Wardlaw v. Planters' Bank

Sykes, J., delivered the opinion of the court. The Delta Bank & Trust Company, a banking corporation of this state, domiciled at Clarksdale, where it had been conducting a general banking business, suspended business and was taken in charge by the state board of bank examiners. At this time the city of Clarksdale had on deposit in this bank over one hundred and forty-six thousand dollars, as evidenced by, various different accounts with the bank, notwithstanding the bank had not qualified as a municipal depository, as provided in chapter 98 of Hemingway’s Code. [109] At this time the Planters’. Bank of Clarksdale had on deposit in this bank certain accounts designated as Planters’ Bank account No. 1, Planters’ Bank account No. 2, Planters’ Bank sheriff’s account, the aggregate of these deposits being over seventy-three thousand dollars. The city of Clarksdale and the Planters’ Bank petitioned the chancery court to have the state board of bank examiners issue to each in accordance with section 36 of chapter 124, Laws of 1914, guaranty certificates of deposit for these amounts. Each further asked that,, by reason of the public nature of the funds on deposit, each be allowed a priority of payment in preference to other depositors of the bank, as provided by section 2823, Hemingway’s Code (section 3485, Code of 1906). In each cause the chancellor decreed that each was entitled to priority of payment over other depositors as provided in section 2823, Hemingway’s Code (section 3485, Code of 1906), and further decreed that the state banking department issue to each its guaranty certificates in accordance with the prayers of the petition. These two causes were tried by agreement in the chancery court, and though separate decrees were entered in favor of the city of Clarksdale and the Planters’ Bank, the causes are presented here in one record. From these decrees the state banking department prosecutes this appeal. The appellant presents two contentions to this court as to why these decrees are erroneous: First, that where public funds are deposited in a bank the relation of trustee and cestui que trust exists instead of that of bank and depositor; and, second, that these trust funds are otherwise secured, namely by section 2823, Hemingway’s Code (section 3485, Code of 1906), and consequently are not guaranteed under the banking law. The particular section of the Banking Act relied upon by the appellants is section 3596, Hemingway’s Code. The material part of this section is as follows: “All deposits not otherwise secured. . . . shall be guaranteed by this act,” etc. [110] A further contention is made that these public funds so deposited are secured by the respective bonds of the municipal and county officers who handle these funds. In the City of Clarksdale case, because of an equal division of the members of the court, the decree must be affirmed. Because of this division I will not undertake to give the reasons of the differences of opinion among us. Judges Anderson, Cook, and Ethridge are of the opinion that under section 2823, Hemingway’s Code (section 3185, Code of 1906), these deposits are secured, and therefore the state banking department should not have been decreed to issue its certificate of deposit to the city. Judges Holden, Smith, and I are of the opinion that section 2823, Hemingway’s Code (section 3185, Code of 1906), is not such security, and that the decree of the chancellor is correct. Judge Ethridge alone is of the opinion that the bonds of these county officers constitute such security for these moneys as takes these deposits out of section 3596 of Hemingway’s Code, and are therefore secured deposits. In the Planters’ Bank Case, the record shows that it had become the successful bidder for the deposit of county funds but failed to' qualify as county depository; that the county moneys were deposited in this bank with the understanding among the banks of Clarksdale that the Planters’ Bank would deposit in the others a certain per cent, of county moneys; that in pursuance of this agreement these funds were deposited by the Planters’ Bank in the Delta Bank. All of us are of the opinion that, as between' the Planters’ Bank and the state banking department, in charge of the affairs of the Delta Bank, the Planters’ Bank was merely an ordinary depositor in the Delta Bank: that as such depositor it is entitled to this guaranty certificate for the amount of this deposit, but that it is not entitled to the priority of payment over other depositors, as is provided in section 2823, Hemingway’s Code (section 3185, Code of 1906). The decree in favor of the Planters’ Bank will be modified in this court to this extent. [111] Affirmed as to city of Clarksdale; modified and decree here in favor of Planters’ Bank. Affirmed in pwt. Modified and rendered in part.