or check of the bank on its correspondent bank in Louisville, Kentucky, and the further sum

John I. COX, Receiver of Johnson City First of $41.75 deposited in cash in the Johnson City

bank on the day of its failure. The chancellor granted the relief prayed as to the check, but declined to give any relief as to the $41.75 cash. The court of chancery appeals reversed the decree of the chancellor and dismissed complainant's bill, denying him any relief, and he has appealed and assigned errors.

The theory of the bill is that the bank at Johnson City was hopelessly insolvent when it issued its check on the Louisville bank and received the cash deposit of $41.75, and this fact was well known to its president and officers, and constituted a fraud upon complainant, and that he has a right to rescind the transaction and recover back the money from the receiver,

APPEAL by plaintiff from a decree of the inasmuch as there was more than enough cash

in the vaults of the bank, which went into the receiver's hands when it failed, to repay the amounts claimed, or that it may reclaim the draft given in exchange for the check on Louisville. The court finds as a fact that the officers of the bank did know of the insolvency of the bank at the time of the transaction. The facts, so far as material to be stated, are that on the 10th of November, 1894, complainant delivered to the Johnson City bank a draft of the United States Leather Company, drawn on a New York bank, for $307.10, and with this and $9.06 in cash it obtained and received from the Johnson City bank its check or draft on the German National Bank of Louisville for $316.36. It immediately transmitted the draft of the leather company to its New York correspondent, and it was placed to its credit in

the New York bank, in its usual course of business, on November 12, 1894, but at what hour does not appear. About noon on that day the Johnson City bank ceased to do busi ness, closed its doors, and went into the hands of defendant as receiver. The draft on the Louisville bank was not paid, but protested. The deposit of $41.75 was made about an hour before the bank suspended. The New York bank was indebted to the Johnson City bank when the latter closed its doors in the sum of $5,644.67, and afterwards paid the receiver $4,873.03 of this amount, retaining $771.64 on account of some rediscounts on which the Johnson City bank was indorser. When the draft was drawn on the Louisville bank, November 10, 1894, the Johnson City bank was overdrawn with it $51.55, but on November 12, when the failure occurred, it had to the credit of the Johnson City bank $113.65. The court of chancery appeals finds as a fact that the parties treated the deposit of the leather company's draft and the issuance of the draft on Louisville as cash trans actions, and the leather company's draft was remitted by the Johnson City bank to its New York correspondent as cash, and for its credit, and not simply as a collection. The real matter presented and insisted upon in this court and in the court of chancery appeals is that the Johnson City bank was hopelessly insolvent, and known by its officers to be so, when the transaction took place with it; and the contains upon the idea that the identical goods or tention is made that this constituted fraud, and that complainant is entitled to recover the amount of the leather company's check out of the proceeds which came into the hands of the receiver from the New York bank. Put into

if the proceeds are appropriated by the bank before it closes its doors, the depositor cannot recover them. If the deposit is money it must be identified in the bands of the receiver. Re Commercial Bank, 2 Ohio N. P. 170.

Moreover the paper must have increased the assets of the bank.

In order to entitle the owner to a preference it must appear that the funds in the hands of the receiver were increased or benefited by the proceeds. Hence, if a draft is deposited which is forwarded to a correspondent, and credited to the forwarding bank, the depositor cannot claim a preference out of the funds of the deposit bank in case of its insolvency. City Bank v. Blackmore, 75 Fed. Rep.

771.

other language, the contention is that it was a fraud to receive the check, under the circum stances, and hence the receiver holds the fund in trust, and complainant has a right to follow and reclaim the amount of the check in preference to other creditors. We have held in cases somewhat similar to this that by the transaction as there detailed the relation of debtor and creditor was created between the customer and the bank, and in such cases the customer cannot follow and reclaim the proceeds of the check or the money when it has been collected or credited before the bank closed. Akin v. Jones, 93 Tenn. 353, 25 L. R. A. 523; Sayles v. Cox, 95 Tenn. 579, 32 L. R. A. 715. An earnest argument is made, however, that the question and effect of the fraud practised in making such transaction when the bank was in a known state of utter insolvency was not passed upon or considered in those cases, and that the consequence of such fraud must be to warrant the customer in rescinding the transaction and reclaiming his property. It is likened to the case of a vendor who has been induced by fraud to part with his goods. In such case he may reclaim them in the hands of the vendee, if he can find and identify them (Belding v. Frankland, 8 Lea, 67, 41 Am. Rep. 630), or against an assignee under a voluntary assignment for the benefit of creditors and to secure pre-existing debts (Id.). This rule obproperty can be traced in kind into the hands of the assignee, and that they have not been mixed or confused with other goods or property of like kind. But does the rule apply in a case like the present? The transaction be

That case applies the trust doctrine as established in Knatchbull v. Hallett, L. R. 13 Ch. Div. 696, 49 L. J. Ch. N. S. 415, 42 L. T. N. S. 421, 28 Week. Rep. 732, where one having trust funds in his hands deposited them in his own accouut at bis banker's, and the court held that the owner could follow them and had a charge on the general balance in the banker's hands, and that it would be considered that the checks afterwards drawn upon the funds were upon his own share, and not upon that of the cestui que trust.

In Tennessee the doctrine of a trust is expressly repudiated in ordinary cases of this kind, and in that state it is held that if the check is forwarded for collection and credited to the deposit bank as cash before it closes its doors the right to follow, and reclaim the proceeds, is lost, although they remain in the hands of the correspondent, and are, together with other funds, turned over by it to the receiver. Friberg v. Cox (Tenn.) 37 S. W. 283.

So, a person who makes a deposit with a bank after it has suspended, consisting of checks drawn on and accepted by the bank in which the deposit is made, is not entitled to a preference over other creditors of the bank. Ontario Bank v. Chaplin, 20 Can. S. C. 152, Affirming M. L. R. 5 Q. B. 407. The difference in the result when the trust doc-closes its doors it will not be presumed in favor of crine is applied, and when it is not, is illustrated by the following cases:

If at the time the check is deposited the bank is hopelessly insolvent the depositor may reclaim the proceeds until they have been mingled with the funds of the bank so that they cannot possibly be traced. And if the check was forwarded to a correspondent for collection and the proceeds placed to the credit of the deposit bank and the general account drawn against, it will be presumed that the funds of the deposit bank were the subject of the drafts; and if the amount of the trust fund was always intact the owner may recover it from the possession of the correspondent. Importers & T. Bank v. Everett Bros. 21 N. Y. S. R. 98.

And in KLEPPER V. Cox it is held that if the credit is given the same day upon which the bank

the depositor to have been after the failure.
But the depositor must show that such was the fact
in order to be entitled to the proceeds. It would
seem that Friberg v. Cox, supra, and KLEPPER V.
Cox carry the refusal to recognize the depositor's
rights further than any other case, and are some-
what inconsistent with the rule prevailing else-
where.

As to trust in proceeds of collection made by bank
when insolvent, see note to Sayles v. Cox (Tenn.) 32.
L. R. A. 715.
H. P. F.

Under this state of facts, in the absence of proof to the contrary, the identification not Under the Code of 1858 a majority, and un being made out, and in favor of the other der a later act three fifths, of the justices of a creditors of the bank seeking a pro rata distri-county are essential to constitute a quorum for bution of its assets, we must presume that the credit was given before the Johnson City bank failed; and, this being so, the proceeds of the check cannot be identified or separated, and the right to reclaim them is lost, and the decree of the Court of Chancery Appeals is affirmed.

APPEAL by complainants from a decree of entered.

the Court of Chancery Appeals modifying a decree of the Chancery Court for Cocke County in complainant's favor in a suit brought to enforce a vendor's lien. Affirmed. NOTE.-As to what constitutes the quorum of a court, see also Williams v. Benet (S. C.) 14 L. R. A. 825.

The majority of the court had authority to | tion was dismissed November 9, 1895, by the hear, consider, and decide the case.

Mill. & V. Code, § 56; Radford Trust Co. v. East Tennessee Lumber Co. supra; Crofoot v. Allen, 2 Wend. 495; Ex parte Rogers, 7 Cow. 529; Patterson v. Leavitt, 4 Conn. 50, 10 Am. Dec. 98.

Mr. W. O. Nums also for appellees.

same two judges. At this time, upon entering the decree dismissing the petition, complainants excepted to the action of the court, because only two members had considered and concurred in the conclusion. These facts appear from the recital in the opinion on petition to rehear, and finding of the two judges, and in the decision rendered by them, and in the

Wilkes, J., delivered the opinion of the decree as entered upon the minutes of the

court:

This bill was filed to enforce a vendor's lien for judgment on the purchase-money notes, and to set aside a subsequent conveyance of the land covered by the lien, upon the ground of fraud, and notice that the lien of the vendor was outstanding. The chancellor granted the relief prayed, and defendants appealed and assigned errors. The case has been heard by the court of chancery appeals, and the decree of the chancellor reversed so far as it decreed that the conveyance of the land be set aside. The complainants are allowed, however, to sell the lands, and to take the surplus proceeds after the payment of the amounts due to defendants Stead & Carver, the subsequent grantees, which amounts are declared a first lien or encumbrance on the property. Complainants have appealed to this court, and assigned errors.

The court of chancery appeals finds, as facts, that complainants sold the lands to Murch, and made him an absolute conveyance of the same, retaining a lien in the purchase money notes, but none in the conveyance; that Stead & Carver, without any notice of any lien, on the faith of the absolute deed to Murch, made him a loan of $3,500, and took a deed of trust on the land to secure the same; that complainants knew of this deed of trust, and made no objection to the same until nearly a year after wards, and when the scheme for which the land was bought proved a failure, and hence they were not entitled to set aside the conveyance in trust, but must take in subordination to it. It follows from the finding of facts that the court of chancery appeals was correct in granting the decree it did, and, if there were nothing else in the case, their decree must be affirmed. It is insisted, however, that only two members out of the three judges composing the court of chancery appeals considered the case, and rendered the finding of facts and final decree in the cause, and this is assigned

court.

The question presented under this state of the record and the assignment of errors is this: Can the decision and findings of the court of chancery appeals be sustained over objection, when the argument of the case has been heard by the full bench of three judges, but only two have conferred and consulted in regard to it, and only two have engaged and concurred in the findings and final determination of the case, the third member being unavoidably absent? It is insisted that the question has been, iu principle, virtually settled by the cases of Radford Trust Co. v. East Tennessee Lumber Co. 92 Tenn. 136, and Austin v. Harbin, 95 Tenn. 600. The first of these cases arose in the supreme court, and it was held that, under the constitutional and statutory provisions relating to that court, three members constituted a quorum to transact business. The case further holds, referring to special judges, that objections to the competency of a court or any member of it must be made on the hearing, or when the action complained of is had. Unquestionably, this is so, but is that principle decisive of this case? Here the argument was heard before a full court, and no objection would lie. Neither counsel nor litigant could know in advance whether the deliberation over the case would be made by the full court, or only a portion of it, and hence there was no opportunity for exception. When the finding of facts and opinion of the court were promulgated, neither litigant nor counsel could know whether all or only a part of the members had participated in the consideration of the case until after the opinion was delivered and handed down; for one member of the court may and always does deliver the opinion, even when all deliberate and concur. No objection would have lain to the delivery of the opinion with only two members on the bench if all concurred in the consideration. As a matter of fact, only one could deliver the opinion, It appears that argument of the case was and no objection would lie to his doing so if had before the full bench on the 7th of Octo- two members were present. Complainant ber, 1895; that the cause was kept under ad- therefore had no alternative but to wait, and visement until November 5, 1895, when an no remedy but to petition for a rehearing, so opinion was filed, signed by two of the judges soon as he came into a knowledge of the facts, of the court. A decree was entered in accord- and cannot therefore be considered as having ance with the opinion, and without exception, waived any rights, or as having given his conon November 6, 1895. On November 8, 1895, sent to the hearing of the case by a part of the complainants filed a petition to rehear the court. In the case of Austin v. Harbin, 95 cause, assigning, as one of the grounds for re- Tenn. 598, it was held that a majority of the hearing, that, while the cause was heard by the court (or two members) might concur in the full court, still it had been considered by only findings and opinion, and the decree would two members of the court, and the opinion not be invalid for that reason, and that it was rendered had been concurred in by only two not required by the act to be signed at all. But members, and it was asked that the cause be- the question as to whether the entire court reconsidered by the full bench. This petition must consider and confer over the case, though was presented to the court while only two mem- a majority concurring might decide it, was not bers were on the bench the third being absent,on considered or passed upon. We do not thereaccount of sickness in his family; and the peti-fore understand the question raised in this case

as error.

to have been decided in either of the cases re- | follows: "An act which empowers two or ferred to and relied upon by appellees, and the more justices, or other persons, to do any act question is an open one. of a judicial, as distinguished from a minisIt is said that 56 of Milliken & Vertrees' terial nature, impliedly requires that they Code should be considered as indicative of the should all be personally present and acting tospirit and policy of our legislation. This sec-gether in its performance, whether to hear the tion is in the following terms: "All words evidence, or to view when they are to act on giving a joint authority to three or more per-personal inspection; to consult together, and sons or officers give such authority to a major- form their judgment." ity of such persons or officers, unless it is otherwise declared." This section is by its terms and context applicable only to the Code and the body of laws embraced in it; but it is insisted, and properly so, that it should be considered in the construction of all subsequent statutes, so as to build up a uniform and harmonious system. The act creating the court of chancery appeals does not in terms provide that any number of the members of the court shall constitute a majority or quorum, and that any specified number must concur in the consideration or in the decision of any case. It does provide that, in case of the sickness or incompetency of any one or more of the judges of the court, such vacancy may be filled by appointment of the governor; and unquestionably, the parties might, by consent, fill the vacancy in any case in which it thus becomes necessary, and the party thus selected by consent could act as a judge. The Constitution, in article 6, 2, provides that "the concurrence of three of the judges of the supreme court shall in every case be necessary to a decision;" and the necessary implication is that a decision may be reached if a majority, or three, of the members concur in the decision, but less than that number can not reach a decision. Undoubtedly, that decision, when thus reached, may be announced, as has been the invariable rule, by only one member of the court. It was held in Austin v. Harbin, 95 Tenn. 598, that this provision of the Constitution and the act conform ing thereto (Mill. & V. Code, § 342) does not apply to the court of chancery appeals, but only to the supreme court, but that a decision and finding by two members, constituting a majority of the former court, would be valid and legal, without the concurrence or over the dissent of the third judge.

In Sutherland, Stat. Constr. § 390, it is said: "Where any number of persons are appointed to act judicially in a public matter, they must all confer; but a majority may decide." In McCoy v. Curtice, 9 Wend. 17, 24 Am. Dec. 115, and note, which was a case where two school trustees acted and issued a warrant to collect taxes, it was said that when power is delegated to two or more indi viduals for a mere private purpose, in no respect affecting the public, it is necessary that all should join in the execution of it; thus arbitrators must all unite in an award. But in matters of public concern, if all are present, the majority can act, and these acts will be the acts of the whole. The same principle is an nounced in Cooley v. O'Connor, 79 U. S. 12 Wall. 396, 20 L. ed. 446, which involved the action of two of the commissioners of direct taxes; and in Crocker v. Crane, 21 Wend. 211, 34 Am. Dec. 228, which was a case where commissioners were authorized to distribute stock in a corporation for its best interests. In the latter case it is said: "It has long been perfectly well settled that where a statute constitutes a board of commissioners or other officers to decide any matter, but makes no provision that a majority shall constitute a quorum, all must be present to hear and consult, though a majority may decide,"-citing Ex parte Rogers, 7 Cow. 529, and notes, which was a case of a board of canal commissioners. See also note to Crocker v. Crane, 34 Am. Dec. 235; Grindley v. Barker, 1 Bos. & P. 229, a case of leather commissioners; Atty. Gen. v. Davy, 2 Atk. 212, a case of commissioners to choose a chaplain; Scott v. Detroit Young Men's Soc. 1 Dougl. (Mich.) 119, a case of power delegated to trustees; Downing v. Rugar, 21 Wend. 178, 34 Am. Dec. 293, a case of overseers of the poor: First Nat. Bank v. Mount Tabor, 52 Vt. 87, 36 Am. Rep. 734, which was a case of town comIt is insisted that it is a general rule of law missioners to issue bonds. None of the cases and construction that, whenever a body is by cited are cases in which "courts," strictly law constituted for the decision and determina- speaking, are considered; but they are cases tion of matters committed to them, in the ab-involving bodies, such as boards of school disence of any provision directing otherwise all must join in the consideration of the matters to be decided, and must confer together over the matters, although a majority may decide after such conference. There appears to be quite a broad distinction in such cases between matters of private and public concern. The rule contended for is tersely stated in the text in 2 Am. & Eng. Enc. Law, 2d ed. p. 645, un der the general head of "Arbitration," that in matters of private concern all must concur in the decision, and it is added: "It is different in matters of a public character, because where persons, as a bench of judges, are appointed to discharge public duties, the decision of a majority is generally sufficient, yet then they must all act together in the proceedings prior to the judgment or award." In Endlich, Interpreta tion of Statutes, p. 605, the rule is stated as

rectors, boards of canal commissioners, boards for the issuance of bonds, boards for the distribution of stock, and other bodies exercising judicial or quasi judicial functions. We have been cited to no case involving the power of a majority of a court of judges to consider and decide causes submitted to them, or a majority of them; and we have been able to find none directly upon the point, when there is no statutory or constitutional provision authorizing a majority to act. The case cited of Atty. Gen. v. Davy, 2 Atk. 212, appears to recognize a distinction between individuals exercising judicial functions and a regularly constituted court of judges.

It is insisted that the rule contended for by appellants would place the court of chancery appeals most nearly in harmony with the prac tice of this court; that three judges of this