Manufacturers' National Bank v. Continental Bank, 148 Mass. 553

Manufacturers' National Bank v. Continental Bank

148 Mass. 553 | Mass. | 1889

Knowlton, J.

In the transaction upon which the plaintiff’s claim is founded, the plaintiff and the Fidelity National Bank stood in the relation to each other of principal and agent. The business in which they were engaged was the collection of checks and drafts which belonged to the plaintiff or to the plaintiff’s customers. Their contract contained in their letters shows, first, an offer to the plaintiff by the Fidelity National *558Bank of its “ services for making collections in the West,” and then a proposition to credit sight items at par, subject to payment, and to make collections, remitting weekly in New York exchange, without charge. This proposition was accepted by the plaintiff, and the Fidelity National Bank thereby became the plaintiff’s agent to collect for it commercial paper. Under this arrangement the credit given for a check was merely provisional until the check was paid. It did not create a debt from the Fidelity National Bank to the plaintiff, and it did not change the ownership of the check. Levi v. National Bank of Missouri, 5 Dillon, 104. Balbach v. Frelinghuysen, 15 Fed. Rep. 675. In that respect their relations to each other were very different from those between a banker and a depositor, where checks are received on deposit as cash, and an absolute right to draw against them is given. White v. National Bank, 102 U. S. 658. Scott v. Ocean Bank, 23 N. Y. 289. Dickerson v. Wason, 47 N. Y. 439. Metropolitan National Bank v. Loyd, 90 N. Y. 530. Ayres v. Farmers & Merchants Bank, 79 Mo. 421.

Their dealings under the contract were in conformity to this-construction of it. It was a custom of the Fidelity National Bank to charge back to the plaintiff, and to return to it by mail, checks and drafts which were not paid. The indorsement of the check which the defendant collected was “for collection for Manufacturers’ National Bank of Boston, Mass.” This indorsement would give notice of the plaintiff’s title to all parties into whose hands the check might come. Sweeny v. Easter, 1 Wall. 166, 173. Blaine v. Bourne, 11 R. I. 119. Cecil Bank v. Farmers’ Bank, 22 Md. 148. Merchants’ National Bank v. Hanson, 33 Minn. 40.

In one particular the contract in question differed from an ordinary contract for the collection of a principal’s money by an agent. Upon the collection of a draft or check, the Fidelity National Bank was not required to keep the proceeds by itself as the plaintiff’s property, but might mingle it with its own money and make itself the plaintiff’s debtor for the amount received. As soon as the proceeds became a part of the funds of the Fidelity National Bank under this arrangement, the plaintiff’s right to control it as specific property was gone, and the plaintiff had instead a right to recover a corresponding sum of *559money. The Fidelity National Bank ceased to do business on June 20,1887, and on the following day a national bank examiner was put in charge of its assets by the comptroller of the currency, and he continued in charge until a receiver was appointed under the laws of the United States. The check was not collected oy the defendant until June 22, 1887. At that time the right of the Fidelity National Bank to mingle with its own funds the proceeds of a check collected for the plaintiff had terminated.

It was implied in the contract under which the collection was made, that the Fidelity National Bank should continue in business as a national banking association. When it ceased to do banking business, it lost the right to appropriate to itself the proceeds of the plaintiff’s property, and to substitute for the money its own liability as for a debt. It had lost the power to perform its undertaking and to make weekly remittances of the amounts collected, for its doors had been closed, and it was in the custody of the law.' Since it could not make the remittances, it could not lawfully under its contract collect the plaintiff’s check and take the proceeds as its own. Cragie v. Hadley, 99 N. Y. 131, 133. If a payment to the defendant as its agent, and an entry of a credit by the defendant for the money, would have passed the property to the Fidelity National Bank, if it had then been regularly doing business, such a payment made after it was insolvent and in charge of the comptroller had no such effect. The implied condition in reference to which both parties contracted had ceased to exist. The continuance of the right of the bank to do business under the laws of the United States was of the very essence of the agreement which permitted it to receive the plaintiff’s money as a credit to be accounted for. Audenried v. Betteley, 8 Allen, 302. Story on Agency, (9th ed.) § 486. This has been expressly decided in the case of First National Bank v. First National Bank, 76 Ind. 561, which is very similar to the case at bar.

We are of opinion that the check in the hands of the defendant was the plaintiff’s property until it was paid, and that the proceeds of it did not pass to the Fidelity National Bank, and that the plaintiff is entitled to recover.

Exceptions sustained.