U.S. Nat. Bank of Omaha v. Geer
| Decision Date | 09 December 1897 |
| Citation | 73 N.W. 266,53 Neb. 67 |
| Parties | UNITED STATES NAT. BANK OF OMAHA v. GEER ET AL. |
| Court | Nebraska Supreme Court |
1. The question whether title passes, to a negotiable instrument delivered to a bank under a restrictive, but ambiguous, indorsement, without an express contract, but in pursuance of an established usage, is one of fact, rather than law, and depends on the intent of the parties.
2. As between the immediate parties, the form of an indorsement is not conclusive, but the nature of the contract may be proved by parol evidence.
3. Evidence examined, and held to show a sale of the instrument in controversy, and not a bailment for collection.
4. The right to rescind a sale for fraud is lost, if not exercised before the vendee transfers the property to an innocent purchaser for value. This rule applies to an attempt to recover a chose in action sold to an insolvent bank in ignorance of its insolvency, as against the claims of a transferee from the bank, who has parted with value on the faith of the bank's title.
Error to district court, Nuckolls county; Hastings, Judge.
Action by the United States National Bank of Omaha against J. H. Geer and others to recover the amount of a certificate of deposit. Judgment was rendered in favor of defendants, and plaintiff brings error. Reversed.J. C. Cowin and W. D. McHugh, for plaintiff in error.
O. H. Scott and Cobb & Harvey, for defendants in error.
This was an action by the United States National Bank of Omaha to recover the amount of a certificate of deposit for $5,500 issued by the defendants Geer & Mease (partners in the banking business, at Nelson, under the name of the Commercial Bank) to the order of the defendant Craven, by him indorsed, and transferred to the defendant the First National Bank of Hebron. It is claimed by the plaintiff that the certificate was by the Hebron bank sold and transferred to the Capital National Bank of Lincoln, and by the Lincoln bank to the plaintiff. The Hebron bank, by its answer, asserts ownership in itself; claiming that the Lincoln bank received the certificate merely as the agent of the Hebron bank for the purpose of collection, and that, the indorsement being restrictive, the Lincoln bank could not and did not pass title to the Omaha bank. The right to the certificate, as between these two parties, is the only matter in contest; there being no issues affecting the other defendants, except such as may be incidental to the controversy indicated. The district court found in favor of the Hebron bank, and entered judgment accordingly.
Similar questions have been presented to the courts with such frequency, and such variety of detail, that there now appear in the books an array of opinions which would be hopelessly confusing, were they to be considered as tending to establish general rules of law for determining such questions. They range all the way from those holding that, as between the parties even, title passes by the legal import of words used by way of indorsement, regardless of intent, to those practically resting the matter on the presumed motive of the indorser, disregarding entirely the form of the transaction and the contractual intent. While intermediate to these extremes are found many cases presenting marked resemblances to that before us, and solved in different ways by different courts, we are saved the necessity of an analysis of such cases for the purpose of inducing therefrom a general rule of law, by attention to a very simple proposition recognized, in effect, by counsel on both sides. A moment's reflection will show that the question is not what legal relations result from a deposit for collection alone, or from a sale or discount, but it is whether this was such a deposit or a sale; that is, whether title passed. The solution of this question rests in determining the common intent of the parties,--a question of fact, and not of law. Among the cases expressly, or by clear implication, treating the question as one of fact, are Bank v. Loyd, 25 Hun, 101, 90 N. Y. 530; Titus v. Bank, 35 N. J. Law, 589; In re State Bank, 56 Minn. 119, 57 N. W. 336;Bank v. Armstrong, 40 Fed. 46;Railway Co. v. Johnston, 133 U. S. 566, 10 Sup. Ct. 390.
There is no conflict in the evidence. Such doubts as exist arise as to inferences from facts proved, and not as to the existence of those facts. For 10 years preceding the events in controversy, the Hebron bank and the Lincoln bank had a continuous course of dealings with one another; the Hebron bank keeping an account with the Lincoln bank, and remitting to it, from time to time, drafts, checks, and other instruments, which were, either at once or upon collection, placed to the credit of the Hebron bank. It is said that the banks were not “correspondents,” but, so far as the evidence discloses, the only difference between their relations and those of banks confessedly occupying the relation in contemplation by witnesses who use that somewhat ambiguous term, was that, while the Hebron bank drew drafts for general banking purposes upon its correspondents at Omaha and Eastern cities, it drew against its credit at the Lincoln bank only for the purpose of transferring funds to its so-called correspondents, and not in favor of its customers generally. So far as the treatment of paper sent by the Hebron bank was concerned, there was no difference between its relations with the Lincoln bank and with its Omaha correspondent. We mention this fact merely because, in argument, some stress seems to be laid on the supposed difference in relations. There is no room for doubt that the motive which influenced the Hebron bank to maintain the account at Lincoln was to secure an economical method of collecting its “foreign paper,” or, more accurately, to secure an economical and speedy method of realizing cash, or a credit equivalent thereto, upon such paper. The motive of the Lincoln bank appears only by inference. It collected paper at par, except where it was itself subjected to expense in favor of third parties, and then charged against the paper only the expense so incurred. It paid the Hebron bank interest on daily balances. It seems quite clear that its motive, therefore, was to obtain the temporary use of the property of the Hebron bank so intrusted to it, for banking purposes. Paper remitted was divided into two classes, styled by most of the witnesses, “cash items” and “collections”; by officers of the Hebron bank, as “sight items” and “time items.” It is certain, however, that the latter nomenclature was inaccurate, as the distinction was only partly based on the time of payment. In the cash items were included all instruments presently payable, on solvent banks, and between individuals of known solvency, other paper belonging to the collection class. The classification was determined by the character of the paper, and not by the form of indorsement, or the terms of the transmitting letter. Thus, the form of indorsement on both classes seems to have been, “Pay to the order of R. C. Outcault, Cash., for account of First National Bank of Hebron, Nebr.” In remitting, printed forms were used, bearing after the address the words, “Inclosed please find for collection and ______.” The blank was usually filled with the abbreviation “Cr.” All witnesses agree that the language so employed was not regarded as of any significance in determining the disposition of the paper. If the paper fell within the collection class, it was noted on the Hebron bank's collection register as having been sent, and its number on that register was noted on the blank with which it was transmitted. On receipt by the Lincoln bank, it was entered on the latter's collection register; and the Hebron bank was by mail notified that it had been received, and would obtain “prompt attention.” When collected, it would be credited to the Hebron bank, and the latter notified of the fact. The Hebron bank would then charge its amount to the Lincoln bank. If the paper was a “cash item,” the Hebron bank would charge it to the Lincoln bank at once, on remitting it; and the Lincoln bank would credit it to the Hebron bank immediately on its receipt, and notify the Hebron bank that it had been so credited. No further notice would be sent the Hebron bank, unless...
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