Citizens Bank & Trust Co. of Belzoni v. Harpeth National Bank of Franklin

delivered tlie opinion of the court.

• From an order of the chancellor dissolving the temporary injunction granted the appellant hank restraining the appellee, Harpeth National Bank, from prosecuting its suit against appellant, pending in the circuit court of Washington county for damages for trover and conversion, this appeal is prosecuted.

The record in the case discloses that S. Castleman, a citizen and resident of Humpreys county, filed an original bill in the chancery court of that county against S. M. Fleming and W. H. English, partners doing business under the ñamé of Fleming & English, residents of the City of Franklin, Tenn., the Harpeth National Bank, a banking corporation domiciled at Franklin, Tenn-., and the Citizens’ Bank & Trust Company, a banking corporation of the state of Mississippi domiciled in the town of Belzoni. The material averments of this bill are as follows, namely: Castleman in November, 1916, ordered from the Amzi Godden Seed & Grain Company, of Birmingham, Ala., a carload of wheat, which order was placed with Fleming & English, who on November 22d shipped to their order, notify complainant, at Belzoni, Miss., from Franklin, Tenn., one carload of seed wheat, and drew a draft upon, complainant for the purchase price thereof, one thousand, two hundred dollars, with the bill of lading attached to the draft. That thereafter Castleman ordered another carload of wheat from Amzi Godden Seed & Grain Company, which order was also filled by Fleming & English, who shipped this car of wheat on December 7th, in the same manner as it did the first car, drawing a draft for one thousand and eighty dollars in the same manner the first draft was drawn. That it became necessary for Castleman to pay these two drafts before he could obtain the bills of lading and secure possession of the wheat or inspect it.

*515It is averred: That Fleming & English knew that the two cars of wheat were ordered for planting purposes, and thereby impliedly warranted that said wheat was suitable for planting purposes, was first-class in every respect, clean, and free from weed seeds of any kind which would lower the grade of the wheat, or flour milled therefrom. That, notwithstanding this knowledge, Fleming & English shipped in these two cars of seed which contained a large amount of small black seed, ■which proved to be corn cockle, a very bad pest to seed wheat, a very little of which is sufficient to reduce the grade of wheat. That said corn cockle is poisonous, and, when ground with wheat, the flour is rendered unwholesome, and even dangerous as food. That, after the wheat had been planted and had come up, Castleman incurred a large and heavy expense in attempting to have the cockle pulled out of the wheat. That he was unable to eradicate it in that way, and a large amount of the cockle grew up and was harvested with the wheat, lowering the grade of the wheat and market price thereof, and resulting in a loss of one thousand, one hundred and forty dollars. Castleman further avers that the two thousand, two hundred and eighty dollars paid by him in settlement of the drafts drawn by Fleming & English was paid to the Citizens’ Bank & Trust Company for Fleming & English, and that said money is still in the possession of this bank. Complainant is informed and believes that the Harpeth National Bank claims to be the owner of the proceeds of the drafts, and that it had sued the Citizens’ Bank & Trust Company, in the circuit court of Washington county, in tort for 'the proceeds of said "drafts. In his prayer for relief he prays that proper process issue for all of the defendants, and that upon final hearing a decree be rendered in favor of him for the sum of one thousand one hundred and forty dollars, and that the Citizens’ Bank & Trust Company be directed to pay him this *516sum out of tlie proceeds of the two drafts which it has on hand. Complainant also prays for general relief.

The Citizens Bank & Trust Company answered the hill and also filed a cross-bill. In this answer and cross-bill it admitted haying in its possession the proceeds of the two drafts. It stated that these drafts and bills of lading were delivered to Castleman upon the payment of the drafts. It disclaimed any knowledge of the wheat transaction between Castleman and Fleming & English. It averred that after the payment of these drafts Castleman instituted an attachment suit in the circuit court of Washington county for damages because of a breach of warranty as to the quality of the wheat in which suit this bank was garnished, and that it duly answered the garnishment, in which it admitted haveing in its possession the proceeds of these two drafts. It also averred: That the Harpeth National Bank had filed suit in the circuit court of Washington county against it in tort for two thousand, seven hundred dollars, alleging that it had converted the proceeds of these two drafts to its use. That this suit was brought by the Harpeth National Bank against it by collusion with Fleming & English and with the wrongful and fraudulent purpose and intention of preventing an adjudication of the -question of liability of the said Fleming & English and the Harpeth National Bank to the said Castleman for breach of warranty as io the quality of the wheat. The prayer of the cross-bill 'is that an injunction issue restraining the Harpeth National Bank from further prosecuting its suit now pending in the" circuit court of Washington county, and that on final"hearing a decree be rendered adjudicating the rights and equities of all the parties of this suit, and directing ■ this cross-complainant as to the payment and disposition to be made of the money in its possession. A temporary injunction was issued in accordance with the prayer of this cross-bill.

*517In its answer to the original hill of Castleman, .the Harpeth National Bank disclaimed any personal knowledge of the ordering of the wheat from Amzi Godden Seed & Grain Company; admitted the shipments made by Fleming & English of the two cars of wheat and the drawing of the drafts in the manner set ont in the hill; .disclaimed any information on its part of the purpose for which the wheat was ordered. It denied on information- and belief that there was any implied warranty that the wheat should he free from weed seed of any kind; denied on information and belief that the wheat contained corn cockle, and denied that the complainant, Castleman, incurred a large expense in having the cockle pulled up, denied that the cockle harvested with • the wheat lowered the grade of the wheat, but, on the contrary, alleged on information and belief that the wheat harvested by Castleman was unusually good and sold, because of its superior quality, for more than the fair market price, and that Castleman sustained no loss. It denied that the proceeds of the two drafts paid by Castle-man were paid by.him to the Citizens’ Bank & Trust Company for Fleming & English; but alleged the fact to be that this bank purchased said drafts on November 22 and December 7r 1916, respectively, and were bona fide and innocent purchasers for value of the same; that in the usual course of business it sent these drafts with bills of lading attached to the Citizens’ Bank & Trust Company with instructions that the bills of lading should be surrendered only upon the payment of the respective drafts; and that it is informed and believes and charges that the bills of lading were surrendered by the Citizens’ Bank & Trust Company to Castleman before the drafts were paid in violation of the» in-' structions under which they were sent. On information and belief it alleges that the claim of Castleman against Fleming & English is fictitious and without merit and made for the purpose of defeating the collection of the *518amount due for the wheat or of securing a delay in the payment of said amount by Castleman; that Fleming & English have no interest in the money paid by Castle-man to the Citizens’ Bank & Trust Company, and that the Citizens’ Bank & Trust Company violated its instructions and therby became primarily responsible to this defendant for the value of the wheat.

Its answer to the cross-bill of the Citizens’ Bank & Trust Company contains practically the same averments as does its answer to the bill of Castleman. In this answer it also admits the bringing of the suit against the Citizens’ Bank & Trust Company in the circuit court of Washington county. It denies that this suit was brought by collusion with Fleming & English or with any wrongful or fraudulent purpose and intention of preventing the adjudication of the liability • of the said Fleming & English, or of this defendant to the said Castleman for breach of warranty. It alleges that the Citizens’ Bank & Trust Company turned these drafts and bills of lading over to Castleman without first requiring him to pay the same, contrary to their instructions and in collusion with Castleman; that it wrongfully retained possession of the proceeds of the drafts'1 for an unreasonable length of time after the same had been paid; that therefore the Citizens’ Bank & Trust Company became primarily responsible to this defendant for the proceeds of these drafts. It asks for a'dissolution of the temporary injunction. The Harpeth National Bank, after the filing of these two answers, filed a motion to dissolve the temporary injunction. It is unnecessary to set out in full grounds stated in the motion, as they will be referred to in stating the. argument of counsel for appellee. This motion was heard on affidavits. The Harpeth National Bank filed an affidavit of Newt Cannon, Jr., its cashier. In this affidavit affiant states that the Harpeth National Bank for a valuable consideration purchased these drafts at the time alleged *519in its answer; that they were sent to the Citizens ’ Bank & Trust Company of Belzoni, Miss., with hills of lading attached, with instructions to surrender the hills of lading upon the payment of the drafts, the proceeds to he remitted at once to the Harpeth National Bank; that the Citizens ’ Bank & Trust Company, as the agent of the Harpeth National Bank, was hound hy these instructions, hut, contrary thereto, delivered the hills of lading without the payment of the drafts; that when Castleman paid the drafts on January 2, 1917, the Citizens’ Bank & Trust Company held' the proceeds thereof until a garnishment was served upon it on January 31, 1917; that the Harpeth National Bank was the owner of these drafts; and that-Fleming & English had no interest therein or in the proceeds therefrom. „

The complainant, S. Castleman, filed a very lengthy affidavit substantially sustaining the allegations of his original hill and of the answer and cross-hill of the Citizens Bank & Trust Company. This affidavit goes into details as to the purchase of the two carlods of wheat, the inferior grade of the wheat caused hy its containing a number of cockle seed, the trouble and expense he went to in attempting to have the cockle pulled up after the wheat had come up; that these two drafts were paid hy him on December 21, and 22, 1916, respectively that he was required to pay the two drafts before he could get possession of the hill of lading and of the two cars of wheat. The affidavits substantiates the averments of the hill as to the extra expense incurred hy him in attempting to eradicate the cockle from the wheat. To this affidavit exhibits were made of correspondence between Castleman and Fleming & English, and Castleman and the Amzi Godden Seed & Grain Company. Upon motion the letters to and from the Amzi Godden Seed & Grain Company were excluded by the chancellor, hut those between Castleman and Fleming & English were admitted. A perusal of this corres-*520poxidence stows that Fleming & English, were attempting to adjust the damage Castleman claimed to have sustained. It shows that Fleming & English were aware of the fact that the Citizens’ Bank & Trust Company had not remitted the proceeds of this ^collection becausé of a request of Castleman not to do so while they were attempting to make this adjustment. The letters from Fleming & English show that they claimed or believed that they were the owners of the wheat and of the proceeds of the drafts paid by Castleman to the Citizens’ Bank &• Trust Company. The chancellor dissolved the injunction. The order dissolying the injunction recites that the cause was submitted upon the pleadings, the motion to dissolve ánd the affidavits taken, and the argument of counsel.

Mention is made in the answer of the Harpeth National Bank that the pleadings filed in the case of this hank against the Citizens’ Bank & Trust Company pending in the circuit court of Washington county are made exhibits to this answer. These exhibits however, are not shown in the record and for that reason cannot he noticed by us on this appeal. It is contended by the appellee that the lower court was correct in dissolving the injunction for three reasons:

“First. Because a bank purchasing a .draft with bill of lading attached does not assume any of the liabilities of the seller of the goods and is not liable1 on a warranty made by the'vendor of the goods represented by the bill of lading.

“Second. That the Harpeth National Bank, being a banking institution incorporated under the laws of the United States, was ’without power to puchase the goods represented by the bills of lading and could make no warranty in regard thereto; that a national bank cannot purchase personal property; that the purchase of personal property would be ultra vires.

*521“Third. That by its action in the dealing with the drafts and bills of lading, the' Citizens’ Bank & Trust .Company converted the drafts and bills of lading to its use and became the owner of same, and, if there was a breach of warranty connected with the wheat, the Citizens’ Bank & Trust Company is liable to Castleman, and neither Fleming & English nor the Harpeth National Bank is liable therefor. ’ ’

As to the first proposition, in their very able brief counsel for the appellee admit that in order to uphold the order of the chancellor we will, have to overrule the opinion of the court in the case of Searles Brothers v. Grain Company, 80 Miss., 688, 32 So. 287, and the case of Mobile Auto Co. v. Sturgess & Co., 107 Miss. 848, 66 So. 205. This question was fully considered by the court in bane and the doctrine announced in the Searles Case was reaffirmed in the case of L. Marks’ Sons v. West Tennessee Grain Co., 81 So. 162.

The second question presented is that the Harpeth National Bank, being a national bank, under section 5136 of the Revised Statutes of the United States (U. S. Comp. St., section 9661), is not authorized to purchase personal property, and therefore the. purchase of the two cars of grain was ultra vires and void. Under this section of the Revised Statutes, a national bank is allowed to discount and negotiate drafts, bills of exchange, and other evidence of indebtedness. It is thereby authorized to purchase drafts with bills of lading* attached., "When, as a consequence of such purchase, it becomes the owner of personal property, this is but an incident to the purchase of the draft and is not prohibited under the above section. McLean v. City State Bank of Mangum, Okl., 210 Fed. 21, 126 C. C. A. 601; Marsh Milling Co. v. Guaranty State Bank (Okl.), 171 Pac. 1122, L. R. A. 1918D, 704. While this question does not seem to have been expressly raised in the *522Searles Case, supra, .yet in that ..case the suit was also against a national hank.

Ns to the third question, namely, that there was a conversion of the draft, hill of lading, and' wheat by the Citizens’ Bank & Trust Company, because this bank turned over to Castleman these two cars of wheat before the drafts were paid, it is to be noted from the affidavits and pleadings that this is a sharply controverted question of fact. When such is the case, an injunction should not be dissolved upon mere affidavits, but the case should proceed to-final hearing. McKinzie v. McCrory, 88 Miss. 86, 40 So. 483. It is also a very grave question of law under the conflicting facts as to whether or not there was a conversion. The pleadings and affidavits raise a number of sharp conflicts in the testimony. From this record it is impossible to say whether Fleming & English or the Harpeth National Bank was the owner of the drafts and wheat; whether or not it was not with the consent of the owner that the bank withheld the proceeds; whether or not the drafts were paid when the bills of lading were turned over to Castleman. There could be no conversion by failure to promptly remit the proceeds of the drafts, in the absence of a demand from the owner therefor.

This suit is commonly termed an “attachment in chancery.” All of the parties are in court, and their respective rights can be fully and completely adjudicated in this one suit.

The order of the lower court is reversed the temporary injunction is reinstated, and the cause remanded.

Reversed and remanded.