164 A. 74 | Pa. Super. Ct. | 1932
Argued October 6, 1932. Bill in equity. It appears that Lipshutz on October 1, 1931 deposited for collection in the Olney Bank and Trust Company two checks drawn on the Central-Penn National Bank. On the same date the Olney Bank transferred to the Pennsylvania Company for Insurances on Lives and Granting Annuities, the defendant, the checks in question containing the endorsement, "pay any bank, banker or trust company," and received the full consideration of the same from the Pennsylvania Company. On the following day the Olney Bank was closed by the Secretary of Banking of Pennsylvania. Plaintiff being unable to get the proceeds of the checks secured the intervention of the maker and caused payment to be stopped. The case was heard on bill and answer. The court entered a decree enjoining the present holder of the checks, the Pennsylvania Company, from presenting them for payment at the bank on which they were drawn and furthermore, directed the company immediately to deliver them to the plaintiff free of charge. The court based its decision in favor of the plaintiff on the words of the endorsement on each check "pay any bank, *484 banker or trust company, to the order Olney Bank and Trust Company."
Section 4 of the Act of June 12, 1931, P.L. 568 provides that an endorsement "pay any bank or banker" shall be deemed "a restrictive endorsement," and shall indicate the creation of an agency relation in any subsequent bank to whom the paper is forwarded. The lower court calls attention to Section 36 of the Act of May 16, 1901, P.L. 194, which defines "a restrictive endorsement" as one which either, first, prohibits any further negotiation of the instrument, or second, constitutes the endorsee the agent of the endorser, or third, vests the title in the endorsee in trust. It concludes therefore that the Olney Trust Company had no right to negotiate these checks to the Pennsylvania Company, and that the latter was bound by the restrictive endorsement, and had no right to presume that the Olney Bank was the owner of the checks and could pass title to them. The learned chancellor overlooked the fact that in the above definition there are three alternative characteristics of a restrictive endorsement, and that they do not all apply to every such endorsement. Which one of them applies must be determined by the form of the endorsement. We, however, pass this for we need not go back as far as the Act of 1901 to ascertain what is meant by the endorsement on the check of the words "pay any bank or banker," for the Act of 1931, in the part to which the lower court refers states clearly that the words "indicate the creation of any agency relation in a subsequent bank to whom the paper is forwarded." They are employed to show the status between the banks not between the depositor and the forwarding bank. The checks in the present instances originally had the blank endorsements, the restrictive endorsement was placed by the forwarding bank and it constituted the endorsee bank the agent of the forwarding bank. There is no question that the Olney Bank was the *485
agent of the plaintiff who deposited the checks: Hazlett v. Commercial Bank,
Being insolvent the officers of the Olney Bank should not have accepted the checks for collection, and when the money was received for the checks they should have set it apart in a separate account and earmarked it. This was not done. The bank became a trustee exmaleficio as to the money thus received and mingled with its own funds: Cameron v. Carnegie Trust Co.,
The decree of the court below is reversed and plaintiff's bill in equity is dismissed at his cost.