Beal v. City of Somerville

• Decision Date: 05 May 1892
• Citation: 50 F. 647
• Parties: BEAL, Receiver, v. CITY OF SOMERVILLE.
• Court: U.S. Court of Appeals — First Circuit

50 F. 647

BEAL, Receiver, v. CITY OF SOMERVILLE.

United States Court of Appeals, First Circuit.

May 5, 1892

Appeal from the Circuit Court of the United States for the District of Massachusetts.

Hutchins & Wheeler, (Edward W. Hutchins, Henry Wheeler, and Frank D Allen, of counsel,) for appellant.

Selwyn Z. Bowman, for appellee.

Before PUTNAM, Circuit Judge, and NELSON and CARPENTER, District Judges.

PUTNAM Circuit Judge.

The conclusion of the circuit court in this case was consonant with justice, and it is therefore gratifying that this court finds that the law requires its affirmance. The transaction was primarily a deposit of the checks, with, secondarily, a duty to be performed concerning them by the Maverick National Bank. The fact that the checks were expressly indorsed 'For deposit' does not change the nature of what occurred in this instance, as there are no intervening equities, although it emphasizes it. The paying of actual money by a customer into a bank of deposit does not create a bailment, because, by the settled custom, recognized by the supreme court of the United States, the house of lords, and numerous other courts, the bank is authorized to mingle the money at once with its general fund, creating immediately the relation of debtor and creditor, subject by further custom to draft in the usual course of business. But, with reference to the checks claimed by the city of Somerville, the word by which the transaction is ordinarily described may conveniently have, and therefore should have, its full natural force and meaning. A mere deposit would only require a bank to keep; but a usage requiring the Maverick to do in this case something more has continued so long, and is so notorious and universal, that the law can take judicial notice of it, and it happens that its terms and limitations cannot be mistaken. The bank must use due diligence to collect; and, as collections are completed, the bank no longer holds the avails as bailee, but is authorized to mingle them with its other funds, and thus constitute itself a debtor. This, of course, makes the entire transaction something more than a mere deposit, in any proper sense; but this word well gives color to all that follows, and converts all that is done between the customer and the bank, to and including the actual turning of the checks into money, into locatio operis, according to its meaning as explained by Judge Story in his work on Bailments, c. 6, art. 2. Aside from the right of the bank to constitute itself a debtor from the time the checks are converted into cash, or its equivalent, instead of a mere trustee or agent, no qualification of the strict legal relations created by a bailment is deducible from the general nature of the transaction, the terms in which it is expressed, or the settled custom, or is shown by the appellant.

It rests on the appellant to support affirmatively his claim to such departure from the ordinary rules which the law applies to a deposit or other bailment, as is covered by his proposition that the bank from the instant of the deposit became a debtor for the amount of the checks, or their general owner, either with or without a right of return in the event of inability to collect. Such a position would reverse all the principles applicable to the simple transaction of a deposit, or other bailment, and cannot be sustained except by evidence of a special agreement, or of such practice or custom as would be equivalent thereto. If appellant showed that the city had a legal right to draw against the checks from the instant of their deposit, so absolute that the bank could not lawfully suspend it by notice or otherwise, pending their collection, this would tend to support his position throughout. But the ninth paragraph of the bill, which is admitted and is relied on by the appellant, weighs against him. Appellant is in error in discussing this paragraph as though it bore on a custom, in any proper sense of the word, which the city is holden to prove. As alleged, it relates to a practice of some banks which may or may not apply to them all, and which is sufficient in this case if it applies to the Maverick. The practice, as alleged, is like any course of action by which a corporation or individual indicates that an option is reserved. If the paragraph admitted in terms that the practice had been acquiesced in by the city, or generally by the customers of the Maverick, it would show conclusively an option on the part of the bank wholly inconsistent with any theory except that of bailment. As it stands, its weight although not very great, is necessarily against the appellant. The first impression coming from the fact that the deposit was immediately entered to the credit of the city on its pass book favors the view of the appellant; but a careful consideration will demonstrate that this was a mere matter of convenience, and the entry would have been the same on either theory, as was illustrated in Manufacturers' Nat. Bank v. Continental Bank, 148 Mass. 553, 20 N.E. 193, and Railway Co. v. Johnston, 133 U.S. 566, 10 S.Ct. 390. On the other hand, the appellant fails to show that the city had an absolute right to check against the deposit as soon as made, irrevocable by notice from the bank; and that such right did not exist must be...