frsbog_mim_v27_0439.pdf
Transcript of frsbog_mim_v27_0439.pdf
7/17/2019 frsbog_mim_v27_0439.pdf
http://slidepdf.com/reader/full/frsbogmimv270439pdf 1/6
439
FEDERAL RESERVE BOARDX-5018
WASHINGTON
DDRESS OFFICI L CORRESPONDENCE T O
T H E FEDER L RESERV E BO RD
December
1 4 , 1 9 2 7 .
Dear S i r :
• Through the courtesy o f Messrs. Locke, Locke, Stroud and.
Randolph, I enclose f o r your information a copy of an opinion rendered.
November 23rd
by the
Supreme Court
o f
Texas
in the
caae
o f
Odle
v .
Barnes.
You w il l rec al l that this was a case involving th e alleged, neg-
ligence
of the
Federal Reserve Bank
o f
Dallas
i n
connection with
the c o l -
lect ion of a check drawn on the First National Bank o f Morgan, Texas
r
now
closed. I have previously forwarded to you a copy of the opinion deliver-
ed by the court o f civil appeals, (X-4824).
The opinion of the court o f civil appeals settled a l l issues as
to the
l i a b i l i t y
of the
Federal Reserve Bank,
but
th er ea ft er , upon motion
of the plaintiff, Odle, certain questions were certified to the supreme
court concerning
th e
l i a b i l i t y
of the
First National Bank'of
F t .
Worth,
the bank which forwarded th e item to the Federal Reserve Batik o f Dallas
f o r
collection
and
also
th e
bank upon which
the
remittance draft taken
i n
settlement of the cash letter to the Morgan bank was drawn. The questions
a re
contained
in tho
opinion,
and as you
w i l l
see,
were based upon
th o
theo-
r y
that perhaps
th e
facts
in the
case were
o f
such
a
nature that
the act
of the
Morgan bank
i n
drawing
the
draft
on the Ft .
Worth bank constituted
an equitable assignment of the funds t o i t s credit with t h e F t . Worth bank*
The supreme court answered a l l o f tho questions favorably to the First
National Bank of F t . Worth.
Very truly yours,
v
Walter Wyatt,
General Counsel.
Enclosure.
LETTER TO COUNSEL OF ALL FEDERAL RESERVE BANKS.
7/17/2019 frsbog_mim_v27_0439.pdf
http://slidepdf.com/reader/full/frsbogmimv270439pdf 2/6
X-5018-a
COPY
N o. 807-4863,
COMMISSION
OF
APPEALS,
1 4 0
SECTION
B.
J \ S . ODLE,
APPELLANT,
v s .
S . C .
BARNES,
e t a l ,
APPELLELS.
FROM BOSQUE COUNTY,
TENTH DISTRICT.
CERTIFIED QUESTION.
The c e r t i f i c a t e o f t h e chief just ice of the
Court o f Civil Appeals f o r t h e Tenth District, by which
we
acquire jur isd ic t ion
o f
this case
i s a s
follows:
Appellant J . S . Odle instituted this suit against
appel lees
S. C.
Barnes, Farmers Guaranty State Bank
o f
Meridian, hereinafter called Meridian hank, t h e First
National Bank
o f
Fort; Worth, here in c a l l e d For t Worth
bank, a n d t h e Federal Reserve Bank o f Dallas, herein
called Reserve hank, t o recover th e sum o f $345.00. The
case
was
t r i e d
i n t h e
County Court
o f
Bosque County
and
judgment rendered f o r a l l t h e defendants. J . S . Odle p e r -
f e c t e d an appeal t o this court, and upon hearing o f said
appeal
t h e
judgment
of the
County court
was
affirmed.
The
case
i s
before
u s on
appellant's motion
f o r
rehearing.
A
brief statement o f t h e pleadings and the f indings o f fact
by this court a r c s e t o u t i n t h e opinion o f this court, a
cert i f ied copy
o f
which wi ll accompany t hi s c e r t i f i c a t e
and
shal l b e considered a s incorporated her ein f o r a l l proper
purposes.
Appellant i n h i s motion f o r rehearing concedes that
t h e draft drawn by th e Morgan bank upon t h e Fort'j Worth bank
i n
favor
of the
Reserve bank
f o r
$1850.77
i n
payment
o f
checks presented
t o t h e
Morgan bank
f o r
payment
by
said
R e -
ser ve bank, among which was included t h e Barnes check upon
which this suit
i s
based,
d i d n o t i n
i t s e l f c o n s t i tu t e
an
assignment of any of the funds on deposit i n said Fort Worth
bank,
but ho
contends that
t h e
drawing
o f
said draft, under
t h e f a c t s o f this case, constituted a s between t h e Morgan
bank,
t h e
bank examiner
and the
receiver
of
said bank
on
one hand, and appellant and the banks acting a s h i s agents
4
•1 -
7/17/2019 frsbog_mim_v27_0439.pdf
http://slidepdf.com/reader/full/frsbogmimv270439pdf 3/6
&*30l8*a
441
ih t he
col lect ion
o f
said Barnes check
on the
other
1
hand,
kn
equitable assignment
o f
suff ic ient
of the
funds
on
deposit
in t he Fort Worth bank to the credit of the Morgan bank t o
discharge th e same, or sS leas t that th e same constituted an
equitable assignment o f suff ic ient o f said funds to pay the
amount
due him as
proceeds
of the
col lection
o f
said Barnes
feheck.
He
further contends that
by
vi r tue
o f
such equitable
assignment he became th e owner o f a sufficient amount of the
funds on deposit in tho Fort Worth bank to the credit of the
Morgan bank to pay him the amount o f said chock, to-wit,
$45.00. He further contends that i t became th e dutjy of the
Fort Worth to remit said amount to him as proceeds o f
th e col lect ion o f h i s said check. H is said contentions are
more folly se t ou t i a h ie motion f o r rehi&ring, which i s
ordered transmitted herewith and made a part hereof. The
transcript and statement o f facts i n this case a r e also
transmitted herewith f o r such uso as your Honorable Court
may see f i t to
make
of the
same. Since
i t i s n o t
clear
that appellant can secure a review of our action on h is
motion by appl ication f o r wri t o f error, we deem i t
expedient to cer t i f y to your Honorable Court f o r detcrminar-
t ion tho issues of law so presented, as f o l l o w ;
FIRST QUESTION.
Did the act of the Jforgen bank i n drawing i t s
draf t on the Fort Worth bank i n favor of the Reserve baric,
constitute, under tho facts o f this case, an equitable
assignment o f suff ic ient of the funds t o i t s credit i n
th e
hands
o f
said Fort Worth batik
to pay the
same
or to
•oay th e amount due appellant a* t he proceeds of the
col lection
of the
Barnes check, which proceeds were
i n -
cluded i n said draft?
SEC01TB QUESTION.
Was i t the legal duty of the Fort Worth bank,
under tho facts i n this case, to hold i n i t s hand# a
sufficient amount of the funds on deposit with i t tjo the
credit
of the
Morgan beak
to pay the
amount
doe
appellant
as the proceeds of the col lection o f said check, and to
remit the- saite to him as such?
THIRD QUESTION.
Should appellant have
had
judgment against
the
Fort Worth >»*•>*• i n t h e trial court under h i s pleading# and
tho evidence adduced f o r t he amount o f said check, less
such dividends as had beon remitted end paid to him by
appellees on account o f such collection? ^
I t i s
conceded
by a l l
parties*
as
indeed
i t
must
bo, that th o drawing o f i t s draft by the Morgan basl: on the
7/17/2019 frsbog_mim_v27_0439.pdf
http://slidepdf.com/reader/full/frsbogmimv270439pdf 4/6
X-5018-a
M
Fort Worth Bank i n favor of the Federal Reserve Bank: did not
o f i tsel f consti tute an assignment o f * n y portion of the
funds
of the
Morgan hank
on
deposit
in t he
Fort Wotth Baric.
The contention o f appellant i s that under th e circumstances
surrounding this transaction
th e
drawing
o f
such draft
con-
st i tu ted an equi tab le assignment o f such fund# in t he Fort
Worth bank,
a t
least
to the
extent
of the
balance
due
after
deducting th e payments received from th e defunct bank.
There
i s
nothing shown
i n t h e
certificate that would
take this case out of the ordinary transaction to constitute
th e draft an equitable assigopient of any portion of th e Morgan
bank deposit with th e Fort Worth bank. Indeed, th e opinion
rendered
by the
Court
o f
Civil Appeals, which
i s
made
a
fa r t
of the certificate, contains this language:
The evidence discloses with reasonable certainty
that said draft was received by the Fort Worth bank after
th e order from th e bank examiner stopping payment thereon.
There is no evidence that th e Fort Worth bank was advised
at the time i t received or returned said draft that th e same
represented
i n
part
th e
oroceds
o f t he
Barnes cjhaclc.
The f i r s t f act this found by the Court o f Civi l
Appeals discloses a situation that negatives any inference
o f
actual payment
by i t o f the
Morgan bank draft,
and
l i k e -
wise negatives any r ight , ranch. less duty, to pay W e draft ,
since at the time o f i t s receipt th e order f o r payment b ad boon
countermanded by tho agent i n change of the Morgan bank. Pay -
ment V i t a f te r such payment had been stopped would have been
a breach o f duty by i t , and t he circumstances therefore d id
not j u s t i f y the holding that i n equity there had been a p a y * * # .
- 5 n
7/17/2019 frsbog_mim_v27_0439.pdf
http://slidepdf.com/reader/full/frsbogmimv270439pdf 5/6
w o r n *
B a t t h e
c o n t e n t i o n
o f
a p p e l l a n t
i e n e t
t e c h n i c a l l y
a
not ional
payment,
but
rather th at
h e
should
b e
protected upon
t h e
theory
o f
eq ui ta bl e ass ignm ent. Whether
o r n o t
there
was an
a s s i g n -
ment p r o tanto o f t h e funds would, dopend upon t h e transac t ion
between appel lant
a n d t h e
Morgan hank
I n
drawing
i t s
d r a f t ,
a n d
n o t
upon anything
t h e
Tort forth bank
d i d o r d i d n o t d o . T h e
ass ignment,
I f a n y w a s
e f f e c t e d
i n l a * o r
e q u i t y ,
w a s t h e a c t
o f t h e
Itorgan bezfic. There
i s
n o t h i n g i n
t h e
record
t o
show
that there
w as
anything
o a t o f t h e
ordinary
i n t h e
drawing
o f
th i s draf t aga ins t funds o n d e p o s i t i n t h e f o r t Worth Bank.
There i s nothing t o i n d i c a t e a n y intent ion whatever o n t h e part
o f t h e Morgan beak tha t t he re sho ul d b e each a n eeetgament.
I t doee n o t appear t o have covered a s p e c i f i c d e p o s i t , ( a s i n
Hatley v . West # % a s Sat'l Bank, 2 8 4 . S , W. 5 4 0 ) , o r a l l O f t h e
general deposit*
n o r i s
there
an y
other circumstance
t o
take
i t
o u t o f t h e
ordinary transact ion,
a n d t o
save
t h e
case from
t h e
s t a t u t e ,
( A r t .
$947,
S e c . 1 8® ) t o t h e
e f f e c t t h a t
a
chock
o f
i t s e l f d oe s
n o t
operate
a s a n
assignment
of any
p a r t
o f
t h e
funds
t o t h e
c r e d i t
o f t h e
drearer with
t h e
bank.
Appe l lant s tre sse s t h e incongrui ty , a s w e l l a s t h e
hardship, o f h o l d i n g m a t Barnes< chec k upon t h e Morgan bank
g i v e n
i n
payment
o f h i s
vendor's l i e n note he ld
b y
appe l lant ,
we®
p a i d ,
a nd y e t ,
t h a t
h e ,
a p p e l l a n t ,
i f
h e l d
t o
have
n o
'• • I '
:
' ' • • V . • •
dominant rlg&t
i n t h e
proceeds
o f
suc h payment.
A i t
thi s
cons ldorai
i o n c a n
have
no
inf luence upon
o u r
answer
t o t h e
q u es t io n s c w t i f l o d . l o t h i n g
i s
before
u s
except
t h e
quest ions
o f I m # # # propounded, a n d w e o f course indicate n o o&mAm
7/17/2019 frsbog_mim_v27_0439.pdf
http://slidepdf.com/reader/full/frsbogmimv270439pdf 6/6
X-5018-a
upon t h e quest ion o f payment by Barnes or any other question
4 4 4
than t h e ones here specif ically answered.
Our conclusions a r e n o t inf luenced in an y wise by
a cons iderat ion o f t h e opposing rules o f agency f o r c o l l e c t i o n
o f checks a n d d r a f ts , i l l u s t r a t e d on th e on e hand by Tillman
County Bank
v .
Behringer,
113 Te x . , 415 , 25 7 S . W. 20 6 , an d
on th e
Ather hand
by
Douglas
v .
Federal Reserve Bank
o f
Dal las ,
( U . S . ) 7 0 L . E d . , 1 0 5 1 . Whether each succe eding c o l l e c t i n g
hank i s to be t r e a t e d a s t h e agent o f t h e payee o r a s t h e agent
only o f i t s immediate forwarder, t h e result would be t h e same
i n either instance i n this case .
Prom what we have sa id i t follows that each of th e
questions propounded should
ho
answered
i n t h e
negat ive ,
and
we accordingly so recommend.
OCIE SPEER,
Judge.
The
opinion
o f t h e
Commission
o f
Appeals answering
c e r t i f i e d q u e s t i o n s
i s
adopted
and
ordered cert i f ied ,
to th e
Court o f Civil Appeals.
THOS B . GREENWOOD,
Assoc ia te Just i ce .
Wm PISRSON,
Assoc ia te Just i ce .
Chief Justice Cureton n o t s i t t i n g .
November 2 3 , 1 9 2 7