281 F. 222 | D. Or. | 1922
(after stating the facts as above). The Federal Reserve Bank is empowered by the Federal Reserve Act (Comp. St. § 9785 et seq.), by authority of which it is permitted to incorporate and transact business, to exercise all powers specifically granted by the provisions of the act, and such incidental powers as shall be necessary to carry on the business of banking within the limitations prescribed by the act. Subdivision 7, § 4 (section 9788).
By section 13, as amended by the Act of June 21, 1917 (40 Stat. 235 [Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 9796]), it is provided that any Reserve Bank may receive from any of its member banks deposits cf current funds in lawful money, or checks and drafts payable upon presentation, and also, for collection, maturing notes and bills, or, solely for the purposes of exchange or of collection, may receive deposits of checks and drafts, payable upon presentation within its district, and maturing notes and bills payable therein, or; solely for the purposes of exchange or of collection, may receive from any nonmember bank or trust company deposits of current funds in lawful money, national bank notes, Federal Reserve notes, checks and drafts payable upon presentation, or maturing notes and bills: Provided, however, that such nonmember bank or trust company maintains with the Federal Reserve Bank of its district a balance sufficient to offset the items in transit held for its account by the Federal Reserve Bank; and “provided, further, that nothing in this or any other sec
By section 16 (section 9799), the Federal Reserve Board is empowered at its discretion to exercise the functions of a clearing house for Federal Reserve Banks, or it may designate a Federal Reserve Bank to exercise such functions, and may also require such bank to exercise the functions of a clearing house for its member banks. By a previous clause of this section, it is provided that every Federal Reserve Bank shall receive on deposit at par from member banks or from Federal Reserve Banks checks and drafts drawn upon any of its depositors, and, when remitted by a Federal Reserve bank, checks and drafts drawn by any depositor in any other Federal Reserve Bank or member bank upon funds to the credit of said depositor in said Reserve Bank or member bank.
The clause of section 16 requiring Reserve Banks to receive at par on deposit from member banks, or from Federal Reserve Banks, checks and drafts drawn upon their depositors, carries with it no specific power for making exchange or collections. The function so to be exercised is treated of in section 13. The Reserve Bank having such paper on deposit, however, may be treated as the holder or owner of such paper. The Federal Reserve Board, apparently recognizing that nonmember banks, unless they voluntarily maintained with the reserve bank the appropriate balance, were not otherwise affected by the act, issued a regulation under title “Check Clearing and Collection,” as follows:
“Each Federal Reserve Bank will receive at par from its member banks, and from nonmember banks in its district which have become clearing mem*226 bers, checks drawn on all member and clearing member banks and on all other nonmember banks which agree to remit at par through the Federal Reserve Bank of their district.”
This was in pursuance of a policy inaugurated by the board to induce nonmember banks which are without the pale of the act to remit at par, and thus to unify bank clearances and collections throughout the country. The questions presented here are: First, whether the Reserve Bank has the authority to make collections from nonmember banks; and, second, whether it can coerce such banks to agree to remit at par.
.“If this were a case of competition in private business, it would be hard to admit the Justification of self-interest, considering the now current opinion as to public policy expressed in statutes and decisions. But this is not a private business. The policy of the Federal Reserve Banks is governed by the policy of the United States with regard to them and to these relatively feeble competitors. We do not need aid from the debates upon the statute under which the Reserve Banks exist to assume that the United States did not intend by that statute to sanction this sort of warfare upon legitimate creations of the states.”
“If we continue to accept exchange, we are, of course, extracting the sting from our direct collections.”
Another is Plaintiff’s Exhibit 20, a letter from the manager at Portland to the Scio State Bank, advising that:
“Shortly, after all the hanks in the country have had time to consider becoming par voluntarily, it will be necessary to use more forcible methods with the few banks that refuse to pay their checks at par.”
Corroboration is found in other correspondence and evidence adduced at the trial, but the record is too voluminous to attempt to particularize.
“While, under the prevailing custom, the defendant bank could rightfully remit checks and drafts drawn against the plaintiff bank direct to the latter for collection, and could thereby exact payment of them, it could not impose conditions upon which such payment should be made; much less could it make the plaintiff bank its agent for causing protest to be made for nonpayment. The idea of requiring that a maker or drawee shall have protested his*228 own paper -Is so inconsistent with the functions of an agent that it can hardly receive the sanction of law. No- man can serve two-masters, especially himself and another.” , ■
The defendant was therefore not authorized to. advise its clients that they must look to the plaintiff bank for protection through failure to protest. The preliminary injunction heretofore decreed will be made permanent, but no 'injunction will issue respecting the maintenance of an agent at Brookings, as such agent had been withdrawn practically at the time of the institution of the suit, and there appears to be no intention upon the part of defendant to replace him.