Bank of Guntersville v. Crayter

MAYFIELD, J.

We are of the opinion that the chancellor found and decreed correctly.

(1) The bank was clearly chargeable with notice that the funds deposited by Burke were deposited by him in his capacity of agent for another, though the account was entered simply as that of “J. L. Burke, Agent.”

(2) The strict rules of pleading or of commercial law should . not be applied to a proceeding like this in a court of equity, where *601 no bona fide purchaser is concerned. The bank either knew absolutely or was chargeable with notice that the moneys or funds so deposited by Burke were not the property of Burke, but that of some principal or client of his; and the notice was such that, if the bank had followed it up with due diligence, the inquiry would have elicited the truth of the matter. At any rate the bank did so ascertain the truth before the notes were due, and before it could rightly apply even the funds of the bank to the payment of such notes. The bank could not have recovered a cent of Burke on these notes had he been living when it so applied the funds to their payment, because the notes were not due; and if no recovery could be had by a suit, assuredly a court of equity will not permit the bank to collect its notes before due, and after the death of the maker, by paying them out of funds belonging to other parties. Whatever fault there was in the failure to show by the deposit entries the real. ownership of the funds, was either that of the bank receiving the deposit, or of the agent making the deposit, and not that of appellee except in so far as he was bound by the act of his agent. The bank, however, knew that he was the agent of some one, and was not making the deposit for himself; and there is no evidence to show that the bank parted with anything of value on account of the deposit.

(3) The bank evidently acted on the theory that a bank has a general lien on the moneys, funds, or general deposits of its customers coming into its hands in due course of business, as for any balance due it by the particular customer as for notes or bills past due, overdrafts, etc. No such lien exists, however, as to special deposits, except as to the particular special matter or dealing.—Lehman’s Case, 64 Ala. 567; Wynn’s Case, 179 Ala. 497, 60 South. 313. See numerous cases cited in note 111 Am. St. Rep. 419.

(4) The reason given for the laws creating the lien is that the bank gives credit to the depositor by allowing overdrafts, or permitting notes or bills to become overdue, on the faith of the general deposit then in its hands, which it can at any time apply to the payment of its debt then past due. To justify the lien, there must be given credit upon the faith of the deposit then on hand, and it must be a general deposit and not a special one. In such cases, if the debt to the bank is past due, it may, without the consent of the depositor, apply a general deposit to the past-due indebtedness to it. If the bank is sued by a depositor as for *602 a general deposit, or for failure to pay a check when it has funds in hand from which the order' could be paid, it may set off a debt then due it by the depositor; but it cannot, without the consent of the depositor, apply or set off a fund as against a debt not then due.—Bank v. Mayer, 104 Ala. 634, 16 South. 520.

(5) This rule, however, does not apply to cases where a trustee, agent, or broker deposits funds of his beneficiary, or principal, and the bank has, or is chargeable with actual notice of the trust character of the deposit. Nor has the bank such a lien upon funds deposited for a special purpose, if it has notice or is chargeable with notice of such special purpose.

We feel perfectly sure that the bank had no right to apply the deposit in question as it is shown it did; and the decree of the chancellor is in all things affirmed.

Affirmed.

Anderson, C. J., and Somerville and Thomas, JJ., concur.