In re Assignment of Bank

Mr. Chief Justice Moore

delivered the opinion.

*87

1. In the assignment of errors contained in the printed abstract of the record no exception to that part of the decree in relation to the amount claimed to have been paid by the assignee on account of road tax is noted, and, such being the case, that item will not be considered: Rule 10, 24 Or. 600 ( 37 Pac. 8 ).

2. Considering the other items of the final account to which objections are made, it appears that on July 23, 1893, one E. L. Thompson executed his promissory note to the Bank of Oregon, which it transferred by endorsement to its correspondent, the First National Bank of Portland, as collateral security, and that Thompson paid to the former bank the balance due on his note, as follows: April 8, 1893, $50; May 1, $101; June 15, $23. On September 9, 1892, E. E. Davis, W. A. Kimsey, and Z. H. Rudd executed their note for the sum of $250 to the Bank of Oregon, which it transferred by endorsement to the said Portland bank as collateral security. On February 2, 1893, the makers of this note paid $259.94, the amount due thereon, to the Bank of Oregon, but it intermingled with its own funds and neglected to transmit to the holder of these notes the sums of money so paid by the respective makers, and when the deed of assignment was executed by said bank it had but $17.22 in money in its possession. Thompson, considering the money so paid by the makers of these notes a trust fund, paid to the First National Bank of Portland, July 25, 1893, $173 on account of Thompson’s note, and on September 13, 1893, $259.94, on *88 account of the note of Davis, Kimsey, and Rudd^ The evidence on this branch of the subject tends to show that for some time prior to the assignment an agreement existed between the Bank of Oregon and the First National Bank of Portland, whereby the latter bank honored drafts drawn upon it by the former, to secure the payment of which the Bank of Oregon transmitted, from time to time, to the Portland bank, as collateral, promissory notes executed to it, upon the maturity of which these notes, upon request of the Bank of Oregon, were returned and collected by it, but, instead of remitting the money so collected, it transmitted to the First National Bank such Portland and eastern exchange as it might receive in the ordinary course of its business.

It is contended by counsel for appellant that this agreement authorized the Bank of Oregon to collect these notes, and hold the proceeds thereof as trustee of the First National Bank of Portland, to which it was to remit the same from time to time, but that, in violation of this agreement, the money so collected was intermingled by the Bank of Oregon with its own funds, in consequence of which the lien of its cestui que trust attached to the combined fund as a security for the amount due it; while counsel for the objector insists that the Bank of Oregon had authority from the Portland bank to collect the amount due on these notes which it held as collateral security, when returned for that purpose, agreeing to remit in payment thereof such Portland and eastern exchange as it might receive *89 in the ordinary course of business, and, this agreement having been fully performed by the Bank of Oregon, there was no breach of confidence, and hence no trust ever attached to the fund; and that, if it be admitted that a trust ever existed, there was no fund in existence at the time the assignment was made upon which it could operate, or to which it could attach. The money upon which the alleged lien is sought to he enforced was received by the Bank of Oregon from the makers of said notes prior to the assignment, and was intermingled with and became a part of its general funds, and as such were paid out in the ordinary course of its business prior to the assignment. There is no evidence to show that any part of the money so received was in the possession of the bank at the time it closed its doors, unless this can be inferred from the fact that the sum of $17.22 was found in its vaults; nor does it appear that any part of the same can be traced into the hands of the' receiver since his appointment, or that the money so collected helped to swell the assets of the bank; so that, if it be admitted that a trust existed, there was no fund in existence at the time of the assignment upon which it could operate, and for that reason the objection to the credit so claimed must be sustained: Ferchen v. Arndt, 26 Or. 121 ( 46 Am. St. Rep. 603 , 29 L. R. A. 664, 37 Pac. 161 ); Muhlenberg v. Northwest Loan Company, 26 Or. 132 ( 38 Pac. 932 , 29 L. R. A. 667).

3. Thompson claims the sum of $600 as a reasonable compensation for the services performed by *90 him as assignee from June 20, 1893, to May 1894, at which time he was removed from his trust by order of the' court, which finds that he is entitled to but $300 for such services. The statute, in prescribing the compensation to be paid to an assignee for his services, provides, in effect, that the court may allow him such commissions in the final settlement of his account as may be considered jus^ and reasonable: Section 3180, Hill’s Annotated Laws. The compensation prescribed must be largely a matter within the discretion of the trial court,, and the amount awarded should be predicated upon the time employed, the nature and quality of the services rendered, and the liability and responsibility of the assignee. Inasmuch as Thompson had collected from the debtors of the insolvent estate only about $3,000, and in view of the fact that he was removed from office by the court, we are-not prepared to say that the allowance was not a reasonable compensation.

4. It also appears that one J. W. Blain was-secretary and said W. S. Thompson treasurer of the Albany Building & Loan Association, a corporation, and that immediately prior to said assignment Blain and Thompson, as such officers of said corporation, deposited in the Bank of Oregon the sums of $292 and $819.82, respectively, and said corporation at the same time also had on deposit, therein the further sum of $580, which had been ordered paid to one F. S. Crosby on his withdrawal from the association, making a total of $1,695.82 which the association had to its credit in the bank *91 at the time of its assignment, at and prior to-which time Blain was the cashier and Thompson the bookkeeper and assistant cashier of the said bank. The by-laws of the Bank of Oregon, in prescribing the duties - of its cashier, contained the following provision: “The cashier of this bank shall be responsible for all moneys, funds and valuables of this bank, and shall faithfully apply and account for all said moneys, funds and valuables, and deliver the same to the order of the board of directors of this bank, or to the person or persons authorized to receive the same.” All the moneys of said bank having been paid out in the regular course of its business, except the sum of $17.22,. Blain, as its cashier, immediately before the assignment, without any positive authority from its board of directors, transferred to Thompson, as treasurer of said building and loan association, for the purpose of reimbursing it on account of its deposits, the promissory notes, a detailed statement of which is hereinbefore given. It is contended by counsel for appellant that the Bank of Oregon, although in failing circumstances, and so ■ known to be by the officers of the building and loan association, could prefer this creditor;- that the transfer of the notes by Blain to Thompson for it, prior to the assignment of the bank, was a lawful exercise of power, and within the authority of the cashier as the general manager of the bank; and that, if it be conceded, for the sake of argument only, that these notes were wrongfully assigned, Thompson could not challenge any previous disposition of the *92 insolvent debtor, and that James takes such rights only as his assignor had, and cannot controvert the bona fides of the transfer; while counsel for the objector maintain that a cashier of a bank has no power, unless specially conferred, to transfer the negotiable notes of a bank to its creditors in payment of an antecedent debt, or to assign the same as security for a past consideration, and that, not only was such authority not conferred, but it was expressly withheld by the board of directors, of which fact Blain and Thompson, as cashier and assistant cashier of the Bank of Oregon, had due notice.

In Wild v. Passamaquoddy Bank, 3 Mason 505 , (Fed. Cases No. 17,646), Mr. Justice Story says: “The cashier of a bank is, virtute officii, generally intrusted with the notes, securities and other funds of the bank, and is held out to the world by the bank as its general agent in the negotiation, management and disposal of them. Prima facie, therefore, he must be deemed to have authority to transfer and indorse negotiable securities held by the bank for its use and in its behalf. No special authority for this purpose is necessary to be proved. If any bank chooses to depart from this general course of business, it is certainly at liberty so to do; but in such case it is incumbent on the bank to show that it has interposed a restriction, and that such restriction is known to those with whom it is in the habit of doing business.” In Robb v. Ross County Bank, 41 Barb. 586 , Sutherland, J., in'commenting upon the authority of a bank to in *93 dorse a bill of exchange, says: “ There is no evidence or finding tending to show that the charter of the bank contained any restrictive limitation on its power of negotiating or indorsing notes or bills of exchange, or on the authority of its cashier to indorse such negotiable paper for the bank. The presumption is, then, that the bank had power, and its cashier authority, to negotiate or indorse the bill.” In the case at bar no such presumption can be indulged in support of the action of the cashier of the bank, nor can it be invoked to protect the person to whom these notes were assigned, for the evidence tends to show and the court finds that the board of directors of the Bank of Oregon, being the general agent of the corporation, chose to depart from the usual course of business ordinarily pursued by a bank, and by their bylaws interposed a restriction upon the cashier, who was the special agent of the bank, thereby prohibiting him from transferring the negotiable securities, or delivering them to any person except to the order of the board of directors, or to the person or persons authorized to receive the same. The board of directors never ordered these promissory notes to be delivered to Thompson, nor was he entitled to or authorized to receive the same, and, having been the assistant cashier of the bank, he is chargeable with notice of this restriction imposed. Such being the case, he is not an innocent purchaser of these securities for a valuable consideration without notice.

*94 In Everett v. United States, 30 Am. Dec. 584 , it was held that when the presumption of authority arising from the mere indorsement of negotiable paper by the cashier of a bank had been overcome by proof that such transfer of the bank’s securities was not made in the regular course of business, but in prejudice of its rights, no title to the chose in action so indorsed passes to the assignee, and hence no action can be maintained by him thereon. It has been held in this state that the assignee of an insolvent debtor, not being an innocent purchaser for value, takes no better title to his grantor’s property by the deed of assignment than that possessed by the assignor at the date of the execution of the •conveyance, and for this reason the assignee could not question the bona fides of a prior transfer by the debtor of the legal title to any portion of his estate, even when made to defraud creditors; but that, when the legal title to the property passes to the assignee by the transfer, subject to any lien thereon, the assignee, having the legal title, is in a position to and may convert the legality of such lien: Jacobs v. Ervin, 9 Or. 52 ; Gammons v. Holman, 11 Or. 284 ( 3 Pac. 676 ); Helm v. Gilroy, 20 Or. 517 ( 26 Pac. 851 ). Applying these rules to the case at bar, the cashier of the bank having no authority to assign the promissory notes in question for the purpose intended, no title thereto passed to the Albany Building & Loan Association; and, such being the case, James, as the present assignee, is in a condition and may controvert the act of the agent *95 of the insolvent debtor relating to this transfer, and hence it follows that the decree must be affirmed.

Affirmed.

Mr. Justice Wolverton,

having been of counsel in the court below, took no part in the consideration of this cause on appeal.