Adams v. Citizens' Bank of Tina

WOODS, Circuit Judge, after making the foregoing statement, delivered tlie opinion of the court. The case decided in Bank v. Gillespie, 137 U. S. 411, 11 Sup. Ct. 118, is broadly different from the present case. “In equity,” it was there said, “the Gillespies may properly be considered the owners. They paid for the cattle; the orders for possession, equivalent to bills of sale, were in their name; they controlled the shipments; and, until their money advanced and stipulated profits were realized, they were equitably the owners and in control.” No such situation is disclosed here either by averment or by proof. The Citizens’ Bank, instead of being in the position of the Gillespies, did not pay for the cattle, did not receive bills of sale or the equivalent, did not control the shipment, and, instead of being the equitable owners of either cattle or proceeds, had simply the legal liability of Parsley & Mark-well to repay the money advanced by the bank, in accordance with their agreement, made four or five years before, when they commenced business, that the bank should pay their checks given for stock purchased, and they would “have the proceeds come back to the bank.” That, in effect, was to extend credit to Parsley & Markwell, and not to create a lien or equitable interest for the benefit of the bank, either in the live stock purchased or in the proceeds thereof. The inference that no more than this was intended by the parties is further justified by the consideration that Parsley was a man of affairs in close relations with the bank, and that in the , ourse of business adopted, whereby the bank was accustomed to receive prompt notice of sales and of the deposits made of the proceeds, it would receive timely information of any disposition of the proceeds of a sale, contrary to the agreement or custom, as it did in the instance complained of. It is alleged that Lovell represented to the bank that the consignment and the deposit of the proceeds of sale would be in the usual course of prior business, “because Adams & Burke had been notified and had notice,” but it is not averred as a fact that they had notice, “that the bank had uniformly during such period advanced the money,” etc.; but, if the direct averment had been made of such notice, it would have meant no more than knowledge that the bank had uniformly given credit to Parsley & Markwell. It is not averred, and there is no proof, that Adams & Burke had notice of the agreement of Parsléy & Markwell with the bank that they would have the proceeds of sales come back to the bank. Their custom was, it is true, under supposed directions from Parsley & Markwell, to deposit the net proceeds of sales in the Drovers’ National Bank to the credit of the Citizens’ Bank, but it was done for the use or subject to the order of Parsley & Markwell, and there was nothing in the course of the business, from their standpoint, by which they were required to infer an agreement, if there had been one, which gave the bank an [273] interest in or lien upon the proceeds of a sale before the deposit was made. In respect to the particular shipment in question, while it appears that the bank made inquiries of Lovell, and obtained of him statements which, if he had the requisite authority to bind them, might be deemed to show an agreement by Adams & Burke to deposit in the usual w'ay the proceeds of the pending consignment, it is to be observed that Parsley & Markwell were not present, nor, so far as it appears, cognizant of what was said between the cashier of the bank and Lovell; and without their participation it would seem to have been impossible that, by reason of anything said by Lovell, the bank should have acquired a special interest in the proceeds of the transaction. Besides, it is evident on the averments of the bill, that whatever assurance Lovell gave was a matter of opinion, based on the custom of business, and was not a promise that the proceeds of this consignment should be deposited to the credit of the bank. The bank relied on no such promise, but solely, as it is alleged, “upon the good faith theretofore observed by Adams & Burke.” It is beyond question that the cashier, who acted for the bank in the premises, expected that the proceeds of the consignment would be deposited to the credit of his bank, and that Lovell knew of that expectation; but it is at the same time true that the bank had no lien upon 1he cattle, or control of the shipment, and therefore had no equitable ground for pursuing the proceeds of the sale into the hands of Adams & Burke, who applied the amount in controversy to the payment of an obligation which they held against Parsley & Markwell, who had authorized the application. That our conclusion involves no inequity is shown by the subsequent conduct of the bank, and other considerations. The bank was informed of the alleged misappropriation within two or three days thereafter, but made no complaint, though the opportunity to do so to Lovell in nerson was frequent, gave no notice of its claim upon the money, and made no demand for it, until the middle of the ensuing May. On the contrary, it made complaint to Markwell, and urged him to replace the money, and, Markwell having-brought to the bank, or to the cashier, a note for ¡¡§5,000, signed by Parsley & Markwell and John Forsythe, payable to the order of Adams & Burke, dated October 6,1892, the bank on the same day made a draft on Adams & Burke, and sent the note and draft together to them at Chicago, on the statement of Markwell that, if that were done, he would furnish the money to pay the draft, implying that he would obtain the money of Adams & Burke, as a new loan upon the note. The note and draft were returned to the bank, Adams & Burke declining to make the loan, though assured of Forsythe’s pecuniary responsibility, which is unquestioned. Afterwards, at the request of some one, presumably an agent of the bank, Adams & Burke indorsed the note without recourse, and the hank holds it as collateral security for the liability of Parslej- & Markwell to the bank. There is no basis in the pleadings, nor, as we conceive, in equity, for that part of the decree which directs the surrender of the note to Adams & Burke. It never became theirs. They refused to accept it, and, if returned to [274] them under the decree, it is far from certain that they could enforce payment. If the Citizens’ Bank had given prompt notice of their claim upon the money, the appellants might have been able to secure payment of their demand against Parsley & Markwell in other ways not now available. The course taken by the hank was equivalent to a concession, if not a representation, that they had no such right as they now assert. The decree below is reversed, and the cause remanded, with direction to dismiss the bill at the cost of the appellee.