American National Bank of Nashville v. Miller

• Decision Date: 09 June 1913
• Docket Number: No. 325,325
• Citation: American National Bank of Nashville v. Miller, 229 U.S. 517, 33 S.Ct. 883, 57 L.Ed. 1310 (1913)
• Parties: AMERICAN NATIONAL BANK OF NASHVILLE, Tennessee, Plff. in Err., v. A. L. MILLER, Agent of the First National Bank of Macon, Georgia
• Court: U.S. Supreme Court

229 U.S. 517

33 S.Ct. 883

57 L.Ed. 1310

AMERICAN NATIONAL BANK OF NASHVILLE, Tennessee, Plff. in Err.,

v A. L. MILLER, Agent of the First National Bank of Macon, Georgia.

No. 325.

Argued May 9, 1913.

Decided June 9, 1913.

Messrs. John M. Gaut and J. S. Pilcher for plaintiff in error.

[Argument of Counsel from pages 517-519 intentionally omitted]Mr. Sloss D. Baxter for defendant in error.

Mr. Justice Lamardelivered the opinion of the court:

R. H. Plant, of Macon, Georgia, kept a deposit account with the American National Bank of Nashville, and, on May 16, 1904, was indebted to it in the sum of $50,000 on paper which matured two or three weeks later.He was generally regarded as a wealthy man, but was in fact insolvent.While so insolvent he, on May 13, 1904, gave to the First National Bank of Macon, of which he was president, a check for $3,000 on account of an indebtedness due by him to it.

The Macon bank at once mailed the check to the Nashville bank with instructions to place it to the credit of the Macon bank.The check was received by the Nashville bank at 8 o'clock Monday morning, May 16th.The letter was opened shortly after 9 o'clock, and was credited to the Macon bank's account about 11 o'clock A. M.,—an hour or so after a petition in bankruptcy had been filed against Plant in Macon.His failure precipitated a run on the Macon bank, and, the same day, by direction of the Comptroller of the Treasury, a receiver was appointed for it under Rev. Stat. § 5234,U. S. Comp. Stat. 1901, p. 3507.

The Nashville bank was not advised of either of these failures, and about 2 o'clock it charged the $3,000 check to Plant's account, and the same day mailed to the Macon bank a letter stating that its account had been credited with $3,000.Four or five days later, having learned of Plant's bankruptcy, it charged off the $3,000, claiming that Plant's insolvency, on May 16th, gave to the Nashville bank the right of set-off even as against the unmatured drafts.Carr v. Hamilton, 129 U. S. 256, 32 L. ed. 670, 9 Sup. Ct. Rep. 295.

The plaintiff was subsequently appointed agent of the Macon bank under Rev. Stat. § 5234, and brought suit against the Nashville bank for the recovery of $3,000.Most of the facts were agreed upon, but much evidence was taken for the purpose of showing that the Macon bank had notice of Plant's insolvency, and at the conclusion of the testimony each party moved that a verdict be directed in its favor.Beutell v. Magone, 157 U. S. 154, 39 L. ed. 654, 15 Sup. Ct. Rep. 566.The court instructed the jury to find for the plaintiff.The judgment was affirmed (107 C. C. A. 456, 185 Fed. 338) by the circuit court of appeals.

There are some disadvantages of sending a check for collection directly to the bank on which it is drawn, but when such bank performs the dual function of collecting and crediting the transaction is closed, and, in the absence of fraud or mutual mistake, is equivalent to payment in usual course.First Nat. Bank v. Burkhardt, 100 U. S. 689, 25 L. ed. 768.In the present case it was as though an officer of the Macon bank had presented the check to the teller of the Nashville bank, and, on receiving the money, had paid it back over the counter for deposit to the credit of the Macon bank.

The Nashville bank, however, claims that there was here the element of fraud and mistake which entitles it to cancel the credit; insisting that the Macon bank, having notice that Plant was insolvent, could not collect the check...