Opinion
Decided November 9, 1931.
Banks and banking — Liquidation — Purchase of draft creates relation of debtor and creditor — Holder not entitled to preference and assets not impressed with trust — Section 713, General Code, inapplicable.
1. Purchase of drafts with cash held to create relation of debtor and creditor, and therefore holder was not entitled to preference on bank's insolvency.
2. Statute providing when assets of closed bank shall be impressed with trust held inapplicable where drafts were purchased for cash (Section 713, General Code).
ERROR: Court of Appeals for Wood county.
Mr. Gilbert Bettman, attorney general; Mr. Frank T. Bow, Mr. J. E. Kelly, Messrs. Brown Sanger and Mr. Sholto M. Douglas, for plaintiff in error.
Messrs. Bowman James, for defendant in error.
Mr. Elmer E. Davis, amicus curiæ.
H.G. Hankey brought an action against I.J. Fulton, superintendent of banks, in the court of common pleas of Wood county, for the purpose of securing a preference as a creditor of the Commercial Bank Savings Company of Bowling Green. The trial judge, on hearing the case, found and adjudged that the assets of the bank in the hands of the superintendent of banks for purposes of liquidation were impressed with a trust for the payment of the amount due the plaintiff, and adjudged that his claim was a preferred one against such assets. The superintendent of banks contends that the claim of Hankey is not a preferred claim against the assets of the bank.
The facts are not in controversy. On November 4, 1929, the plaintiff went into the Commercial Bank Savings Company in Bowling Green and purchased four drafts of $100 each upon the Hanover National Bank of New York City, paying the bank for said drafts the sum of $400 in cash. The bank thereupon transferred said sum of $400 to its credit with the Hanover National Bank. The plaintiff received the drafts from the bank and continues to hold them, they never having been presented to the New York bank for payment; but on or about November 30, 1929, the Commercial Bank Savings Company of Bowling Green was closed by order of the superintendent of banks and the assets taken over for purposes of liquidation.
Counsel for the superintendent of banks contend that the transaction between the parties created merely the relation of debtor and creditor, and that therefore no preference exists, while counsel for the claimant, Hankey, insist that the relation created was that of principal and agent and that therefore the funds of the bank were impressed with a trust in his favor, thus giving his claim a preference.
We think there can be no doubt that under the common law such a transaction as is disclosed in this case, there being no fraud shown, created between the purchaser of the draft and the bank merely the relation of debtor and creditor. Such seems to be nearly the universal holding of the courts, and such a conclusion is more in accordance with the facts. The authorities are collected in an annotation found in 16 A.L.R., 190, and a supplementary annotation may be found in 57 A.L.R., 1168. It may be noted, however, that the latter annotation is appended to a case in which fraud was shown to exist. See also annotation commencing in 73 A.L.R., 66.
It is urged, however, that the common law, denying a preference in cases where a draft is purchased for cash, has been changed in Ohio by virtue of Section 713, General Code. We do not so interpret that section. By its terms it only applies to a case where a check is presented to a bank for collection and payment, and the statute can have no application to a case where a draft is purchased and paid for in cash. Whether the statute applies to a case in which a draft was purchased with the depositor's own check we need not now inquire, because the question is not involved in the case at bar and any opinion thereon would be wholly obiter.
The facts in Union Savings Bank of Bryan v. Department of Commerce, 34 Ohio App. 6, 170 N.E. 186, decided by this court, are so different from those in the case at bar that the decision is not an authority in this case. We call attention, however, to the fact that the syllabus cites Section 713, General Code, while the reference should be to Section 714, General Code. The case last cited was affirmed by the Supreme Court in 119 Ohio St. 142, 162 N.E. 423.
For the reasons given the judgment will be reversed, and, proceeding to render the judgment which should have been rendered in the court of common pleas, it is adjudged that the claimant is not entitled to any preference.
Judgment reversed and judgment for plaintiff in error.
LLOYD and WILLIAMS, JJ., concur.