IrA.TIONALEXCH. BANK OF DALLAS 17. BEAL.
855
p'racticed upon her, brought a$uit the county court of Arapahoe county to setaside andarinul the decree of divorce on the ground of fraud. This suit was pending on the 24th of December, 1890; when William B. Daniels died. Then,on April 2, 1891, she brought this suit in this court. The point is presented in the brief of counsel for plaintiff in support of' thf'l allegation in the bill, that the county court of Arapahoe county, under the constitution and laws of Colorado, did not have, and could not have, jurisdiction of any suit for divorce. It is not necessary, in passing on the several demurrers to the bill, to pass on the question involved inthis propositfon. !tis a question of such delicacy, and one which may be so far-reaching in its effects,' that I prefer that it should be settled, if to be settled at all, by my Brother HALLET, who is more familiar with the constitution and laws of Colorado than I am, and, because of his large experience on the supreme bench of the state and on the federal bench, is much better qualified than I am to pass on this question. The demurrers of William C. Daniels, Sarah M. Kenyon, and William D. Kenyon, Lewis C. Ellsworth, Laura. Parnell, Henry Martyn Hart, and Thomas B.Croke, Mitchell Benedict, and William G. Fisher, are overruledo
tiff, as soon as she discovered the fraud whic:Q had
NATIONAL EXCH. BANK OF DALLAS fl. BEAL, (C(rcuit Court, D. Ma88achusettl. Hay
(two cases.)
40 l89J.) PBOOBJmL
Nos. 2,978, 2,978-
L
BJJI][8-COLLBOTIONS-DRAIITS-RIGRTS 0" OWNBB-BPIIOMC
A bank whioh had received a draft for oollection sent it to its correspon4ent bUk at the residence of the drawee, aud the draft was paid to such correspondent. There were .no mutual accounts between the two banks, but it was the custom ot the correspondent to remit the proceeds of collections at stated periods. H.eld that, until this remittance was made, or the principal bank had given the original Owner of the draft credit for the avails, the original owner of the draft, as theowner of the proceeds thereof, to recover them from the correspondent bank. Though the correspondent was the agent of the first bank, and payment to it was a payment to the principal, yet until the proceeds were actually remitted to sucb principal. and mingled with its general funda, or were so credited, the owner of the draft nad the option to decline to consider it his debtor, and to claim the proceeds in the hands of the agent.
.. SAMB-PAYMBNT-DBBTOR AND CREDITOR.
to that
SAMB-INSOLVIINCY-LIA.BILITY 011 REOIIIVIIR.
Where the princiPlJ.l fails, and a receiver Is appointed, he takes the proceeds ot the draft, when remitted to him, SUbject to the same right of reclamation by the owner that the latter had as against. the agent. ' Where, in such a case, there are mutual accounts between the two banks, the right of aj1;ent to set olf the amount of the colleotion against the principal's indebtedness to It cannot be adjudicated in a suit in equity between the owner of the draft and the principal without making such agent a party.
.. SAMII-SIIT-OFl/-PARTIES.
inEquity. It appears from the allegations of the bill that plaintiff' sent to the Maverick Bank two drafts for collection and credit on general accoWlt,
356
,'FEDERAL REPORTER,
vol. 50.
payable, one in Fall River and the other in Taunton, and the¥averick Bank sent the first to the Massasoit Bank, at Fall River, for collection and credit, and ,the other to.1he Taunton National Bank at Taunton, and on October. 31,1891, the Massasoit Bank and the Taunton Bank collected the two and. credited their amount to Bank, and mailed letters to the Maverick ,Bank stating that they had done so. October 31st was the l,ast day that the Maverick Bank did business, it being taken 911arge9f the next day by a national bank examiner, and closed, by the dirf;lctioIlOf the cOlOptroller of the currency. The lettl,'lrs written by the Massasoit. ;Bank and, the. Taunton Bank did not, therefore, arrive until after"the failure, and consequently no entry of credit on3,ccount of these drafts was made by the Maverick Bank to the plaintiff. At the close of business 0 11 October 31st 'there was a balance on general account, including this draft,:pue from the MassasoitNational Bank to the Maverick Bank, of $144.04, which was, subsequently set off against collections made for the MassasoitBank by t4e defendant as receiver of the Maverick Bank. The Taunton Bank had,no mutual account with the Maverick Bank, and was in the habit of remittiJlg the proceeds of paper sent it by the Maverfor the amount ick Bank f9rcollectioo evrry five days, and sent a of the draft collected by them to the receiver. The usage between the plaintiff and the Maverick Bank, as set forth in the bills, was that the Maverick Bank credited the amounts of drafts sent it by the plaintiff for collection on the day the same were collected on general account, and did not keep the proceeds of such drafts separate, but mingled them with its flinds,:and this was done with, the knowledge or the plaintiff. The plaintiff files these bills, claiming to be entitled to receive from the receiver the amount of these two drafts in full. " Ropea, Gray &: Loring, for complainant. Hutchim &fbr defendant. PUTNAM, Circuit Judge. These two cases were submitted together on bill and demurrer. If the opinion of Judge COLT, handed down in this court March ,11, 1892, in Bank v. Beal, 49 Fed. Rep. 606, had been to the same point as now arises, I would be bound by it; but it was not. It,however, states a rule which is useful here, as follows: "When payment was dlllde and credit given, it seems to me the Maverick Bank ceased to pe agent of the complainant, and the'relationship between the two became that of debtor and creditor." In Comrner({ial Nat. Bank v. Hamilton Nat. Bank., 42 Fed. Rep. 880, Judge GREsHbHleems to have expressed the opinion that, notwithstanding credit given by a collecting agent having the same relations which the Maverick National Bank has to this case, the primary owner might make claim against, the subordinate agent until the subordinate agent had actually remitted; but I am concluded by the rule laid down by Judge COLT, and, as I state further on, the cases at bar do not require any consideration of the conclusions of Judge GRESHAM on this' particular point. The facts in No. 2,978, in which paym¢nt was made to the Taunton NationalBank,are in the simplest form for the preservation of
NATIONAL EXCH. BANK OF DALLAS 1:'. BEAL.
357
complainant's title to the bill or draft and its proceeds, and for the ap. plication of the principles which seem to me to underlie these suits. In that case there were no mutual accounts between the local bank and the Maverick; so that, after payment to the former, the pr.oceeds were held by it free from any equities. of its own, and segregated throughout from all other transactions. Consequently the owner, whoever the owner might be, could have identified and followed the avails as easily as he could have identified or followed. the draft or bill itself. In this case. No. 2,978, the fact that the indorsements on the draft or bill were made expressly" for collection" did not change the nature of the transaction, and are of no value; although, whenever claims of strangers intervene, or, indeed, whenever the state of accounts between the collecting bank and its subordinate correspondent is such 8S to be concerned in the transaction, the notice given by this special ani! limited phraseology maybe ofimportance. That the draft. or bill, when received by the Taunton National Bank, and until paid by the acceptor, or other person on whom drawn, remained the property of the complainant, cannot be successfully disputed; and it is also an elementary principle that the proceeds, so long as they remained with that bank, and were segregated and unmistakably identified, as in the present case, stood presumably in liliu of the collection paper, and were held by the same ownership and title. If, therefore, the respondent claims that in No. 2,978 the complainant has not the same title to the proceeds as it had to the draft, or that its right is less than that of a manufacturer to pursue and reclaim his consigned goods, or the accounts due for them, through the hands of the commission merchant or other factor, into the hands of or from the agents or customers of the latter, the burden is on him to show the special facts which justify the distinction. For these he must look, if anywhere, to the rule given by Judge COLT, already quoted. so exThe nature of these transactions has .been fixed by a tensive, uniform, and long continued that the courts must take cognizance that, when the proceeds of collections have been actually received into the vaults of a bank bearing the relation to the primary owner of the collection paper which the Maverick National Bank bore to the complainant, and have been credited by the former to the latter, the agency ceases, the avails can no longer be traced. or claimed as trust assets, and the matter is merged into one .of mere debit and credit. Whether or not. when the proceeds are so clearly identified and so free from new equities as in No. 2,978, the primary owner does not have the option of treating the intermediate bank as its creditor, or of demanding from the local bank the avails, so long as the latter continues to hold them, it is not now necessary to consider. It is enongh for the present that, so far as the rule already quoted from Judge COLT concerns this case, the complainant is affected only by the state of accounts between it and U.s immediate correspondent; and its title to the paper, or its proceeds, is not prejudiced by the mere fact that some other bank holds either as the immediate agent of the complainant's correspondent, until the latter has by Buitable entries on its books completed and recognized the relation-
358
':a'FEDERAL REPORTER,
ship of creditor anddebtoT.' Until this is accomplished, the rights of the complainant: are no less than those of the manufacturer already spoken,of, whorhigbtpursue the price of his goods into the hands of the'{a:etor'.s although the latter had made himself in fact and in form;primarily the debiOOr,ofthe middleman. Whatia the ultimate >limit to which the spes recuperandi may reach it is not necessary now to decide, and it may va ry according to special circumstanoes of differing cases; but that, in the present instance, it continued until the proceeds had actually been remitted by the Taunton National Bank,or were at least so entered by the Maverick to complainant in the usualcourlile of business that the right of complainant as creditor was absdlutely: and fully recognized, as well as fixed, seems to be implied in what was, said by Judge COLT, and appears to me to be the correct rule. No inwrvening rights are prejudiced by sustaining complainant's claim for the ,avails of the draft collected by the Taunton National Bank, and. therefore,none need be considered so far as concerns No. 2,978. Excha'TtgeNat, of Pittsburgh v. Third Nat. Bank oj New York, 112 U. 8.276,5 Sup. Ct. Rep. 141, and the earlier case of Hoover v. Wise, 91 U. S. 308, are conclusive on this court, to the effect that in this transaction the Taunton National Bank was the agent of the Maverick, and that the latter would' have been responsible for any insolvency or lack of diligence of the former, although the complainant knew when it forwarded,the bill or draft to the Maverick that it must transmit the same to Taunton for collection, and although the bank at Taunton exercised an independent occupation, and was not a mere servant of the Maverick. The respondent claims that, as the relations of the bank at Taunton to the Maverick are thus defined by the supreme court, the money, when collected at Taunton, became at once the money of the Maverick, in fact and.in contemplation of law; so that from the moment of payment to the local bank the Maverick became a debtor to the complainant, and the complainant was entitled to all the rights of a creditor. It is to be nowas not passed on by the supreme court, but ticed that this is sought to be built up from what it did decide. It must be admitted that the right of the complainant was not concluded by the mere fact that the Maverick became from a certain instant its debtor, if it did; because the question still remains the leading one in the case, whether, notwithstanding that fact, the complainant did not retain an option to decline to regard the Maverick as its debtor, and in lieu thereof to look to the proceeds of its draft, wherever it might find them. By analogy, the factor who sells goods on a guaranty commission becomes the debtor of the manufacturer from the instant the goods are sold; and yet it must be conceded that the latter has the choice of declioing to accept the credit, and of making claim to the account held by the vendor against his customer. It seems tome the case turns 00 the proposition that, while it must be admitted that the avails of goods or of choses in action, when they come in fact into the hands of a bank or factor authorized to deal with them, are thus so mingled with the mass of assets as to lose their ear-marks, yet they preserve their identity so long as they remain
NATIONAL EXCH. BANK 0:1 DALLAS'.,. BEAL.
,359
in the possession of a subordinate party, whether he be technically venfrom a' peculiar course of dealing or state dee, bailee, dr, of facts, the proceeds have necessarily lost their identity in the hands of the latter. Therefore the law sustains the just result that;at the close of business on the 31st day of October the proceeds of this draft, then lying-in the hands of the Taunton National Bank, might have been recovered from it by the complainant. 13efore there was any change in the status,-that is, befO'retheopening of business on the next secularday,the insolvency of tbe Maverick Natiouall3ank had been declared; So that at the instant ofthis declaration the avails of the draft were still subject to reclamation by the primary owner. The receiver, likean assignee in bankruptcy, took only the mere equities of the insolvent bank, and holdspy relation whatever he did take as 'of the 1st day of November, 1891,jn behalf of whom it may concern, and as trustee for all interestsasthey then existed·. My conclusions with reference to this case --:-No·. 2}978-seem to be in harmony with all the decisions in the other circuits. Had they not been so, yet, inasmuch as the latter have been uniformly in favor of the rule claimed by the complainant, I would have felt constrained to follow them; and the result would have been the same. I have not attempted to scrutinize with strictness the allegations of the bill, but have assumed them to be in harmony with the settled practice between banks of deposit to which' the case must ultimately conform, because the allegations must be construed in connection with those things of which the court necessarily takes judicial notice. Neither have I considered whether the appropriate remedy is not at law, because, the counsel for each party expressed at the hearing a desire that no point of jurisdiction should be taken, and my doubts,On this do not require me to challenge, of my own motion, the apparent course of practice to which these bills conform. As to. case No. 2,979, in which the sub·agent was the Massasoit National Bank, it seems to me that, until this bank is made a party, it is not proper to adjudicate whether it can maintain the offset which it has attempted, whether the remedy of the complainant is against it for all except $144.04, or against the receiver, if it hasany remedy at all, or whether or not the rule of Freeman's Nat. Bank v. National Tube- Work' 151 Mass. 413, 24 N. E. Rep. 779, or that of Commercial Nat. Bank v. Hamilton Nat. Bank,already cited, applies, or even to at all. If this was an action at law, it might, perhaps, on the principres applied in No. 2,978, be maintained for the item of $144.04; but in equity it does not seem suitable to thus split up a controversy. In No. 2,979, there will be a decree sustaining the demurrer, and dismiss.: ing the bill, with. costs, unless the Massasoit National Bank is brought in by amendment filed on or before the June rules next; and in No. 2,978 the demurrer is overruled, and the defendant ordered to plead or answer 'on or before the same June rules, the costs to abide the final decree.
FEDER.L REPORTER ,_
vol.' 60.
SANTElli
RIVER CYPRESS LUMBER SOUtib
Co.
11. JAMES
et ale
(Oircuit.Oourt, D. -1. FBDEBAL 'fITLE.
OaroLina. April 80, 1892.) COLOR OJ'
.The law of the states as to possession of lands under color of title, being a rule of propertJ, aro of controlling authority in the federal courts. lnSouth Carolina, when one enters on a body of land under color of title, the
STATE DEOISIONS-ADVEME POSSESSION .
2.AD;VURSB POSSB$SION-COLOR OF TITLE.
.
S.
actual possession of a part is the possession of the whole, except such parts as are in actual possession of others.
INJUNCTION-POSSESSION OF LANDS.
PlaintifY, being in possession of a large tract of timber land under color of title, 'and'engaged ,.,ith numeroUs laborers in getting out logs for his lumber mill, in which a large capital is invested, and which is dependent upon this tract for a supP'1 pf logs, is entitled to a temporary injunction against one Who, under claim of with force and firearms, enters upon the tract, destroys plai.ntifY's logging implements, and spreads terror among his workmen; but as a court of eqUity cannot determine the title to the land the parties will be l'equired to frame an issue of law pntbat question, to be tried to a jury, pending the injunction.
In Equity. Bill by the Santee River Cypress Lumber Company against R. B; James and others for an injunction against with the ,possession of certain lands. Temporary injunction continued· .Smythe & Lee and E. W. Moise, for complainant. M. a.Galluchat and A. G. Magrath, for defendants. SIMONTON, District Judge. The bill was filed for an injunction. The complainant, claiming to be in peaceful possession of a tract of land, alleges that the defendant, with actual force and firearms, entered upon its premises, destroyed its boats; drove away its laborers, terrorized and dOlloralized its labor, caused a temporary suspension of its operations, and threatened complete destruction of them. A temporary injunction 'Was granted to prevent a flagrant breaoh of the peace, which seemed imminent. Leave was reserved to defendants to move to set it aside on 'short notice. Defendan.ts have answered, and admitted the entry, justifying it nnderclaimof ownership. The testimony in the cause has 'been taken. Itappears that the complainant purchased and holds un:der conveyance in fee simple a body of swamp land consisting of several 'adjacent tracts ofland lying along the Santee river, containing in all 'Some 13.000 acres. A plat was made of the land in one body, and it, with. the deed, was duly recorded. The land is valuable only for the timber upon it, and is overflowed every freshet in the river. This land Was purchased for the purposes of a lumber business in which complainant is engaged. It has erected lower down the river a large mill for preparing lumber for market, attached to which is a pond in which logs are kept for use. The operations of this mill are dependent upon the supplyoflumberfrom the 13,000 acres ofland. This is cypress, ina swamp which cannot be traversed by wheeled vehicles. It is traversed by small creeks and water ways. The complainant had dug out these creeks and waterways, and had constructed canals, one leading through the length