Opinion
No. 32346.
October 26, 1936.
1. BANKS AND BANKING.
Bank receiving check from its depositor for collection receives it as agent of such depositor, and so does each bank thereafter receiving paper in process of collection.
2. BILLS AND NOTES.
Where bank receiving check for collection forwarded check directly to drawee bank and drawee bank charged check against drawer's account and in payment forwarded draft on another bank, which refused to pay draft because of insolvency of bank issuing draft, drawer of check and assignees of drawer's business held not required to be made parties to suit to establish claim against insolvent bank's assets since drawer and assignees had been discharged from liability to payee.
APPEAL from the chancery court of Bolivar county. HON. R.E. JACKSON, Chancellor.
W.D. Jones, of Merigold, for appellant.
Petitioner was required under the authority in the case of Christensen, et al. v. Merchants Marine Bank of Pascagoula, et al., 150 So. 375, to file its petition in the receivership matter and, therefore, could not file a separate suit and bring other parties in as parties defendant.
Appellant was entitled to a decree in the court below upon the petition, answer and special demurrer and this court should now enter a decree for appellant.
The defense relied upon by appellee is that the liquidating agent of the Bank of Shelby paid to Domengeaux Drug Store the sum due appellant when J.S. Domengeaux presented to said liquidating agent the original cancelled check which was positive evidence that the amount should not have been paid to Domengeaux but to the payee of said check or its assigns. The case of Marine Bank Trust Co. v. Triplett, 115 So. 202, is directly in point and settles the question of liability. It certainly demonstrates that Domengeaux Drug Store would not be liable to appellant for the amount of said check.
When a check is received for collection by the bank on which it is drawn, and the drawer then has sufficient funds on deposit with such bank with which to pay the check, the drawer will be discharged from further liability on the check although the bank fails to pay the amount of the check to the holder thereof from whom it was received, notwithstanding the bank may be then insolvent, provided it was then open for business and it does not appear that, in the event the check had been presented to it by another collection agent, it would not have been paid.
Marine Bank Trust Co. v. Triplett, 115 So. 202; Planters' Mercantile Co. v. Armour Packing Co. of Louisiana, 69 So. 293.
We are aware of the rule that if, during the progress of a trial, it develops that there are other parties who are necessary and proper parties to the cause that the court may, of its own motion, stop the trial and order that such parties be made parties defendant, but we do not think the court can order other parties to be brought in by petitioner as parties defendant whose names do not appear in the record. The particular parties which the court has ordered to be brought in in this cause are strangers to the case and are not before the court at all and not mentioned in the pleadings or the record in the case except in the order of the court.
E.B. Taylor, of Shelby, for appellee.
It is necessary for the appellee to be able to show against the proper and necessary parties, who claimed and received the proceeds of the particular check in question, and to have the matter fully determined and adjudicated.
It is necessary that appellee have an opportunity to show the facts as to the claimants to the check in question, and to show that the Domengeaux Drug Store, named in appellant's petition as a debtor, actually claimed and received the proceeds thereof, claiming to have settled with the payee or holder of such pretended claim, and there was no indebtedness due the appellant.
There can be no question as to innocent purchasers of this claim as appellant did not acquire the claim until January 9, 1933, according to its petition, long after the bank had closed, and after it is alleged that Domengeaux Drug Company had settled its account with the the creditor.
It is a very easy matter for appellant to sue the Domengeaux Drug Store and show the indebtedness to appellant and then for the appellee to show Domengeaux Drug Store claimed and received the benefits of the check in question, and then recovery be had against Domengeaux Drug Store or its successor, who are thoroughly solvent, and not have an insolvent estate pay the amount twice.
We are not overlooking the fact that if Domengeaux Drug Store had seen fit to stand upon the check as payment, that it might not have been such, but it is the privilege of appellee to be able to show against the proper and necessary parties, that Domengeaux Drug Store did not in fact so consider the check as payment and claimed the proceeds thereof itself, leaving it answerable to the original creditor in full.
The authorities cited by counsel for appellant are not in point and have no bearing on the case. The chancellor had the whole matter before him and decided he would not proceed with the case on its merits unless the necessary parties were brought in, in order that justice might be done.
Appellant filed its bill in the chancery court of Bolivar county against appellee, receiver of the Bank of Shelby in liquidation, to have its claim of ninety-nine dollars and eight cents established against the assets of said bank. Appellee answered the bill, and embodied in its answer a special demurrer based upon the ground that the Domengeaux Drug Company and Rowe and Edwards were necessary parties defendant, and for that reason should have been joined as such in the bill. The demurrer was sustained, and appellant declining to plead further, the bill was dismissed.
The Bank of Shelby was a Bolivar county institution. Appellant is a wholesale drug concern in Memphis, Tenn. The Domengeaux Drug Company was indebted to the appellant in the sum of ninety-nine dollars and eight cents, to pay which it sent appellant a check on the Bank of Shelby for that amount. Appellant deposited the check with the First National Bank in Memphis for collection; that bank forwarded the check directly to the Bank of Shelby for payment; the latter bank drew a draft for the amount, with other items, on the Union Planters National Bank, its Memphis correspondent, and at the same time charged the ninety-nine dollars and eight cent check to the account of the Domengeaux Drug Company, the drug company having sufficient funds to its credit to meet its payment. The Bank of Shelby forwarded this exchange to the First National Bank; the First National Bank presented it to the Union Planters National Bank for payment, which was declined upon the ground that in the meantime the Bank of Shelby, being insolvent, had closed its doors and gone into liquidation.
Afterwards the Domengeaux Drug Company sold out its business to Rowe and Edwards. The question is whether or not the Domengeaux Drug Company and its assignees, Rowe and Edwards, were discharged from liability to appellant for this indebtedness. We think this question must be answered in the affirmative. The rule in this state is that a bank receiving a check from its depositor for collection receives it as the agent of such depositor, and so does each bank thereafter receiving the paper in process of collection. Pearl River County v. Merchants Bank Trust Co., 168 Miss. 612, 151 So. 756; People's Gin Co. v. Canal Bank Trust Co., 168 Miss. 630, 144 So. 858, 146 So. 308; Planters' Mercantile Co. v. Armour Packing Co., 109 Miss. 470, 69 So. 293. Therefore, under the facts here, the Bank of Shelby was one of those agencies; it had authority as such to charge the account of the drawer with the amount of the check.
In the Planters' Mercantile Company Case the court held that where a check is received for collection by the bank on which it is drawn, and the drawer then has sufficient funds on deposit with it to pay the check, he will be discharged from further liability thereon, although the bank fails to pay the check to the person from whom it was received, notwithstanding the bank may be then insolvent, provided it was open for business, and it does not appear that if the check had been presented by another collecting agent it would not have been paid. These cases are decisive of the question against the position of the appellee.
Reversed and remanded.