Nat'l Bank of Commerce v. Bossemeyer

• Decision Date: 05 May 1917
• Docket Number: No. 19061.,19061.
• Citation: 101 Neb. 96,162 N.W. 503
• Parties: NATIONAL BANK OF COMMERCE v. BOSSEMEYER ET AL.
• Court: Nebraska Supreme Court

101 Neb. 96

162 N.W. 503

NATIONAL BANK OF COMMERCE

v.BOSSEMEYER ET AL.

No. 19061.

Supreme Court of Nebraska.

April 14, 1917.

Dissenting Opinion, May 5, 1917.

Syllabus by the Court.

Under the provisions of section 5354, Rev. St. 1913 (Laws 1905, c. 83, § 36), an indorsement “Pay to any bank or banker. All previous indorsements guaranteed”--is not a restrictive indorsement.

In the usual course of business a grain dealer deposited in a bank a sight draft with bill of lading attached, in which the depository bank was payee. It forwarded the draft to plaintiff, its correspondent bank, indorsed generally as above. Plaintiff bank gave credit to the remitting bank for the amount in its general checking account. The custom between the banks was that if such drafts were protested and returned to plaintiff, they should be charged back to the account of the remitting bank, and that interest should be charged from the time the credit was given until the proceeds of the draft were received. Plaintiff had no knowledge or notice of any custom between the depositor and the remitting bank, and there is no other evidence as to the intention of the parties. Held, that the indorsement and credit passed title to the draft to the receiving bank, and made it a holder for value in due course.

The draft was protested for nonpayment and returned. Held, that the receiving bank was entitled to enforce payment of the draft, and protest fees against the drawer. Section 5379, Rev. St. 1913.

Appeal from District Court, Nuckolls County; Hurd, Judge.

Action by the National Bank of Commerce against Ernest Bossemeyer and Frank Bossemeyer, doing business under the firm name and style of Bossemeyer Bros. Judgment for defendants, and plaintiff appeals. Reversed, and cause remanded, with direction to enter judgment for amount due.

Hamer, J., dissenting.Morning & Ledwith, E. J. Hainer, and A. W. Lane, all of Lincoln, for appellant.

Buck, Brubaker & Buck, of Superior, for appellees.

LETTON, J.

On January 3, 1911, defendants, who are grain dealers at Superior, Neb., drew a sight draft upon a firm in New Mexico for $729, and attached a bill of lading for a car of grain consigned to the order of the drawer. They deposited the draft in the First National Bank of Superior (hereaftertermed “the Superior bank”), which gave them credit for the amount upon their checking account. This was done in accordance with a custom whereby defendants deposited such drafts with bills of lading attached and were given credit, with the understanding that if the draft was not paid it should be protested, and its amount, with protest fees, should be charged back; that if interest was charged to the bank by the correspondent the interest should be charged to the account of drawer. Before the draft was deposited, by mutual agreement the custom was changed and such dishonored drafts were not charged back, but defendants, upon being notified of their return, would give a check to the bank to cover the amount of the draft and protest fees. This was the custom in Superior between banks and grain dealers generally.

The Superior bank sent the draft and bill of lading to plaintiff, its correspondent bank in Lincoln, which credited it with the amount and forwarded the draft and bill of lading to New Mexico through its regular correspondents. The draft bore upon its face the following: “Protest and return immediately with all papers attached if not paid upon presentation.” The indorsement by the Superior bank is as follows: “Pay any bank or banker. All previous indorsements guaranteed.” Before the draft reached New Mexico the Superior bank had suspended payments and been taken in charge by the comptroller of currency. Defendants notified the drawee not to pay the draft, caused the car to be delivered, and collected the amount due from him. The draft was protested and returned to plaintiff. This action was brought against the drawers by plaintiff as a holder for value, as defined in section 5344, Rev. St. 1913. Five similar transactions are alleged as causes of action in the petition.

Several defenses are set up: (1) That the drafts were deposited with the Superior bank for collection only, to the knowledge of plaintiff, and were received by plaintiff from that bank for collection. (2) That since the Superior bank charged interest until the collection was made and charged the drafts back if not paid it was not an owner or holder in due course, and the same relation as to the drafts being deposited for collection existed between the Superior bank and plaintiff. (3) That at the time the drafts were received the Superior bank was insolvent, which was known to plaintiff and to the officers of the Superior bank, but unknown to defendants, and that when these conditions became known defendants rescinded the transaction. The action was tried to the court without a jury, which found generally for the defendants and rendered judgment of dismissal. Plaintiff appeals.

The evidence is undisputed that the Superior bank had only one account with plaintiff; that as soon as such drafts were received by plaintiff it gave credit to the Superior bank for the amount of the same and usually charged interest from that time until it received the proceeds from its correspondent bank; that if any draft was protested and returned it charged back the amount of the draft and protest fees to the Superior bank, and that this is the usual custom among bankers. Plaintiff had no notice of the insolvency of the Superior bank until January 9, 1914, and had no knowledge of the dealing between the drawer and the Superior bank, but received these drafts in the usual course of business, relying upon the indorsements. The assistant cashier of the plaintiff bank testifies that the drafts were sent to plaintiff together with checks on Lincoln and other banks, foreign bills of exchange, and other items with deposit slip “Inclosed for Credit and Advice,” and were acknowledged in the following form:

11-16-13-20M

National Bank of Commerce.

As per your letter of 3:

+------------------------------------------------------+
                ¦We credit subject to payment.¦We enter for collection¦¦
                +-----------------------------+-----------------------+¦
                ¦634 2               ¦43      ¦                       ¦¦
                +--------------------+--------+-----------------------+¦
                ¦36 3                ¦28      ¦New York               ¦¦
                +--------------------+--------+-----------------------+¦
                ¦                    ¦        ¦Chicago                ¦¦
                +------------------------------------------------------+
                

Items merely sent for collection were entered under the column “we enter for collection.” When plaintiff received notice of the failure there was a credit of $3,608.36 on its books to the credit of the Superior bank. This amount fluctuated until March 28th, when there was $4,102.52 on hand, which was the amount at the time of the trial. The plaintiff bank had also loaned to the Superior bank $10,000 upon its note, which was secured by collateral to the amount of $14,000; $1,000 of which has been collected and the remainder is of questionable value. The drawer testified that the drafts were deposited with the Superior bank for collection only. The question for determination is whether the draft was received by the plaintiff for collection, the title and ownership remaining in the Superior bank, or, did plaintiff become a holder in due course by the indorsement and receipt of the draft and the crediting of the Superior bank with the amount thereof? Defendant contends that the indorsement is restrictive, and shows that the title did not pass; that since the custom was that interest should be charged between the date of the receipt of the paper and the receipt of the money in payment thereof, and because if not paid it was the custom to charge the amount and protest fees back to the account of the Superior bank, the draft was taken for collection only.

[1] Is the indorsement restrictive? Whatever may have been held before the enactment of the Negotiable Instruments Act, it is clear that this question must be determinedby the provisions of that statute. Section 5354, Rev. St. 1913 (Laws 1905, c. 83, § 36) is as follows:

“An indorsement is restrictive which either: First--prohibits the further negotiation of the instrument; or second--constitutes the indorsee the agent of the indorser; or third--vests the title in the indorsee in trust for or to the use of some other person. But the mere absence of words implying power to negotiate does not make an indorsement restrictive.”

There is nothing on the face of this indorsement which prohibits the further negotiation of the instrument or constitutes the indorsee the agent of the indorser, or vests title in the indorsee in trust for the use of some other person, and hence, by the most elementary principles of statutory construction, the plain meaning of the language must be observed, and it must be held that the indorsement was not restrictive.

In Bank of Indian Territory v. First Nat. Bank, 109 Mo. App. 665, 83 S. W. 537, a case which was decided before the Negotiable Instruments Act went into effect in that state, it was held, without any discussion of the reasons, that an indorsement such as this was a restrictive indorsement. In three cases decided in that state after the act was in force (National Bank of Rolla v. First Nat. Bank, 141 Mo. App. 719, 125 S. W. 513;National Bank of Commerce v. Mechanics' American Nat. Bank, 148 Mo. App. 1, 127 S. W. 429;Citizens' Trust Co. v. Ward [Mo. App.] 190 S. W. 364) the same ruling was made; but in none of these cases was the language of the statute considered, and the holding is placed upon the authority of the first case, which, as we have seen, was decided before the act took effect. These cases are not authority upon the proposition as to whether such an indorsement is restrictive under the provisions of the act. Furthermore, any bank receiving a draft with such an...