It seems to me that the situation which gave rise to the litigation in this case may be tersely stated as follows: Jones was indebted to the State Bank of Bartow in the sum of $500.00. He executed a *Page 74 negotiable promissory note to the Bank in that amount dated March 13, 1929, payable ninety days after date as evidence of such indebtedness. The Bank before maturity endorsed the note to the Hanover Bank and Trust Company of New York as collateral security for a debt which the payee owed to the latter Bank. The Bank of Bartow became insolvent and was placed by State authority in the hands of a Liquidator. The Hanover Bank filed its claim with the Liquidator and received a dividend of twenty-five per cent. Then, in April, 1930, the Hanover Bank began its action against Jones on the promissory note. When the Bartow Bank failed Jones was a depositor, having to his credit a sum larger than the amount due on the promissory note. In these circumstances has the Hanover Bank lost its right of action against Jones on the note?
The sole question is, should the Hanover Bank have surrendered the note to the Liquidator of the Bartow Bank when the former filed its claim with the Liquidator for the full amount of the Bartow Bank's indebtedness to the Hanover Bank? If it had done so then Jones claims that in an action by the Liquidator against him he could have set off the amount of his deposit in the Bartow Bank when the latter became insolvent. See Butler v. Tunnicliffe (Fla.), 140 So.2d Rep. 201; Robinson v. Aird,
In Dickinson v. Tunnicliffe (Fla.), 141 So.2d Rep. 597, this Court recognized the principle that a debtor to an insolvent bank may set off the amount of his deposit in an action by the Liquidator against the debtor on the latter's indebtedness, but the distinction was made that in such case the right of set-off against the Liquidator is to be governed by the state of things existing at the time of insolvency and not by conditions thereafter created. *Page 75
Now when the bank failed what was the state of things then existing as between the maker of the note, Jones, and the Bartow Bank? Jones' note had passed into the hands of the Hanover Bank as a holder in due course, and Jones had no set-off against the Hanover Bank by reason of being a depositor of the Bartow Bank. How then does Jones' claim to a set-off arise against the Hanover Bank in an action by that bank against him on the note?
Is it a sufficient answer to say that because the Hanover Bank filed its claim with the Liquidator for the full amount of its debt against the Bartow Bank that it owed to the latter the duty of surrendering all the collateral in its possession which it held as security for the payment of its claim? When the Bartow Bank failed Jones could not have set off his deposit in that bank against the Hanover Bank because the debts were not mutually existing between the parties. The so-called equity does not attach to and affect the validity of the note, so the defense is neither a set-off nor an equity affecting the note. If the duty rested upon the Hanover Bank to surrender the note when it lodged its claim with the Liquidator, the payment by the Liquidator of twenty-five per cent. of the claim without demanding a return of the note in no wise creates an equity in favor of Jones affecting the note, nor does it destroy the rights under the Negotiable Instruments Law of the Hanover Bank to the ownership of the note, but even if it did no defense appears to exist against the Liquidator in favor of Jones which existed when the Bartow Bank became insolvent. See Brown v. First Nat. Bank,
So I think the demurrer to the pleas was properly sustained and no error appears in the judgment.
DAVIS, C. J., and WHITFIELD, TERRELL, BROWN and BUFORD, J. J., concur. *Page 76
