3 F.2d 465 | N.D. Ga. | 1924
The handling oí! checks between Federal Reserve Banks and nonmember banks of the Reserve system was dealt with in American Trust & Banking Co. v. Federal Reserve Bank of Atlanta, 256 U. S. 350, 41 S. Ct. 499, 65 L. Ed. 983; American Trust & Banking Co. v. Federal Reserve Bank of Atlanta, 262 U. S. 643, 43 S. Ct. 649, 67 L. Ed. 1153; and in Farmers’ & Merchants’ Bank of Monroe v. Federal Reserve Bank of Richmond, 262 U. 8. 649, 43 S. Ct. 651, 67 L. Ed. 1157, 30 A. L. R. 635. The present ease involves the handling of cheeks between the Federal Reserve Bank and one of its members under regulation J of tbe Federal Reserve Board. That regulation, adopted to execute the collection and clearing house powers granted in section 13 and section 16 of the Federal Reserve Act (Comp. St. §§ 9796, 9799), re
1. The provision of section 16, which is claimed to require the immediate credit of checks is: “Every Federal Reserve Bank shall receive on deposit at par from member banks or from Federal Reserve Banks' cheeks and drafts drawn upon any of its depositors.” Complainant, being a member bank, claims immediate credit, at par, for all the cheeks and drafts on the depositors of the Reserve Bank of Atlanta, who are either member banks of the i Sixth Reserve district, the United States, or other Reserve Banks. Regulation J 'allows immediate credit for government checks and vouchers, and for items payable in the city where the Reserve Bank is located. When payable at a distant point the item is deferred for the number of days indicated on the time schedule, and then credited without any deduction (subject to final payment) whether returns have been- actually received or not. Are these latter items “received on deposit at par?” Section 5 of regulation J states the terms on which checks sent to a Reserve Bank “for deposit or collection” will be handled, the first being: “A Federal Reserve' Bank will act only as agent of the bank from which it receives such cheeks, and will assume no liability except for its own negligence and its guaranty of prior indorsements.” A cheek so received and handled is really received for collection and not on deposit in the common sense of the word, meaning general deposit in which arises the relation of debtor and creditor, not that of principal and agent. Webster’s International Dictionary; “Deposit.” In a general deposit the check on indorsement and delivery to the banker becomes at once the property of the banker, who owes the depositor the face of (he check, or other agreed sum, and becomes bound to honor the depositor’s cheeks therefor. New York v. Massey, 192 U. S. 138, 145, 24 S. Ct. 199, 48 L. Ed. 380; McGregor, Receiver, v. Battle, 128 Ga. 577, 58 S. E. 28, 13 L. R. A. (N. S.) 185. The depositor’s only relation to the cheek thereafter is his liability under his indorsement in ease of nonpayment, a liability usually enforced by “charging the cheek back” to him. Usually the depositor may check immediately, but this is not of the essence of a general deposit. The parties may agree otherwise; and it is not uncommon in banking practice, where large checks, payable at a distance, are taken at par, to delay availability on, the checking account so that the banker may not, by honoring checks in advance of collection, be lending his money without interest. The inclusion of the time schedule only in the terms upon which the reserve bank will receive deposits would be ordinary prudent banking, considering the enormous volume
The additional stipulation that the Reserve Bank will aet only as agent makes greater difficulty. It probably means that the checks are at first received only for collection. Ward v. Smith, 7 Wall. 447, 19 L. Ed. 207. “Deposits for collection” are spoken of in section 13, but “on deposit” in section 16 does not mean for mere collection. Since, however, credit is to be given at the expiration of the period fixed by the time schedule, whether returns from tho check have actually been received or not, at that time, certainly the agency is to cease, and the check is to become and does become the property of the Reserve Bank, and the transaction ripens into a general deposit. The check is then “received on deposit at par,” as required by section 16.
2. The next contention relates to charges not for collecting cheeks on others, but for remitting to the Reserve Bank payment of checks drawn on the member bank itself. Section 16 provides: “Nothing herein contained shall be construed as prohibiting a member bank from charging its actual expense incurred in collecting and remitting funds, or for exchange sold to its patrons. The Federal Reserve Board shall, by rule, fix tho charges to be collected by the member banks from its patrons whose checks are cleared through the Federal Reserve Bank and the charge which may be imposed for the service of clearing or collection rendered by the Federal Reserve Bank.” Whether the right established in the first clause quoted of a member bank to charge actual expenses for collecting and remitting would include a remittance in payment of cheeks drawn on it and presented by the Reserve Bank, or whether the term “its patrons” in the second sentence refers to those sending checks to the Reserve Bank, and implies that all expense of clearance of their cheeks is to be charged back to them, are questions that need not be decided. For the later legislation, known as the “Hard-wick Amendment” of section 13, is directly applicable and controls. It provides that “nothing in this or any other section of this act shall be construed as prohibiting a member or non-member bank from making reasonable charges, to be determined and regulated by the Federal Reserve Board, but in. no case to exceed ten cents per $100 or-fraction thereof, based on the total of checks and drafts presented at any one time, for-collection or payment * * * an¿ remission therefor by exchange or otherwise; but no such charges shall be made against the Federal Reserve Banks.” The complainant argues that the last clause is in the nature of a proviso or exception wholly repugnant to the main enactment preceding it, and therefore void, leaving the grant of the right to make reasonable charges unrestrained by the exception; or, if the last clause is to be treated as a part of the main enactment equally with what precedes, that the two-parts are so inconsistent as to render the whole legislation abortive, and leave section 16 to control. As pointed out in Farmers’’ & Merchants’ Bank of Monroe v. Federal Reserve Bank of Richmond, 262 U. S. 649,
3. The contention that the Reserve Bank of Atlanta cannot handle for collection or deposit cheeks on complainant coming to it from sources outside the Sixth Reserve district is erroneous. The evidence is that the Reserve Bank handles no such -cheeks on its members except those sent it by another Reserve Bank or by the members of another Reserve Bank by the latter’s authority and for its account. Section 13 declares that any Federal Reserve Bank may “solely for the purposes of- exchange or of collection,. * * * receive from other * * * Reserve Banks * * * checks and drafts payable upon presentation within its district.” These other Reserve Banks may receive from their members and nonmembers maintaining clearing balances “cheeks and drafts payable upon presentation” at any place. So checks drawn upon complainant coming to member banks or nonmember clearing banks in another Reserve district may he sent by them to the Reserve Bank of their district, and by it sent for collection or- exchange to the Reserve Bank of complainant’s district without going beyond the permissions of section 13. A check sent by a member bank by the authority and for the account of its Reserve Bank is in effect received from the latter.
4. The result of these provisions of the Reserve Act so construed is to require a member bank to pay without deduction checks drawn on it when presented by. its Reserve Bank, whether paid over its counter or by the more convenient means of a cheek on its own deposits elsewhere. This takes none of -the property or property rights of complainant without due process of law. Complainant may refuse to pay otherwise than in cash over its counter, according to the common law, as, on the other hand, the Reserve Bank may insist on that sort of payment. What is lost is the right to agree on a compensation for a more convenient payment by draft on more accessible reserves when both parties are willing so to agree. That the state, having power over the state banker and his business, may regulate his method of receiving and paying out his deposits was ruled in Farmers’ & Merchants’ Bank of Monroe v. Reserve Bank of Richmond, 262 U. S. 649, 43 S. Ct. 651, 67 L. Ed. 1157, 30 A. L. R. 635. A similar power must be recognized in the United States to regulate the banking in the Federal Reserve system. Complainant, being a national bank, chartered to do its business 'under the federal laws, cannot complain that those laws are not, or do not remain, such as it would prefer. It is not compelled to do anything without compensation. It is simply told that, if it does the thing in question, it must be done without compensation. Noble State Bank v. Haskell, 219 U. S. 575, 31 S. Ct. 299, 55 L. Ed. 341.
The evidence offered by the defendants as to the actual conduct of their business is pertinent and admissible. -The remainder, relating mainly to matters either irrelevant or to -be judicially known, is excluded.
Nothing unlawful appearing in any of the acts of the defendants complained of, a decree may be taken dismissing the bilL