Atlanta Savings Bank v. Downing

Fish, P. J. We are not concerned with any equities which may exist between Downing and the insurance company, or between that company and the bank. The question to be decided is whether the bank or Downing had a better claim to the fund, [694] as between each other. It is clear that Downing had legal title to the policies by virtue of his assignment. Liverpool Ins. Co. v. Ellington, 94 Ga. 785. Downing informed the insurance company what was the extent of his interest in the policies. He had a right to .control the amount due on the policies, and to be first reimbursed therefrom. He consequently had a right to direct the company to retain the amount due him, or pay over that sum to him, before the balance of .the amount due on the policies was paid to Beach. There is no suggestion in any of the letters from Downing to the insurance company that he was willing, under any circumstances, for Beach to be paid before he was reimbursed the amount of his debt. At the time the bank made the loan to Beach it was aware of Downing’s statement as to the amount of his debt, and it also knew or could easily have ascertained what direction Downing had given to the insurance company as to its payment. Moreover it knew that Downing had a right to give such direction to the company, inasmuch as it was aware of the assignment of the policies to him. This being so, it was the plain duty of the bank, before making the loan to Beach, to make inquiry of Downing to see if he had been paid. Knowing that Downing had legal title to the policies under his assignment, it knew that Beach could assign to it only such interest in the policies as he had after Downing was paid. Downing had priority. Until his debt was satisfied, the bank had no claim on the money due on the policies. It made the loan at its peril, without inquiring whether Downing’s debt had been paid. Downing had no notice of the bank’s claim until asked to indorse the check turned over to it by the, agent of the insurance company. It was no concern of the bank that Downing permitted Beach to take his part of the fund out of the- first checks sent. He was under no obligation to the bank to reimburse himself first. • Downing was guilty of no fraud or misrepresentation to the bank, nor had he made any statement to the agent of the insurance company which would estop him from collecting his debt as against the bank. His mere statement as-to the amount of his claim certainly could not have this effect. There was but one fund in the hands of the insurance company due on the policies. This was a lump sum which Beach and Downing were to divide in accordance with the private arrangement between them. Nor did the [695] company undertake to divide the fund when it drew its checks. It treated it all the time as a lump sum due on the policies. The checks were made payable jointly to Beach and Downing, and were sent to Beach. The order given by the Beaches to the bank did not undertake to assign any - particular fund or check, but directed the company to hold any check or checks until the bank had been paid. But even if the order be treated as an equitable assignment, there was no separate check payable to Beach. . He had no right to direct the company to hold a check payable to himself jointly with Downing, nor did the company have a right to hold such a check on his order. The bank was chargeable with notice of these facts, and knew that as against Downing it had no right to receive the check, or to call on him to indorse it until he had himself been reimbursed. When Beach gave the bank the order, nearly his entire interest in the policies had been satisfied, and the bank could easily have ascertained this if inquiry had been made of Downing. Downing’s equity was superior to the bank’s and there was no error in directing a verdict in his favor. Judgment affirmed. All the Justices concur, except Gandler, J., absent, and Lumpkin, J., disqualified.