290 Mass. 174 | Mass. | 1935
This suit in equity was brought in the Superior Court by the plaintiff, the payee of certain checks, against the commissioner of banks in possession of the property and business of the Salem Trust Company, the Federal National Bank of Boston, in the hands of Herbert Pearson, receiver, and the drawers of such checks to enjoin the defendant Federal National Bank of Boston from bringing suit thereon, and the drawers from making payments thereon to the defendant bank or its receiver, and to order said defendant bank to deliver these checks to the plaintiff. By amendment the receiver was joined as a party defendant. He filed an answer and a counterclaim wherein he prayed that the amounts due from the plaintiff as indorser of said checks and from the defendant drawers thereof be determined, and that the plaintiff and these defendants be ordered to pay such amounts to him as receiver. The judge who heard the case made findings of fact and an order for a
Material findings of fact, supported by the evidence, are as follows: Both the Salem Trust Company and the Federal National Bank of Boston ceased to do business on December 14, 1931. The former was taken over by the commissioner of banks and th§ latter by the comptroller of the treasury. Neither has reopened. Each is now in the process of liquidation.
The plaintiff deposited the checks here in question — which were not drawn on Salem banks — with the Salem Trust Company, some of them on December 12, 1931, and others on December 14, 1931. “Each of these checks was endorsed by a rubber stamp, 'Pay to the order of The Salem Trust Co. American Barrel Co.’ The deposit slips contained no printing relating to the terms on which the deposits were made but the pass book in the name of the American Barrel Co., in which the deposits were entered, contained the following notice, — 'In receiving items for deposit or collection this bank acts only as depositor’s collecting agent and assumes no responsibility beyond the exercise of due care. All items are credit subject to final payment in Cash or Solvent Credits. This Bank will not be liable for default or negligence of its duly selected correspondents nor for losses in transit, and each correspondent so selected shall not be liable except for its own negligence. • This Bank or its correspondents may send items directly or indirectly, to any Bank including the payor, and accept its draft or Credit as conditional payment in lieu of Cash; it may charge back any item at any time before final payment, whether returned or not, also any item drawn on this Bank not good at close of business on day deposited.’ The Salem Trust Company on the date each deposit was received posted the amount of the checks on its books to
The Salem Trust Company caused each check to be indorsed with a rubber stamp as follows: “Pay to the Order of Any Bank, Banker or Trust Co. . . . Salem Trust Co . . . .” “It then sent the checks in the December 12th deposit, not drawn on a local bank, with other checks to the Federal National Bank of Boston by mail and the checks in the deposit of December 14th, not drawn on a local bank, with other checks to the Federal National Bank of Boston by messenger. Each set of checks reached that bank on Monday, December 14th, while that bank was doing business.” Accompanying each set of deposits was a writing containing the statement “For collection items listed below” and a list of the checks included. “Neither the Salem Trust Company nor the Federal National Bank of Boston were members of the Boston Clearing House Association. Under an arrangement entered into between the Salem Trust Company and the Federal National Bank of Boston all checks received by the Salem Trust Company, not drawn on Salem Banks, were sent to the Federal National Bank of Boston for collection. The Federal National Bank of Boston by arrangement with the Federal Reserve Bank of Boston cleared all checks deposited with it and those received from the Salem Trust Company through the Federal Reserve Bank of Boston. Daily settlements were made between the Federal National Bank of Boston and the Federal Reserve Bank of Boston of amounts due by reason of clearing of the checks of the Salem Trust Company and that amount was charged or credited to the Salem Trust Company as the case might be. The checks from the plaintiff, together with other checks when received from the Salem Trust Company, were sent to the Federal Reserve Bank of Boston for clearing.” At “the time each bank stopped doing business . . . the Salem Trust Company owed the Federal National Bank of Boston more than the total amount of the checks here in question.” The plain
There was evidence, but no specific findings, that the bank statements sent by the collecting bank to the forwarding bank contained the statement “All items are credited subject to final payment.” and that, according to the course of dealing between the forwarding bank and the collecting bank, checks sent by the former to the latter were immediately credited to the account of the forwarding bank, but if for any reason they were not collected they were returned to the forwarding bank and that bank charged with the amount thereof even if its account were overdrawn.
The judge ruled (or found) “that under the circumstances here disclosed the Salem Trust Company was never the owner of the checks in question but was the agent of the plaintiff to collect the checks . . . that the Federal National Bank of Boston did not become owner of the checks in question but also acted as an agent to collect. . . . that the agency of the Federal National Bank of Boston to collect these checks terminated with the appointment of the receiver; [and] that thereafter it had no authority to collect or hold the checks.”
The decree was right.
The forwarding bank was an agent of the plaintiff for the collection of these checks and not the owner thereof. This appears from the notice in the plaintiff’s pass book that checks were deposited by the plaintiff with the forwarding bank as such an agent even though the plaintiff’s indorsements were not restrictive (G. L. [Ter. Ed.] c. 107,
Nor was the collecting bank the owner of the checks. The arrangement between the forwarding bank and the collecting bank was in terms an arrangement that checks should be sent by the former to the latter “for collection.” And the checks here in question were sent for that purpose, as appears from the letter of transmittal. The notice from the collecting bank to the forwarding bank contained in the bank statements, that items are credited “subject to final payment,” and the course of dealing between the banks whereby checks deposited by the forwarding bank with the collecting bank were credited by it to the forwarding bank but unpaid checks returned to the collecting bank were immediately charged to the forwarding bank is at least compatible with the existence between the banks of an agency relation. The principles already stated in regard to the relation between the plaintiff and the forwarding
It does not appear, however, that the' collecting bank had notice of the terms of the deposits of the checks with the forwarding bank. Consequently, since the indorsements of these checks by the plaintiff were not restrictive and the checks had all the appearance of title in the forwarding bank, the collecting bank was entitled to treat the forwarding bank as the owner of the checks capable of passing title to the checks to a purchaser for value without
It is not necessary to decide whether as between the forwarding bank and the collecting bank the latter had a so called “banker’s hen” on the uncollected checks sent to the latter for collection whereby it was entitled to apply them or their proceeds to its general balance of account with the forwarding bank. See Furber v. Dane, 203 Mass. 108, 117. For even if the collecting bank had such a right as against the forwarding bank, the former through its receiver cannot prevail in this suit unless its right to the checks is superior to the right of the plaintiff, the real owner thereof. The collecting bank has no such superior right, even though it had no notice that the forwarding bank was not the real owner of the checks, unless it gave credit to the forwarding bank or suffered balances to remain in its hands to be met by checks transmitted, or expected to be transmitted, by the forwarding bank to the collecting bank in the usual course of business between the banks. Bank of Metropolis v. New England Bank, 1 How. 234; S. C. 6 How. 212. Sweeny v. Easter, 1 Wall. 166. But, by reason of the special agreement between the banks, credit given to the forwarding bank and balances suffered to remain in its hands were not to be met by uncollected checks transmitted, or expected to be transmitted, in the usual course of business to the collecting bank. Such checks were taken only provisionally and credits therefor on the books of the collecting bank were purely temporary and conditional. The forwarding bank could not as of right draw against them. The right of the collecting bank to charge back uncollected items was not merely a method of exacting payment from the forwarding bank as indorser. Compare Douglas v. Federal Reserve Bank of Dallas, 271 U. S. 489, 493. It was an incident of the temporary and conditional nature of the credits. The forwarding bank’s overdraft, so far as appears, was not suffered on the faith
Decree affirmed.