187 F. 746 | 9th Cir. | 1911
(after stating the facts as above). [1] One or the other of the parties to this lawsuit must necessarily suffer a loss because of the insolvency of the first indorsee of the check, and the question as to which must bear the loss must be decided in accordance with their respective legal rights. The reasons are obvious and sufficient for holding that the insolvent bank did not acquire any proprietary right to the check which could be maintained against the defendant, if rights of a third party were not involved. The check, however, was negotiable paper, and the unrestricted indorsement thereof by the defendant, who was the drawer, payee, indorser, and real owner, warranted uninformed persons in receiving it, bona fide, as paper which the insolvent bank could rightfully dispose of.
This case is easily distinguishable from the cases cited by counsel for. the plaintiff in error, of which Evansville Bank v. German American Bank, 155 U. S. 556, 15 Sup. Ct. 221, 39 L. Ed. 259, is a sample. ,In that case a draft was transmitted for collection to the Fidelity National Bank of Cincinnati, a few days before the insolvency of that bank became known to its patrons. The letter in which it was transmitted was similar to the letter in which the defendant’s check was transmitted to the plaintiff, but the indorsement on 'the draft was in the following words: “Pay Fidelity National Bank of Cincinnati, ’or order, for collection, for German American Nat’l Bank of Peoria, Ill’s.” That form of indorsement divested the draft of its negotiable quality, and the difference between that case and this one is as wide as the difference between negotiable and nonnegotiable instruments. The plaintiff had a legal and moral right to buy the check, and it is the opinion of this court that it did buy the check, and that the purchase was fully consummated before any of its officers or agents were apprised of the insolvency of the first indorsee or of the defendant’s ownership. If it had merely received the check, given credit for it by a book entry and passed it on to another bank for collection, without having given anything, in exchange, the case would be different, but by reason of the plaintiff’s relationship to the insolvent bank as its Portland correspondent and of their method of doing business with each other the plaintiff had a right to absorb and appropriate to its own use negotiable paper received from the insolvent bank in exchange for drafts paid and remittances made and debited to that bank in its current account, prior to notice of its insolvency, and, when the check was credited in that account, the amount of money which it represented was, in legal effect and actually, subtracted from the plaintiff’s assets and added to the assets of the insolvent bank. Commercial Bank of Pennsylvania v. Armstrong, 148 U. S. 50, 13 Sup. Ct. 533, 37 L. Ed. 363.
■ The whole argument in behalf of the defendant 'seems to be grounded upon an idea that the letter of transmittal from the insolvent bank constituted Ihe plaintiff a subagent and that, having received for collection and credit a check made payable to the defend
Judgment affirmed.