53 Neb. 67 | Neb. | 1897
This was an action by the United States National Bank of Omaha to recover the amount of a certificate of deposit for $5,500 issued by the defendants Geer and Mease, partners in the banking business at Nelson under the name of the Commercial Bank, to the order of the defendant Craven, by him indorsed and transferred to the defendant the First National Bank of Hebron. It is claimed by the plaintiff that the certificate was by the Hebron bank sold and transferred to the Capital National Bank of Lincoln and by the Lincoln bank to the plaintiff. the Hebron bank, by its answer, asserts ownership in itself, claiming that the Lincoln bank received the certificate merely as the agent of the Hebron bank, for the purpose of collection, and that the indorsement being restrictive, the Lincoln bank could not and did not pass title to the Omaha bank. the right to the certificate as between these two parties is the only matter in contest, there being no issues affecting the other defendants except such as may be incidental to the controversy indicated. the district court found in favor of the Hebron bank and entered judgment accordingly.
Similar questions have been presented to the courts with such frequency and such variety of detail that there now.appear in the books an array of opinions which would be hopelessly confusing were they to be considered as tending to establish general rules of law for determin ing such questions. They range all the way from those bolding that, as between the parties even, title passes by the legal import of words used by way of indorsement, regardless of intent, to those practically resting the mat
There is no conflict in the evidence. Such doubts as exist arise as to inferences from facts proved, and not as to the existence of those facts. For ten years preceding the events in controversy the Hebron bank and the Lincoln bank had a continuous course of dealings with one another, the Hebron bank keeping an account with the Lincoln bank, and remitting to it from time to time drafts, checks, and other instruments, which were either at once or upon collection placed to the credit of the Hebron bank. It is said that the banks were not “correspondents,” but, so far as the evidence discloses, the only difference between their relations and those of banks confessedly occupying the relation in contemplation by witnesses who use that somewhat ambiguous term was that while the Hebron bank drew drafts for general banking purposes upon its correspondents at Omaha, and eastern cities, it drew against its credit at the Lincoln
On January 20, 1893, the Hebron bank, being then the owner of the certificate of deposit in controversy, remitted it with other items to the Lincoln bank. It was indorsed in the usual manner, “for account of” the Hebron bank, and was transmitted as usual “for collection and credit.” It was treated by both banks as a “cash item” in the manner above described. On sending it the Hebron bank charged it to the Lincoln bank, and on receiving it the Lincoln bank credited it to the Hebron bank and notified the latter of that fact. It was received by the Lincoln bank on the 21st and the same day transmitted to the plaintiff, the Omaha bank, under substantially similar circumstances, and in pursuance of .similar usages and a similar course of dealing. The Lincoln bank charged it to the Omaha bank and the latter credited it to the. Lincoln bank. On the morning of the 21st the account of the Lincoln bank was overdrawn with the Omaha bank some $1,900. Including the amount of the certificate, credits were that day given the Lincoln bank amounting to over $18,000. The Omaha bank that day paid out on checks and drafts of the Lincoln bank nearly $17,000. It thus appears that the whole of the credit obtained by the certificate was the same day exhausted by payments actually made in favor of the Lincoln bank. The Lincoln bank was hopelessly insolvent, to the knowledge of its officers, and was closed on the afternoon of the 21st, never to reopen. On the 23d the
Certain aspects of the foregoing facts tend, it is argued, to stamp the transaction as one between a principal, the Hebron bank, and its agent for collection. One of these features is that the Lincoln bank was not what is known as a correspondent of the Hebron bank. As already indicated, we cannot conceive that any importance attached to this distinction, whatever it may be, because there can be no doubt that their arrangements contemplated the establishment of the relationship of debtor and creditor at one time or another, with reference to this particular instrument or its proceeds. Next it is argued that the arrangement between the banks was for a collection agency and that therefore the transaction should be treated in the nature of a collection. The motive of the Hebron bank in entering into its relations with the Lincoln bank was, as stated, undoubtedly to obtain the speedy conversion of foreign paper into cash or its equivalent, but, that this object was not intended to be effected by the specific collection and remission of each instrument forwarded, is attested by every transac-'
It is suggested that as the Lincoln bank was at the time insolvent to the knowledge of its officers, it was incapable of taking and consequently transmitting title. This is stating the rule too strongly. The rule invoked is only the application of the general law of fraud in sales induced by false representations, keeping the bank open and holding it ont as ready to transact business being an implied representation of solvency. A sale made to such a bank would not be void. It would be, at the most, voidable at the option of the vendor or depositor, and could not be avoided after the rights of innocent third parties had attached. As already intimated, the indorsement may have been so restricted that the Omaha bank could not claim as an innocent purchaser if title had not in fact passed to its vendor, but title did pass and the Lincoln bank owned the certificate unless and until the Hebron bank rescinded the salé. . Before this happened it could, and did, pass title to a stranger who parted with value therefor, and it was then too late for the Hebron bank to assert its right to rescind.
Reversed and remanded.