Continental National Bank v. Weems

Citations

• 69 Tex. 489
• 6 S.W. 802
• 1888 Tex. LEXIS 885

Syllabus

<p>1. Banks — Trusts—Debtor and Creditor. — In the course of dealings between a New York and Texas bank, the New York bank was in the habit of discounting notes for the latter, and of forwarding the same, on maturity, to the latter “for collection and returns,” with the understanding that the proceeds of such discount notes should be preserved by the Texas bank as the property of the New York bank, and should be returned to it as such. Such being the habit of business between the banks, the Texas bank received notes from its New York bank eorrespondent “for collection and return of proceeds,” held:</p> <p>(1) The Texas bank became as to such collections, when made by it, a trustee for the New York bank.</p> <p>(2) After their collection was made the relation of creditor and debtor as between the banks did not exist. The Texas bank had no authority to credit on its books the amount collected, but was legally bound to remit the money to its correspondent.</p> <p>3. Same. — The trust fund thus collected was credited by the Texas bank to its New York correspondent and mingled with other money of the Texas bank; thereafter, and before an adjustment of accounts, the Texas bank became insolvent, and was placed in the hands of a receiver. Held, that the trust attached to whatever money remained, when the receiver was appointed, in the bank vaults.</p> <p>8. Same. — The Texas bank, after receiving some notes from its New York correspondent “for collection and returns,” procured renewals of the same, after which the Texas bank endorsed them and deposited them as collaterals with other banking houses in New York, to which they were paid, and were by them applied to the debts due them from the Texas bank. Held, that the New York bank, as to the amount thus collected on said notes, had no lien on the general assets of the Texas bank in the receiver’s hands. One who receives the money of another in a fiduciary capacity and expends it in paying his own debts, does not thereby crea