First Denton National Bank v. Kenney

Burke, J., delivered the opinion of the Court. The appellee on this record held a mortgage upon the property of Joseph E„ Haimnel and wife amounting with interest to the sum of $1,150.76. By the directions of the appellee this sum, in payment of the mortgage, was paid by a cheek of Oscar Clark drawn on the Denton National ²⁶ Bank to the order of William H. Deweese, the attorney of the appellee. This.check is in these words: “Denton, Md., October 1, 1906.

Pay to the order of Wm. H. Deweese, Atty., $1,150.76, Eleven Hundred and fifty and 76/100, in full for A. J. Kenney mortgage. To Denton National Bank, Denton, Maryland. Oscar Clare." At that time Mr. Deweese was sick, and he died in Eebruary, 1907,.insolvent.

On the 8th of October, 1906, being too helpless to write 'his name, the check was endorsed as follows and sent to the bank for deposit: “Wm. H. Deweese, Atty. (His Mark) Test: Mat Gootee." The bank returned the check to Mr. Deweese, and informed him that it would not deposit the same to his credit under this endorsement. The check was then endorsed in these words and returned to the bank, and the proceeds were credited to his individual account: “Wm.

H. Deweese. (His Mark) Test: Mat Gootee." On the day the check was deposited, William H. Deweese was indebted to the bank, on overdraft, in the sum of $32.18. On November 26th, 1906, an overdue promissory note for the sum of $800.00, payable to the Denton National Bank and signed by William H. Deweese and Harvey L. Cooper, as joint makers, was by direction of Harvey L. Cooper, a comaker of the note and who was also the president of the Den-ton National Bank, charged to the amount of Mr. Deweese. The whole amount standing to the credit of Mr. Deweese on the books of the bank at that time, and against which the note was charged was then represented by the proceeds of the check of Oscar Clark mentioned above.

The hank also charged against the account the overdue draft of $32.18. ²⁷ Erederiek R. Owens was appointed and qualified as administrator of the personal estate of William H. Deweese, and the bank paid over to him as administrator the sum of $80.19, the amount remaining to the credit of Deweese upon its hooks at the time of his death. This suit was brought by the appellee against Harvey L. Cooper, Erederiek R. Owens, administrator of William H. Deweese, and the Denton National Bank to recover the money which the bank charged under the circumstances mentioned to the account of Deweese. The seventh paragraph of the hill charges that “in addition to the information furnished the officers and directors of the said Denton National Bank and to the said Harvey L. Cooper, by the wording of the check aforesaid, the said officers and directors of the said The Denton National Bank and the said Harvey L. Cooper surety on the said note and president of the Denton National Bank, had actual knowledge of the fiduciary relation which the said William H. Deweese bore to the entire account to which this said note was charged up.” The prayers of the hill are first, for a decree declaring the Denton National Bank to he indebted to the plaintiff in the sum of $806.67, the amount of said note charged up to said account, with interest from November 26th, 1906-, until paid. Second, that a decree he passed directing Erederiek R. Owens, administrator of the said William H. Deweese, to pay to the plaintiff the sum of $80.09, the portion of the above account paid to him by the hank, and for further relief.

The bank, in its answer to the hill of complaint, admitted that it received for deposit from William H. Deweese on the 8th day of October, 1906, a properly endorsed check of Oscar Clark for $1,150.76, and averred that it had received this cheek in the usual course of business, and that at the time of the deposit of that check the account of Deweese was overdrawn to the extent of $32.18. It admitted the execution of the note by Deweese and Oooper for the sum of $800.00, ²⁸ as stated in the bill, and that the note with interest was charged as alleged to the account of William BE. Deweese. It denied that it had any knowledge or information at the time the check was deposited that Deweese was insolvent, or that it had any knowledge of any fiduciary relation existing between Deweese and the appellee, or any other person so far as this deposit or account was concerned; but that it believed and treated the account as it actually was, the individual account of William II.

Deweese. It admitted that it charged to his account the $32.18 referred to, and that it paid to Frederick B. Owens, the administrator, of William II. Deweese, the sum of $80.09, the balance remaining to the account of the deceased. The answer further avers that so far as the bank “had any knowledge or had any reason to believe, at the time of the charging of the said note and overdraft, the money standing to the credit of the said William H. Deweese was his private account, subject to his check, and liable for any overdue indebtedness to said defendant, and the charging up of said note and said shortage was done in good faith, and in the regular course of .business, with the consent of said William Deweese and ratified by him.” The material averments of the answer of Harvey L. Cooper appear in the fifth and seventh paragraphs, wherein it is denied that the note was charged to the account of William II.

Deweese by his direction either as surety or as president of the Denton National Bank, and he avers that he had no knowledge that the note charged against the account of said Deweese until sometime subsequent to the time when that was done, and he farther denies that he had any knowledge of any fiduciary relation existing between Deweese and the plaintiff. The answer of Frederick B. Owens, the administrator, need not be particularly examined. It admits the receipt from the bank of the sum of $80.09, and states that this amount is deposited 'to his credit as administrator in the ²⁹ defendant bank. The general replication was filed, and the testimony was taken in open Court.

The case was heard upon the bill, answers and testimony. The Court dismissed the bill as to Harvey L. Cooper; but as to the Daiton National Bank and Frederick K. Owens, the administrator, it ordered and decreed, first, “that the defendant, the Denton National Bank, pay to the plaintiff the sum of eight hundred and six dollars and sixty-seven cents ($806.67), the amount of the note in controversy in this suit, charged up to said account, and also that the said Denton National Bank pay to the plaintiff the sum of thirty-two and eighteen cents ($32.18), the amount of the overdraft mentioned in said cause charged to the said account, represented by the check of eleven hundred and fifty dollars and seventy-six cents ($1,150.76), mentioned in this cause;” secondly, “that Frederick II. Owens, the administrator of the personal estate of William H. Deweese, deceased, pay to the plaintiff eighty dollars and nine cents ($80.09), the amount of the plaintiff’s money, as represented by the aforesaid check of eleven hundred and fifty dollars and seventy-six cents, paid ovar to the said Frederick B. Owens, adminis: trator, hv the defendant, the Denton National Bank.” The hank was ordered to pay the costs of the proceeding. The appeal before us is taken from this decree by the hank alone.

William H. Deweese had been a depositor of the bank prior to the date of the check in question. This check was a negotiable instrument under Article 13, sections 20 and 22 of. the Code of 1904. It was drawn on the Denton National Bank, and was made payable to William H. Deweese, attorney. It was endorsed by him in blank, and the amount of the check credited to his individual account.

This credit was given upon the faith of the check, the title to which passed to the hank under the endorsements. It is said in Tyson & Rawls v. The Western National Bank, 77 Md. 415 , that “it is well settled that when' a customer of a hank deposits money to the credit of his account, the money becomes the property of the hank. The customer ³⁰ is credited and the bank is debtor, with all the ordinary incidents belonging to that legal relation. There is no fiduciary connection between them.

The depositor departs with his money, and the bank contracts an obligation to pay such checks as he may draw to an amount not exceeding the sum deposited. The consideration which the depositor receives for his money is the absolute and unconditional contract by the bank to pay his checks to the extent of his deposits. And the same rule obtains in the case of checks, drafts and promissory notes, wherever, under the circumstances of the case, it is applicable; that is to say, wherever the bank becomes the owner of the commercial paper, and the customer acquires the unconditional right to draw for the proceeds. When a check, draft or promissory noté is endorsed in blank, or to the order of the bank, and the proceeds credited to the depositor as cash, the bank becomes the owner of the paper by virtue of the endorsement.

And, in case it is not paid at maturity, it has the ordinary remedies which belong to the endorsee of instruments of this character which have been dishonored.” If this were a suit between the appellee and William H. Deweese, or his administrator, there could be no difficulty as to the right of the plaintiff to recover the proceeds of the check; but quite a different question is here presented. Assuming that the check in the hands of Deweese was impressed with a trust in favor of the appellee, as he