Source: https://supreme.justia.com/cases/federal/us/275/248/
Timestamp: 2019-04-22 06:26:51+00:00

Document:
1. Where a bank, before the filing of a petition in bankruptcy against it, received deposits of checks, the proceeds of which were later collected by its trustee in bankruptcy, the depositor is entitled to claim the proceeds of the deposit only if the bank received the checks as an agent for collection, but must stand as an ordinary creditor if ownership of the paper passed to the bank. P. 275 U. S. 252.
word "for account of" were not necessarily to be taken a constituting the payee an agent for collection, but were to be construed in the light of the intention of the parties as revealed by all the circumstances, and in this instance their purpose was to advise the bankrupt of the account to which the checks were to be credited, and not make it an agent for collection, or restrict its rights as purchase. P. 275 U. S. 253.
Certiorari, 271 U.S. 653, to a judgment of the circuit court of appeals, which reversed an order of the district court dismissing a petition of the respondents for reclamation of the proceeds of checks collected by the above named trustee in bankruptcy.
Respondents, bankers of Frankfort-on-Main, maintained a general deposit account with the bankrupts, who were private bankers in New York City. On instruction of Lloyds Bank, Limited, London, which was requested by respondents "to procure this amount for us" on June 15, 1923, "at Knauth, Nachod & Kuhne, New York," the National Bank of Commerce in New York on that day delivered to Knauth, Nachod & Kuhne, the bankrupts, its cashier's check for $30,000, payable to them "for account of Rochling Bank, Gebr. Frankfort-on-Main," and took from them their receipt for the check "for account of Rochling Bank." On instruction of the Swiss Bank, London, the National City Bank, New York, on the same date delivered its cashier's chock for $30,000, payable to the order of Knauth, Nachod & Kuhne, "A/C Gebr. Rochling, Frankfort A/M," taking from them a receipt in like form. On that day too, the bankrupts credited the account of respondents with the two checks and made an entry on their books indicating that respondents were entitled to interest on the amount of the checks from that date. The checks were deposited by Knauth, Nachod & Kuhne in their own deposit accounts in other banks, and were there credited to those accounts. On the following day, June 16, 1923, before the collection of the checks, the petition in bankruptcy was filed.
In receiving these checks, forthwith crediting respondents with them, and in crediting interest from the date of their receipt, the bankrupts followed the established course of their business with respondent which had extended over a period of more than two years. Periodic statements of the account rendered to respondents showed that interest was credited from the day of deposit, and that, on occasion, drafts were made against deposits before they had been collected.
Respondents' petition, filed in the District Court for Southern New York for reclamation of the proceeds of checks was dismissed. The order of the district court was reversed by the Circuit Court of Appeals for the Second Circuit. 10 F.2d 935. This Court granted certiorari. 271 U.S. 653.
The proceeds of the two checks concededly have come into the hands of the petitioner, the bankrupts' trustee, and the sole question presented is whether the bankrupts, on receipt of the check and before the filing of the petition in bankruptcy, became the owners of them, or whether, as the court of appeals held, Knauth, Nachod & Kuhne were respondents' agents to collect them. If the former, respondents were creditors of the bankrupts, Douglas v. Federal Reserve Bank, 271 U. S. 489; Burton v. United States, 196 U. S. 283, entitled to share only on an equal footing with other creditors. If the latter, respondents were entitled to reclamation from the petitioner, since the checks had not been collected at the time of the petition in bankruptcy. St. Louis & San Francisco Ry. v. Johnston, 133 U. S. 566; White v. Stump, 266 U. S. 310, 266 U. S. 313; Bankruptcy Act, § 70(a), c. 541, 30 Stat. 565, as amended, § 16, c. 487, 32 Stat. 800.
account of" the indorser. It may be conceded that such an indorsement indicates that the transaction is not a purchase and sale of the paper, and, at least when not otherwise explained or limited, may fairly be taken to mean that the interest gained by the indorsee is that of an agent for collection. White v. National Bank, 102 U. S. 658; Evansville Bank v. German-American Bank, 155 U. S. 556; Commercial Bank of Penn. v. Armstrong, 148 U. S. 50, 148 U. S. 57.
Here, however, the words were used not by a payee in his indorsement, but by a third person making a deposit for respondents' benefit. They are thus of much less significance than in the usual case as data in determining the relation between respondents and the bankrupts, and the course of conduct of the parties becomes correspondingly more important. Moreover, the words themselves, despite their wide commercial use and the importance of giving them, as far as practicable, a uniform effect, have no rigid and unchangeable significance. Their purpose is to express intention. They are not an incantation which unfailingly invokes an agency. And the circumstances in this case indicate that they were here used with a different object.
as their agents for collection, or that any restriction should be placed on the use of the checks by Knauth, Nachod & Kuhne once they had credited respondents.

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