Court Opinion

ID: 8636602
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:46:17.865764+00
Date Added: 2024-06-11T16:55:56.911196
License: Public Domain

DILLON, Circuit Judge.
The receiver succeeds to all the rights of the National Bank of the State of Missouri; and, as there is no question of fraud, actual or constructive, in the case, he succeeds only to the rights of the bank as against the city to the balance on hand in the Bank of the Republic at the date of the failure of the Missouri bank.
As between the Missouri bank and the city, did those moneys in the Bank of the Republic belong to the city? Suppose the Missouri bank had not failed, and a contest had arisen between it and the city as to the balance on hand in the Hank of the Republic, would the city have been entitled to a judgment or decree that this balance was in law or in equity its money ? If so, the same rights still remain. If, however, as respects this balance, the Missouri bank sustained towards the city the relation of a debtor only, this relation still remains', and the receiver is entitled to the fund, and the city must come in as a general creditor.
Suppose the Bank of the Republic had failed with the amount here in dispute on hand; on which would the loss have fallen, the city or the Missouri bank? Such an inquiry would involve the same principle which is presented in the cause now under consideration. The correct decision of the cause requires that the facts and circumstances which give it its peculiar character shall be closely regarded, and the intention and purposes of the bank and of the city kept constantly in view.
The general relation of the bank to the city was the usual relation of a banker to his customer, viz., the relation of debtor and creditor. That was the undoubted relation as to the account in the general pass-book “H.” On the face of the special pass-books, “E,” and “G,” the same relation also exists, for the bank credits the city and charges itself with the amount received or transferred from the general account, and when it subsequently receives the coupons and surrenders them to the city, and not before, it charges the city on these books (and on its books, of which these are copies) with the amount of coupons surrendered, and with exchange on the sum remitted to New York, and also .the commissions for services charged by the Bank of the Republic. It did not charge the city on the special books with the amount remitted to New York at the date of remittance, but, as just stated, only debited the city when the coupons were received here and surrendered to the city.
As between the bank here and the Bank of the Republic, the money was that of the Bank of Missouri, and not that of the city. It was intended to be so as between all three of the parties. Originally the city had a purpose in not having it appear that the money in New York to pay its obligations was its own — a purpose based upon a commendable precaution to protect its credit against unfounded pretences, and in no wise fraudulent —and that mode of transacting the business naturally continued after the reasons for it had probably ceased.
If we leave out of view the effect of the account shown in the-special pass-books “E” and “G,” the right of the city as against the bank would seem to be sufficiently clear. The case would then be this: The bank was the general debtor of the city, having funds subject to its check or draft. Let us take the transaction of April 25th, for it represents all the others. The city comptroller directs the city treasurer “to remit” to the Bank of the Republic $51,000 to pay the bonds and coupons of the city falling due at that bank on the following month. On the same day the city treasurer draws in favor of the bank his check for the amount and encloses it to the president of the bank, with directions, inter alia, “to remit” to the Bank of the Republic, in New York, $51,000, “to pay bonds and coupons of the city falling due (at that bank) in May next.” The bank at once charges the amount of that check to the city, which has the effect to reduce the city’s balance with the bank and to stop interest to that extent. If the money had passed over the counter to the city treasurer, and he had delivered it to another bank, with instructions to remit to a particular bank for a specified and definite purpose, such bank would have been the agent of the city to remit or transmit the money of the city; it would remain the money of the city, notwithstanding it may have been credited on account to the agent, and *190not to the principal, and this with the consent of the two. If such bank had transmitted the money by express, the money would be the city’s; if by draft, it would be the agent of the city for that purpose; but when its instructions were obeyed and the money duly received by the appointed depositors’, all liability would be at an end. If the appointed depository failed, the loss could not be thrown upon the agent.
See Levi v. National Bank of Missouri [Case No. 8,289].
But the money was not paid over the counter to the city, and the city did not select some other agent or bank to remit or transmit it to the Bank of the Republic, but selected its general depository to make the remittance, and accepted a credit in another account for the same sum. The bank remitted the sum, as directed by the city, to the Bank of the Republic, with specific- directions to credit the amount to it, and to use the same “to pay the bonds and coupons of the city maturing at your bank next month,” and charge the amount to the account of the bank here, and forward to this bank the bonds and coupons cancelled.
The letter of the treasurer to the president of the bank made the bank here the agent of the citj’ to remit, and if the bank here did remit accordingly, and placed the sum with the designated bank, i. e., the Bank of the Republic, it did its duts’, and would not be liable to the city if the Bank of the Republic had failed with this fund on hand. Though the amount stood on the books of the Bank of the Republic to the credit of the bank here, S'et that was by the city's consent and for its convenience. It imposed, as between the bank here and the city,’ no additional liability on |he baiiic. and it deprived the city of none of its rights; such would be the effect of the letter of the treasurer to the president of the bank, if there is nothing to qualify or change it in the other circumstances of the case. The main circumstance- relied on is that the city, at the time it gave directions to remit, accepted on another account and pass-book a credit from the bank for the same sum — the bank, by such credit, acknowledging itself to be the debtor of the city for the amount it had undertaken to remit. If this is the controlling element in the case, then the relation of debtor and creditor between the city and bank never ceased, as respects the sum directed to be remitted, and remained the same as before, and continued so to remain after the sum was placed, as directed, with the Bank of the Republic. : | i
But, in my judgment, this is not tlie controlling element in the cause. The special pass-books are to be regarded as in the nature of memoranda, and adopted for the sake of convenience, and have the same effect as if the bank had given to the city a receipt for the money received, and promised therein to remit the same to the Bank of the Republic for the purpose of paying the coupons of the city.
The bank charged the city with exchange on the amount it thus received, the same as it would have charged if the draft had been for any other customer. It became the agent of the city to transmit the money. The money, when placed in the Bank of the Republic, was, as between the Missouri bank and the city, the money of the latter. When the agent presented coupons cancelled, this showed that the agent had discharged the duty it had undertaken.
It is my judgment that the relation between the Missouri bank and the city, as respects the money deposited with the Bank of the Republic-, was not that of debtor and creditor strictly, but that of principal and agent, with the duties and liabilities of the latter, and not those of the former relation. The moneys deposited by the Missouri bank in its name with the Bank of the Republic, were, as between the former bank and the city, trust moneys, and in equity’ they belong to the cestui que trust, and the latter has the right to pursue and claim them as against all persons who do not stand free of the trust.
This view is not regarded as at all in conflict with the cases cited and relied on by the defendant’s counsel. Marine Bank v. Fulton Bank, 2 Wall. [69 U. S.] 232; Savings Bank Case [unreported], per Mr. Justice Miller.
A decree will be entered adjudging the money in controversy to belong to the city. Decree accordingly.