Peck v. First Nat. Bank

43 F. 357 | U.S. Circuit Court for the District of Southern New York | 1890

Wallace, J.

At the time when the Fidelity Bank received the draft belonging to the plaintiffs for collection, the hank was, according to the agreed statement of facts, “hopelessly and irretrievably insolvent, as was known to E. L. Harper, the vice-president of the Fidelity Bank, who was then the managing officer of the business of the hank.” - The bank failed the same day, or the next morning, and never resumed business. Under these circumstances, it was a fraud upon the plaintiffs, on the part of the bank, to acquire their property upon the faith of its apparent prosperity, without disclosing the real situation. The Fidelity Bank, therefore, did not acquire any title to the draft, or its proceeds. Railroad Co. v. Johnston, 10 Sup. Ct. Rep. 890. The restrictive indorsement upon the draft was notice to the defendant that the Fidelity Bank was merely an agent for the plaintiffs to collect the proceeds, consequently the defendant did not acquire any better title to the draft, or its proceeds, than the Fidelity Bank had. Judgment is ordered for the plaintiffs.