Court Opinion

ID: 8001763
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:49:52.04415+00
Date Added: 2024-06-11T16:35:44.802559
License: Public Domain

Holmes, Judge,
delivered the opinion of the court.
The plaintiffs endorsed and deposited two drafts with Josiah Lee & Co., bankers at Baltimore, for collection, who endorsed and sent them to the State Savings Association of St. Louis *599for collection, as their agent. The last endorsements were expressed to be “for collection,” but the defendants (who were trustees of the association) had no actual knowledge, at the time when they were received, that the plaintiffs were the owners of the drafts. The drafts were paid when due, the one on the 27th day of October and the other on the 1st day of November, 1860, and on the 29th day of October intervening Josiah Lee & Co. failed. On the 5th day of November following, the defendants received notice from the plaintiffs that they were the owners of the drafts, and that the same or the proceeds thereof were tobe held subject to their order. When the drafts were received and collected, Josiah Lee & Co. were indebted to the State Savings Association in the sum of $2,000, and the amounts of the drafts when collected were credited on that debt. Before the drafts were deposited by the plaintiffs with their bankers in Baltimore, the bankers and the defendants had had transactions together as bankers. No advances had been made, nor any credit given, on those particular drafts, and no paper had been sent by the defendants to the firm of Josiah Lee & Oo. for collection. After the receipt of these drafts, the amounts collected on them were never paid or accounted for to Josiah Lee & Co. otherwise than by such credit on account of their indebtedness.
On this state of facts, the court instructed the jury, in effect, that the plaintiffs were not entitled to recover.
It may be taken as well settled that where there have been mutual and extensive dealings between two bankers, on a mutual account current between them, in which they mutually credit each other with the proceeds of all paper remitted for collection when received and charge all costs and expenses, and accounts are regularly transmitted from one to the other, and balances settled at stated times upon this understanding, and where, upon the face of the paper transmitted, it always appears to be the property of the respective banks, and to be remitted as such by each on its own account, and the balance of account is suffered to remain unsettled on the *600faith of such mutual understanding, and a credit is given upon the paper thus remitted or deposited, or upon the faith of that which is expected to be remitted in the usual course of such dealings, there will be a lien for the general balance of accounts, and a right to retain the securities so received, or the amounts collected and on hand, as a credit upon the general balance in settlement of such advances. (Bank of Metropolis v. N. Eng. Bank, 1 How., U. S. 234; Rathbone v. Sanders, 9 Ind. 217.) But where there is no such mutual arrangement or previous course of dealing between the par ties whereby it is expressly or impliedly understood that such remittances of paper are to go to the credit of the previous account when received and no advance is made nor any credit given on the basis of the particular bill, or upon the faith of such course of dealing and such future remittances, or where the special circumstances are inconsistent with the hypothesis of such mutual understanding, and the one bank merely passes the proceeds of paper remitted for collection to the credit of the other on a subsisting indebtedness which it happens at the time to have standing against the other, there is no such lien, and no right to retain and apply the money collected in that manner ; but the real owner of the funds may maintain an action to recover the amount. (Wilson v. Smith, 3 How., U. S. 763.) And such, we think, was this case, on the proofs made.
The evidence did not show that there was any such mutual understanding or previous course of dealings as would justify the inference that these drafts were paid in to defendants as securities on account, or were remitted to be credited on account when received, or that the proceeds were to be placed to their credit in payment of previous advances or the general balance, or that a credit was extended on the balance of account on the faith of such remittances.
There was nothing in the transactions proved which was inconsistent with the right of Josiah Lee & Co. to draw immediately on them for the money collected on these drafts. And the fact that the drafts were expressly endorsed in full, *601“ for collection,” would seem to have a strong tendency to negative the idea that they were intended to be paid in on account of the general balance. No doubt a banker has a general lien by the law of the land, for his general balance, upon all securities in his hands belonging to his customer which have been paid in upon the general account or deposited as a.security for advances on account, unless there be evidence to show that he received the particular bill or security under special circumstances which would take it out of the general rule. (Davis v. Bowsher, 5 T. R. 488.)
The evidence here fails to show that these drafts were either paid in as security or deposited upon the general account as a security for advances already made, or on a new credit given, but rather tends to prove that they were received under special circumstances which would of themselves import the contrary supposition.
Nor did the facts show any warrant or authority from Josiah Lee & Co. to them to make that application of the funds when collected. They were not even advised that the money had been so applied, nor that it was to be so accounted for. (Hoffman v. Miller, 10 Am. Law Reg. 676 ; Bk. of Metropolis v. N. Eng. Bk., 6 How., U. S. 212.)
For these reasons, we think the plaintiffs’ instructions should have been given and the defendants’ instruction refused.
Judgment reversed and the cause remanded.
Judge Wagner concurs
; Judge Lovelace absent.