Federal Reserve Bank v. Fant

The opinion of the Court was delivered by Mr. Chief Justice Watts. On December 13, 1926, the Federal Reserve Bank of Richmond sent to the South Carolina Loan & Trust Company a letter containing checks drawn upon the latter 'bank and likewise a letter containing checks drawn upon the South Carolina Loan & Trust Company’s Bank (a subsidiary bank of the South Carolina Loan & Trust Company). These letters were received on December 15th and the amounts of the checks were charged to the accounts of the various drawers on that day in both banks, and in settlement thereof the South Carolina Loan & Trust Company sent its three [28] checks drawn on banks in Richmond, Baltimore, and New York to the order of the Federal Reserve Bank. All of these three checks were refused payment for the reason that before they were presented for payment the South Carolina Loan & Trust Company, the drawer of the checks, had closed its doors and ceased transacting business. Thereafter the Federal Reserve Bank filed its complaint against A. S. Fant as Receiver of the South Carolina Loan & Trust Company, Security Savings Bank, and South Carolina Loan & Trust Company’s Bank, and also' against the Mortgage Loan Company, alleging the facts above stated, and further alleging that because of these facts it was entitled to payment in full, or in the alternative to have its claim arising from the checks drawn on the South Carolina Loan & Trust Company’s Bank established as a claim against the assets of that bank so as to receive the dividend payable to depositors in the South Carolina Loan & Trust Company’s Bank for checks that were drawn on it. By stipulation of counsel the Federal Reserve Bank has received payment of the dividend of 25 per cent, from the assets of the South Carolina Loan & Trust Company upon its entire claim, and there is no dispute as to its right to prove its claim against the South Carolina Loan & Trust Company, as an unsecured creditor. To this complaint a demurrer was interposed by Fant as Receiver of the South Carolina Loan & Trust Company and by the Mortgage Loan Company, which raises the question of law arising on the face of the complaint that the Federal Reserve Bank is not entitled to preference, but to share only as other creditors in the assets of the South Carolina Loan & Trust Company. The demurrer of Fant, Receiver of the South Carolina Loan & Trust Company’s Bank, raised the question that there was no cause of action against that bank arising on the three checks drawn by the South Carolina Loan & Trust Company in payment of the checks sent by the Federal Reserve Bank, [29] both those which had been drawn on South Carolina Loan & Trust Company and also those drawn on South Carolina Loan & Trust Company’s Bank, and that any claim arising thereon was a claim against the South Carolina Loan & Trust Company, the drawer of said checks. The exceptions are overruled, and Judge Townsend’s order will be reported; he was right under Citizens’ Bank v. Bradley, State Bank Fxaminer, 136 S. C., 511, 134 S. E., 510; Peurifoy v. First National Bank of Batesburg, 141 S. C., 370, 139 S. E., 793; Manuel v. Bradley, 140 S. C., 321, 138 S. E., 815. Judgment affirmed. Messrs. Justices Cothran, BlEass, Stabler and Carter concur.