafts were to be regarded as drawn on the faith of such securities under the agreement with the Royal Bank, for that contract did not contemplate transactions of that nature. Even if it had been shown that, as between the drawer and payee, such an understanding existed, it would not affect the rights of the Royal Bank, whose claim to securities was unaffected by any authority in the State Bank to make any such transactions. The right of the State Bank to draw was not absolute, but dependent upon the assent of the Royal Bank. The holders have no better claims, legal or equitable, than the State Bank, and that institution had no authority under the agreement with the Royal Bank to impose any charge or lien on the securities.
It follows that the Royal Bank is entitled to the proceeds of the securities to the extent that may be necessary to satisfy its claim under the original agreement.
Moses, C. J./and Wright, A. J., concurred.