Ayres v. Farmers & Merchants Bank
| Decision Date | 31 October 1883 |
| Citation | 79 Mo. 421 |
| Court | Missouri Supreme Court |
| Parties | AYRES v. THE FARMERS & MERCHANTS BANK, Appellant. |
Appeal from Jackson Special Law and Equity Court.--HON. R. E. COWAN, Judge.
REVERSED.
The plaintiffs Ayres, Kinsey, Thomas & Smith were co-partners doing business under the firm name of the Citizens' Bank.
Lathrop & Smith for appellant.
Gage, Ladd & Small for respondents.
On August 1st, 1878, Wickstrum & Swinson drew their check on the defendant for $500 in favor of H. W. Baker & Co., who indorsed it to plaintiff for a valuable consideration, and plaintiff sent it to the Mastin Bank for collection and credit to plaintiff.
There was evidence tending to prove a business arrangement between plaintiff and the Mastin Bank under which the amount of the check was passed to plaintiff's credit upon receipt of the check, and plaintiff was immediately entitled to draw against it, and on the day it was transmitted plaintiff drew upon the Mastin Bank for the full amount in favor of H. W Baker & Co., from whom plaintiff received it; that the Mastin Bank received the check on the 2nd day of August, 1878, and on that day gave plaintiff credit on their books for the amount, and mailed to plaintiff a letter stating receipt of check and credit given, and on the same day charged the check to defendant on whom it was drawn, and mailed it to defendant for credit to its own account; that on the day after the receipt of the check by the Mastin Bank, that bank made a general assignment for the benefit of its creditors; that defendant received the check from the Mastin Bank by due course of mail, charged it to the drawers who had sufficient funds on deposit with defendant to pay it, and credited the amount to the Mastin Bank, without notice that the bank had failed and made a general assignment.
On the 7th day of March, 1878, the Mastin Bank sent the following card to plaintiff and defendant and its other correspondents:
“After this date this bank will give credit on day of receipt, to its correspondents, as formerly, for cash items and checks on banks in the interior. To aid in the speedy transaction of business, we request our correspondents to list all remittances for which they ask credit on receipt, on a separate sheet from that on which is listed time paper and collections. The amount should be carefully stated and correctly footed. Instructions for shipment of currency or transfers to other points should be given on separate sheets, to prevent the same being overlooked.
JOHN J. MASTIN, Cashier.
The following is the letter transmitting the check in question by plaintiff to the Mastin Bank:
| “Citizens Bank. |
Capital $100,000.
NORTH TOPEKA, KANS., 8-1, 1878.
Dear Sir: We inclose for collection and credit items as stated below.
Very respectfully,
J. THOMAS, Cashier.
Abilene Bank $ 244 70 do 150 00 Farmers & M 500 00 Germ. Nat 4 22 B. & Allen 5 00 You 1,847 10 $2,751 02 Latshaw--no pro 100 00
This letter inclosed two checks mentione in the pleadings and read in evidence, as follows:
$244.70. ABILENE, KANS., July 29th, 1878.
ABILENE BANK.
LEBOLD, FISHER & Co.:
Pay to H. W. Baker & Co., or order, two hundred and forty-four dollars and seventy cents.
M. V. BRILHART
Indorsed, H. W. Baker & Co.
Pay J. J. Mastin, Esq., Cashier, or order, for collection account of Citizens' Bank, N. Topeka, Kan.
J. THOMAS, Cashier.
Pay and credit account of Mastin Bank, Kansas City, Mo.
JOHN J. MASTIN, Cashier.
The other check dated July 30th, 1878, was made in the same form by E. Fuller Parent, for $150, and was indorsed just like that for $244.70.
This action is for the recovery from defendant of the amount of the check for $500, drawn by Baker & Co. upon defendant. On a trial plaintiff had judgment, from which this appeal is prosecuted; and the only question is: Under the business arrangement between the Mastin Bank and the plaintiff and defendant, what was the legal effect of the transactions between them with respect to that check? Did it become the property of the Mastin Bank, in such sense that plaintiff cannot maintain his action against defendant on the check? Morse, in his work on Banks and Banking, page 424, approves the following doctrine, “that if a bill or draft be forwarded by its owner for collection, and by order or custom of dealing the party receiving it places the amount to the credit of the owner, and the owner thereupon draws or is entitled to draw against the same as cash, this works a transfer of title, so that the owner cannot follow the paper or its proceeds in the hands of a third party receiving it in good faith and due course of business from the agent for collection.” Clark v. Merchants Bank, 2 N. Y. 380; Scott v. Ocean Bank, 23 N. Y. 289. Lord Eldon in Ex parte Sargeant, 1 Rose 153, and several other cases, seems to have been of the opinion, it is said in a note to section 228 of Story on Agency, “that if the bills were entered as cash, with the knowledge of the customer, and he drew or was entitled to draw upon the banker, as having that credit in cash, he would thereby be precluded from recurring to the bills specifically.” Judge Story says that this opinion of Lord Eldon was adopted by the vice-chancellor in Ex parte Thompson, 1 Mont. & McArthur 312; and in ...
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...and had become the absolute owner thereof, and of any money or property collected thereon by the Security National Bank, Savings & Trust Company. Ayres v. Farmers & Merchants Bank, 79 Mo. 421; Haas v. Fruit Co., 183 S.W. 677; Hendley v. Globe Refinery Co., 106 Mo. App. 20; Jefferson Bank v.......
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Foristel v. Security Nat. Bank, Savings & Trust Co.
...and it is immaterial whether or not the customer thereafter exercises his right to check out the proceeds of such paper. [Ayres v. Farmers & Merchants Bank, 79 Mo. 421, l. c. 424; Bank v. Merchants Refrigerating Co., 236 Mo. 407, l. c. 415, 139 S.W. 545; Hendley v. Globe Refinery Co., Ameri......
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...on the credit and partly drawing thereon by the depositor works a transfer of title to the check or other negotiable paper. Ayres v. Farmers & Merc. Bank, 79 Mo. 421; Bullene v. Coates, 79 Mo. 426; Flannery Coates, 80 Mo. 444; May v. Bank of Hughesville, 291 S.W. 170. The fact that a bank h......
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