Haas v. Old National Bank

Bleckley, Chief Justice. 1. According to reason and justice, as well as the spirit of the best authorities on the subject, what transpired in Indiana between the Indiana bank and its customer would amount to an equitable assignment from the latter to the former, if these parties mutually intended that the bank should thereby become substantial and beneficial owner of the particular fund which represented the price of the goods for which the bill of exchange was drawn. There was much more to indicate such an intention than the mere drawing, delivery and discounting of the bill: Had this been all, no assignment of the fund, legal or equitable, would have resulted. But from this, together with the attachment of the bill of lading and the entry of the amount to the credit of the consignor, he being a regular customer of the bank, and the circumstances being apparently such as that he had a right to draw at once upon the bank for this amount, without waiting for the bill to be collected, it could well be infei’red that the intention was to make the bank the substantial owner of the fund, not only from the time it should be realized by collection, but from the time the bill was deposited and credit for it [313] given on the books of the bank to the depositor. Although the bill was not drawn expressly on any particular fund, but was an ordinary negotiable bill of exchange, a consideration of prime importance is that the attachment to it of the bill of lading, the latter specifying a particular consignment of goods, and the former being drawn for the price of these goods, might serve, as matter of evidence, to specialize and identify the particular fund as the one really drawn upon according to the mutual intention of the drawer and the payee. The bill of lading could well be treated as a supplement or appendix restricting and qualifying, equitably though not legally, the general terms of the bill of exchange, and pointing out informally the fund from which the drawee was requested and expected to make payment. Certainly the drawee would be at no loss to understand what fund was in contemplation. Altogether there was ample evidence to warrant the jury in finding that the intention was to establish a substantial ownership of the fund in the bank, and, consequently, to make to the bank an equitable assignment of that particular fund; and it was not error to refer the question to the jury for determination. 2. In a proceeding by garnishment, a mere formal legal title to the fund-in controversy in the debtor of the garnishing creditor will not prevail over a substantial equitable title which 'a third person acquired from such debtor before the garnishment was served. If the debtor himself could not hold or recover the fundas against such third person, his creditor ought not to be allowed to do so. Whatever is not rightfully and justly the property of a debtor, though he may have the formal legal title to it, ought not to be applied to the payment of his debts. He ought rather to be treated as holding such title as he had in trust for the real owner, and not for the benefit of himself or of his own [314] creditors. On tbe facts in evidence, this case had a right result, and is now finally disposed of. Two bills of exchange and two garnishments were involved in the litigation, but what has been said of one hill and garnishment applies equally to the other. Judgment affirmed.