Manufacturers' Nat. Bank v. Continental Bank

• Decision Date: 28 February 1889
• Citation: 20 N.E. 193,148 Mass. 553
• Parties: MANUFACTURERS' NAT. BANK v. CONTINENTAL BANK et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

148 Mass. 553

20 N.E. 193

MANUFACTURERS' NAT. BANK v. CONTINENTAL BANK et al.

Supreme Judicial Court of Massachusetts, Suffolk.

February 28, 1889

COUNSEL

J.D. Ball, for plaintiff.

J.R Bullard, for defendants.

OPINION

KNOWLTON J.

In the transaction upon which the plaintiff's claim is founded the plaintiff and the Fidelity National Bank stood in the relation to each other of principal and agent. The business in which they were engaged was the collection of checks and drafts which belonged to the plaintiff or to the plaintiff's customers. Their contract contained in their letters shows, first, an offer to the plaintiff by the Fidelity National Bank of its "services for making collections in the west," and then a proposition to credit sight items at par, subject to payment, and to make collections, remitting weekly in New York exchange, without charge. This proposition was accepted by the plaintiff, and the Fidelity National Bank thereby became the plaintiff's agent to collect for it commercial paper. Under this arrangement the credit given for a check was merely provisional until the check was paid. It did not create a debt from the Fidelity National Bank to the plaintiff, and it did not change the ownership of the check. Levi v. Bank, 5 Dill. 104; Balbach v Frelinghuysen, 15 F. 675.

In that respect their relations to each other were very different from those between a banker and a depositor when checks are received on deposit as cash, and an absolute right to draw against them is given. White v. Bank, 102 U.S. 658; Scott v. Bank, 23 N.Y. 289; Dickerson v. Wason, 47 N.Y. 439; Bank v. Loyd, 90 N.Y. 530; Ayres v. Bank, 79 Mo. 421.

Their dealings under the contract were in conformity to this construction of it. It was a custom of the Fidelity National Bank to charge back to the plaintiff, and to return to it by mail, checks and drafts which were not paid. The indorsement of the check which the defendant collected was, "For collection for Manufacturers' National Bank of Boston, Mass." This indorsement would give notice of the plaintiff's title to all parties into whose hands the check might come. Sweeny v. Easter, 1 Wall. 173; Blaine v. Bourne, 11 R.I. 119; Bank v. Bank, 22 Md. 148; Bank v. Hanson, 33 Minn. 40, 21 N.W. 849.

In one particular the contract in question differed from an ordinary contract for the collection of a principal's money by an agent. Upon the collection of a draft or check, the Fidelity National Bank was not required to keep the proceeds by itself, as the plaintiff's property, but might mingle it with its own money, and make itself the plaintiff's debtor for the amount received. As soon as the proceeds became a part of the funds of the Fidelity National Bank under this arrangement, the plaintiff's right to control it as specific property was gone, and the plaintiff had instead a right to recover a corresponding sum of money.

The Fidelity National Bank ceased to do business on June 20 1887, and on the following day a national bank examiner was put in charge of its assets by the comptroller of the currency, and he continued in charge until a receiver was appointed under the laws of the United States. The check was not collected by the defendant until June 22, 1887. At that time the right of the Fidelity National Bank to mingle with its own funds the proceeds of a check collected for the plaintiff had terminated. It was implied in the contract under...