ALABAMA IRON & RY. CO. et al. v. ANNISTON LOAN & TRUST CO., 57 F. 25

LOCKE, District Judge, (after stating the facts.) The nine grounds of exception assigned, upon examination, resolve themselves into but three principal questions that require examination: Was the Anniston Loan & Trust Company a-bona fide holder of the $25,-000 of receiver’s certificates, the subject-matter of this litigation? Had they been legally disposed of, so that any title had been acquired by said company? And was the receiver — and the appellants —estopped from setting up the invalidity of said certificates? The first question is, without hesitation, answered in the affirmative.

In our view of the other two questions, we deem it unnecessary to consider separately each of the grounds, as the determination of the one question, whether or not the certificates were a valid claim against the property, must include all reasons for such conclusion. Nor do we consider it necessary to examine and review -the minutiae of the peculiar circumstances of the delivery and sale of the certificates, or whether or not the testimony which was introduced to show the revocation of the power given to Woodson to sell, and which was objected to, and argued at length, was admissible.

It is conceded by the report of the master — in which view we agree — that, as far as the action of the receiver could do it, the sale was ratified by him; and the only question remaining is whether the proceeds ever came into the hands of the receiver, as to justify the court in recognizing the sale, and confirming the validity of the lien given by the certificates.

The principle of law, that, in order to hold the body of the trust liable for the receiver’s certificates, the proceeds must come to the hands, custody, or control of the receiver, is not questioned by either party; and it is conceded that the receiver acted in perfect good faith in accepting a credit with the bank, and protecting himself and such deposit, as far as possible, by taking securities, and that he is estopped from repudiating the sale, and denying the receipt of the proceeds.

The sale was not repudiated by the receiver upon his learning of it, nor does it appear that he made demand for the money, as money, when informed that the proceeds had been placed to his credit in the bank where he had been doing his banking business for a long time, to the extent of many thousand dollars, and where he still made deposits of large amounts, and continued drawing checks, for several weeks. The embarrassment of the receiver, and the ground of claim on the part of the purchaser, so far as- they have any, arise from the failure of the bank, and not from any insufficiency of deposit of proceeds.

The funds were received by him precisely as they are received by the banks at the clearing house, and precisely as they are received by one depositor who is paid by the check of another depositor; that is, the receipt of the amount appropriated and placed to his credit by the bank, with his acceptance and acknowledgment. Had he received a check upon the said bank, duly certified by the cashier, and had the same placed to his credit could it have been considered more a valid payment? Levy v. Bank, 4 Dall. 234.

The amount to his credit from the sale of the certificates was in his possession and control, the same as the amount he had deposited since the sale. It is true that subsequently, when he learned that there might be a question of the solvency of the bank, he demanded and obtained from the president of the bank personal notes, mortgages, and collateral securities, to secure his deposits. But this, in our opinion, so far from tending to invalidate the sale of the certificates, was a fresh and conclusive ratification of the sale, and of the acceptance of the deposit of the proceeds.

The giving of notes secured by mortgage or collaterals, by a bank, to protect a deposit, is no evidence that there has not been a money transaction, or valid credits received. Is the court bound to recognize the estoppel of its agent, and protect the parties who have been, from the force of events subsequent to their transaction, and unforeseen by them, forced into the position occupied by the petitioners herein? The learned judge in the court below considered that it is, and with this view the peculiar circumstances of the case induce us to agree.

This sale had been recognized and treated as valid and binding by both the receiver and the court until it was too late for the purchasers to protect themselves from loss. Koontz v. Bank, 16 Wall. 196; Oddie v. Bank, 45 N. Y. 735; Bank v. Burkhardt, 100 U. S. 686; Prom the 5 th of November, when the last credit of $6,500 was given to Chamberlain on the books of the bank, until the 4th of January, neither the validity of the sale, nor the integrity of the receipt of the proceeds, were questioned.

The receiver continued drawing checks against the fund thus accumulated, and the decree was drawn, presented, and signed, recognizing all as valid.

The report of the sale and deposit of proceeds made to the court; the drawing, presenting, and consent to signing of the decree of foreclosure, in which the validity of these certificates was plainly and distinctly recognized, — were all done with full knowledge and understanding of the circumstances subsequently set up.' The appellants herein purchased the property subject to any liens which might be held to be valid on account of the existence of these outstanding certificates, of which they had full knowledge, and they now hold by assignment, or by buying in at foreclosure sales' in suits brought by themselves, the securities which were considered, when taken, abundantly ample to protect the deposits.

Under these circumstances, to permit them to successfully contest their payment, and cast the burden of any possible loss upon the innocent purchasers, who had not been informed of any error or mistake of theirs until too late to protect themselves, would, it seems to us, as expressed in the emphatic language of the learned judge in the court below, “bring discredit on the temple.” We fail to find any error in the action of the circuit court, and the judgment is affirmed, with costs.