Sisseton Live Stock Shipping Ass'n v. Drovers State Bank

1 Reported in 205 N.W. 447, 206 N.W. 394. Action for money had and received by defendant for the use of plaintiff, the former being a South St. Paul bank and the latter a South Dakota corporation with its principal place of business at Sisseton in that state. After a trial without a jury and a decision for defendant, plaintiff appeals from the order denying its motion for a new trial. The controversy arises over the proceeds of a check for $2,033.59, drawn January 11, 1924, by the "Central Co-operative Commission Association, Trustee" to the order of defendant on the Stock Yards National Bank of South St. Paul. That check represented the proceeds of live stock belonging to plaintiff and sold for it on the South St. Paul market by the drawer of the check. Pursuant to a *Page 485 custom prevalent at South St. Paul, and which we assume for present purposes was initiated by defendant, checks such as this drawn on South St. Paul or Twin City banks were immediately deposited by the commission men as agents of the shippers, in some South St. Paul bank, instead of being sent to the shipper for the purpose of collection through the longer and more tedious process of having them go through his home bank and thence back through the usual channels to the drawee bank. Such deposits were not made to the credit of the shipper, but to that of his home bank, so that, as soon as one was made at South St. Paul and the fact communicated to the home bank, the shipper was entitled to the benefit of and to draw against the credit so established. In this case the deposit was made too late for clearings on Saturday, January 12, 1924. The deposit slip indicated that plaintiff was the depositor, acting through the Central Co-operative Commission Association, the drawer of the check, as its agent. It directed that the amount of the check be placed to the credit "of shipper's bank," the Guaranty State Bank of Sisseton, South Dakota. It was so credited by defendant and the check was cleared and paid by the Stock Yards National Bank, the drawee, on Monday, January 14, 1924. The Guaranty State Bank of Sisseton, it now appears, was insolvent and closed its doors on January 12, 1924. It has not reopened them since. In this situation, the proceeds of the check having been placed to the credit and gone to the use of the Guaranty State Bank and plaintiff never having had the benefit thereof, it is claimed that the deposit with defendant by its South St. Paul agent on January 12, 1924, was for collection only and did not pass title to the check or its proceeds to defendant. We must hold otherwise. There was nothing about the deposit indicating that it was for collection only. Although defendant may properly be held to have had knowledge that the check was the property of plaintiff, there was nothing to qualify the authorized direction by plaintiff's agent to place the deposit immediately and unconditionally to the credit of the Sisseton bank. That was done and the operation amounted to an absolute *Page 486 assignment of the title of the check and the proceeds to defendant. It is the law that "the title of the money, drafts or other paper" so deposited "immediately becomes property of the bank, which becomes debtor to the depositor for the amount, unless a different understanding affirmatively appears." Security Bank of Minnesota v. Northwestern Fuel Co. 58 Minn. 141,59 N.W. 987. In this case there is no evidence of any different understanding, except that the Sisseton bank and not plaintiff was to have the credit, which was to be immediate and unconditional. A circumstance strengthening that conclusion is that drafts were being made frequently, if not daily, by the Sisseton bank on defendant. The latter would not honor such a draft if the result would be an overdraft. On the day of this deposit, the evidence shows, defendant honored such a draft upon the faith of a promise by plaintiff's agent, Central Co-operative Commission Association, that this very deposit would be made later in the day. Without that deposit, there would have been an overdraft by the Sisseton bank. There enters thus an element of estoppel which, however, is not resorted to as a basis for decision. It simply indicates the injustice that would result if plaintiff were permitted, after the transaction and the failure of its home bank, to convert an absolute deposit to the credit of the latter into one for collection only and thereby retroactively deprive defendant of the absolute title which the unconditional deposit vested in it. This disposes of the case and we find it unnecessary to consider the decision of the trial court insofar as it is based upon the finding that plaintiff was doing business in this state without having been admitted for that purpose under our statutes as a foreign corporation. Order affirmed. ON PETITION FOR REHEARING. On December 11, 1925, the following opinion was filed: *Page 487