198 Iowa 1337 | Iowa | 1924
The rule supported by the very decided weight of author
“A deposit in a bank of a bill, check, draft or other evidence of debt in the ordinary course of business, whereby the depositor receives a credit against which he may draw, operates to transfer the title to the bank, in the absence of a usage, custom, or of any oral or other agreement that the effect of the transaction shall be otherwise. * * * In such case the bank is a purchaser and absolute owner of the paper, and not a mere agent to.collect the same for the payee, but is not necessarily a bona-fide purchaser for value and without notice. # * * This is the rule although the bank has the right to charge dishonored paper to the depositor, instead of proceeding against the maker. ’ ’
In 2 Morse on Banks and Banking (5th Ed.), Section 575, it is said:
“A deposit being made by a depositor in a bank, in the ordinary course of business, of money, or drafts or checks received as money, the title to the money or drafts or checks is immediately vested in and becomes the property of the bank.”
The following cases support the rule that prima facie the bank, by such a transaction, becomes the owner of the paper. Taft v. Quinsigamond Nat. Bank, 172 Mass. 363 (52 N. E. 387); Hoffman v. First Nat. Bank, 46 N. J. L. 604; Walker & Brock v. Ranlett Co., 89 Vt. 71 (93 Atl. 1054); National Bank of Webb City v. Everett, 136 Ga. 372 (71 S. E. 660); Fourth Nat. Bank v. Mayer, 89 Ga. 108 (14 S. E. 891); National Com. Bank v. Miller, 77 Ala. 168; Fourth Nat. Bank v. Bragg, 127 Va. 47 (102 S. E. 649); Ditch & Bros. v. Western Nat. Bank, 79 Md. 192 (29 Atl. 72, 47 Am. St. 375, 23 L. R. A. 164); Auto & Accessories Mfg. Co. v. Merchants’ Nat. Bank, 116 Md. 179 (81 Atl. 294); Metropolitan Nat. Bank v. Loyd, 90 N. Y. 530; Cragie v. Hadley, 99 N. Y. 131 (1 N. E. 537); American Tr. & Sav. Bank v. Gueder Mfg. Co., 150 Ill. 336 (37 N. E. 227);
Importance in varying degrees is given, in the majority of the cases, to the fact that the depositor has an immediate right to check against the credit so given him, as indicating that the bank took title to the paper; while;in those holding that the bank is presumed to be a mere collector, this is said to be but a provisional credit, a privilege given him, and not controlling. And the right of the bank to charge back to the depositor the amount for which credit was given, in case the paper is not paid, is, in the latter cases, considered of controlling importance,
The fact that a draft is drawn in favor of the bank in which it is deposited, has been held to authorize a presumption that the bank took it as owner, and not merely for collection. First Nat. Bank v. McMillan Bros., supra; Gulf States Lbr. Co. v. Citizens’ First Nat. Bank, supra; National Bank of Webb City v. Everett, supra; Walker & Brock v. Ranlett, supra.
This court has heretofore adhered to the rule which we believe to be supported both by reason and the weight of authority. In Shaw & Schoonover v. Jacobs, 89 Iowa 713, an action by an indorsee of a check, who was alleged to have taken it only for collection, it was said:
“The effect of the indorsement in question was to transfer to the plaintiffs the title to the check, not merely to enable them to collect it, but for all purposes. That such was the intent of the parties is shown to some extent by the fact that credit was given to Osborn Brothers [the payees and indorsers] for the check. In the absence of evidence that the giving of credit was only for the purpose of keeping a record of the check, a matter of bookkeeping, we must presume that it was intended as a payment. The custom of banks, upon which the defendant relies [to cancel the credit if the check was not paid], could not have controlled the agreement of the parties * * *. The claim that the plaintiffs are not the owners of the cheek is not supported by the evidence.”
Perhaps it should be noted that, in that case, the question that the giving of an unused credit would not constitute the indorsee an innocent purchaser of the check for value does not seem to have been raised.
First Nat. Bank v. Mt. Pleasant Mill. Co., 103 Iowa 518, is a case where, upon a sale of grain, the seller drew a draft in favor of the plaintiff bank, accompanied by a bill of lading for the shipment, indorsed in blank, and the bank gave the seller credit for the amount of the draft. The shipment was attached en route by a creditor of the seller’s. The question was whether
“So when the plaintiff in this case cashed the draft, and took the assignment of the bill of lading from the commission company [the seller], it secured a better title than the milling company, which attached the grain while in transit; and the fact that, when the grain was attached, it had not been called upon to make any direct advaneés to the commission company, is not, of itself, of controlling importance.”
In Midwest Nat. Bank & Tr. Co. v. Niles & Watters Sav. Bank, 190 Iowa 752, it was recognized that the case of Beal v.‘ City of Somerville, supra, was classed among the minority decisions; and Security Bank v. Northwestern Fuel Co., supra, was quoted with approval, as follows:
“Upon a deposit, being made by a customer in a bank, in the ordinary course of business, of money, checks, drafts, or other negotiable paper received and credited as money, the title of the money, drafts, or other paper immediately becomes the property of the bank, which becomes debtor to the. depositor for the amount, unless a different understanding affirmatively appears.”
In the instant case, the evidence as to the deposit of the draft by defendant in the intervener bank is to be found only in the testimony of the cashier and the books and records of the bank. There is no evidence of any custom, as between these parties or generally, relating to such transactions; nor is there any evidence as to the prior course of dealing between them. The testimony of the cashier and the records of the bank show the deposit by defendant, on March 15, 1922, of the draft in question, with another, the two aggregating $1,062; and that defendant was given credit on an open account at the bank for that amount on that day. This account shows other deposits from day to day, and withdrawals, indicated in the balances shown, thereafter up to March 27th, at which date it shows an overdraft. Balances were struck, at times, oftener than once a day, and on three occasions prior to March 21st, the date of service of notice of garnishment on the garnishee, the balance shown was less than the amount of the draft in question. While there is no evidence tending to show a right in the intervener
We have, then, this, state of facts: The draft was drawn in favor of the intervener bank, and was deposited to the defendant’s account therein, and defendant was given credit for it; the defendant exercised the right to check upon the account before the collection of the draft by intervener, and had, by so doing, reduced the account to an amount less than that of the draft, before the garnishment. There is nothing whatever in the record from which there can be inferred any intention of the parties’ that the'draft was deposited only for collection, or that the intervener was not the owner of the draft. The admission of counsel that the bank had a right to charge defendant’s account with the amount of the draft if it was not paid is not alone sufficient, under the circumstances, and according to what we believe is the proper rule, under the authorities cited, to justify a contrary holding. It was, as has been said, a right it would undoubtedly have had, as the payee of a dishonored draft, to recover against the drawer, and one that it could have enforced by charging the defendant’s account with the amount.
Error is assigned on the admission in evidence of the individual ledger sheet of the intervener, showing the defendant’s account. We think that sufficient foundation was laid for its admission. Ricker v. Davis, 160 Iowa 37; Duffy v. Hardy Auto Co., 180 Iowa 745; Shea v. Biddle Impr. Co., 188 Iowa 952. But, in any event, the ruling was not prejudicial, as there was no evidence even tending to show that the transaction was not as testified to by the cashier, or to overcome the presumption, arising from the facts so shown, that the bank was the purchaser and owner of the draft.
The judgment is — Affirmed.