United States National Bank of Omaha v. Geer

• Decision Date: 09 December 1897
• Docket Number: 7607
• Citation: 73 N.W. 266,53 Neb. 67
• Parties: UNITED STATES NATIONAL BANK OF OMAHA v. J. H. GEER ET AL. [*]
• Court: Nebraska Supreme Court

73 N.W. 266

53 Neb. 67

UNITED STATES NATIONAL BANK OF OMAHA v. J. H. GEER ET AL. ^[*]

No. 7607

Supreme Court of Nebraska

December 9, 1897

ERROR from the district court of Nuckolls county. Tried below before HASTINGS, J. Reversed.

REVERSED AND REMANDED.

J. C Cowin and W. D. McHugh, for plaintiff in error.

References Metropolitan Nat. Bank v. Loyd, 25 Hun [N. Y.] 101 90 N.Y. 530; First Nat. Bank of Elkhart v. Armstrong, 39 F. 231; Cragie v. Hadley, 99 N.Y. 131; Ayers v. Farmers & Merchants Bank, 79 Mo. 421; Wasson v. Lamb, 120 Ind. 514; Titus v. Mechanics Nat. Bank, 35 N. J. Law 588; Strong v. King, 35 Ill. 1; In re State Bank, 56 Minn. 119; Holmes v. First Nat. Bank of Lincoln, 38 Neb. 326.

O. H. Scott and Cobb & Harvey, contra.

References: National Bank v. Burkhart, 100 U.S. 692; Barnard v. Kellogg, 10 Wall. [U. S.] 390; Beal v. City of Somerville, 50 F. 650; Manufacturers Nat. Bank v. Continental Bank, 148 Mass. 553; St. Louis & S. F. R. Co. v. Johnston, 133 U.S. 566; Moors v. Goddard, 147 Mass. 288; Fifth Nat. Bank v. Armstrong, 40 F. 46; St. Louis & S. F. R. Co. v. Johnston, 27 F. 243, 133 U.S. 566; Hoffman v. First Nat. Bank of Jersey City, 46 N. J. Law 605; Levi v. National Bank of Missouri, 5 Dill. [U. S.] 107; Balbach v. Frelinghuysen, 15 F. 683; Branch v. United States Nat. Bank, 50 Neb. 470; First Nat. Bank of Chicago v. Reno County Bank, 3 F. 257; Freeman's Nat. Bank v. National Tube Works Co., 151 Mass. 413; Blaine v. Bourne, 11 R. I. 119; City Bank of Sherman v. Weiss, 67 Tex. 331; White v. Miners Nat. Bank, 102 U.S. 659; Peck v. First Nat. Bank, 43 F. 357.

OPINION

IRVINE, C.

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 and 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 Metropolitan Nat. Bank v. Loyd, 25 Hun [N. Y.] 101, 90 N.Y. 530; Titus v. Mechanics' Nat. Bank, 35 N.J.L. 588; In re State Bank, 56 Minn. 119, 57 N.W. 336; Fifth Nat. Bank v. Armstrong, 40 F. 46; St. Louis & S. F. R. Co. v. Johnston, 133 U.S. 566, 33 L.Ed. 683, 10 S.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 ten 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 entrusted 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 belonged 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 "Enclosed 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, 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 the paper should be dishonored, in which event its amount would be charged to the Hebron bank and the latter so notified, the paper being returned. Interest was paid on the general balance, including as it did those cash items which had been credited upon their receipt but not yet collected. It would seem that by the custom of banks in such cases, when a credited item is dishonored, interest thereon is charged to the remitting bank from the time credit was given, and that the Lincoln bank was authorized by such custom to so treat the Hebron bank, but it would also seem that such right was never in fact exercised. During the period referred to certain notes of the Hebron bank were rediscounted by the Lincoln bank, and some of these not being paid at maturity, the Lincoln bank exercised, and the Hebron bank acknowledged, the right to immediately charge them back to the Hebron bank in the same manner as dishonored "cash items." The balance at any time to the credit of the Hebron bank was subject to be drawn upon, including that amount representing credited but uncollected cash items. The officers of the Hebron bank testify that they habitually refrained from so drawing until a reasonable time should elapse for the collection of such items, and that they regarded the...