Court Opinion

ID: 9652571
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:26:40.083147+00
Date Added: 2024-06-11T18:12:52.434339
License: Public Domain

TRIEBER, District Judge
(concurring).
I concur in a reversal of this judgment upon the ground that the complaint alleges that the checks in controversy were deposited with the plaintiff “to transmit for collection,” and upon the express agreement between it and its depositor, that “all items are credited subject to final cash payment and are handled at risk of depositor.” These allegations are admitted by the demurrer to the complaint.
The plaintiff was therefore acting only as agent of the depositor in indorsing and delivering them to the defendant for collection, and sues as assignee of the Halloek & Howard Lumber Company, its principal, although undisclosed at the time the cheeks were delivered to the defendant. So far as the defendant is concerned, the undisclosed principal may maintain an action against the agent selected by its agent to collect the checks as established by the authorities cited in the opinion of Judge PHILLIPS.
*346But counsel for the defendant in his brief and argument insisted; That section 11, par. (i), of the Federal Reserve Act (Comp. St. § 9794), authorized the Federal Reserve Board “to make all rules and regulations necessary to enable said board effectively to perform the same (referring to the powers granted to the Federal Reserve Bank).
That in pursuance of that authority the Federal Reserve Board by regulation J, Series of 1920, promulgated the following rule:
“(8). In handling items for member and nonmember clearing banks, a Federal Reserve Bank will act as agent only. The board will require that each member and nonmember clearing bank authorize its Federal Reserve Bank to send cheeks for collection to banks on which cheeks are drawn, and, except for negligence, such Federal Reserve Bank will assume no liability. Any further requirements that the board may ■ deem necessary will be set forth by the Federal Reserve Banks in their letters of instruction to their member and nonmember clearing banks. Each Federal Reserve Bank will also promulgate rules and regulations to be binding upon all member and nonmember banks, which are clearing through the Fed- ' eral Reserve Bank.”
That by that regulation each Federal Reserve Bank is authorized to promulgate rules and regulations to be binding upon all member and nonmember banks which are clearing through the Federal Reserve Bank.
That pursuant to this authority the defendant Federal Reserve Bank issued General Letter No. 223, dated November 15, 1919, containing among other regulations, the following :
“In accepting checks and drafts from member and clearing member banks, the Federal Reserve Bank of Kansas City will act as agent only, and will be liable in no ease, except for negligence. The Federal Reserve Bank of Kansas City reserves the right to charge back against the member of clearing member bank’s account, all unpaid items and any other items, returns for which cannot be converted into available funds. Such items will be charged back whether or not the original checks or drafts can be returned to the member or clearing member bank.
“The sending of items by member and clearing member banks to the Federal Reserve Bank of Kansas City for credit will be construed as adopting the instructions stated herein; accepting the provisions here detailed as to relationship of the Federal Reserve Bank of Kansas City in handling transit business, and authorizing the Federal Reserve Bank of Kansas City in its discretion to forward any items for payment direct to the bank on which they are drawn.”
And it is claimed that these regulations of the Federal Reserve Board and the defendant Federal Reserve Bank have the same force and effect, as if a part of the act of Congress, and the courts will take judicial notice of them, without being pleaded or established by evidence at the trial of the cause, citing Caha v. United States, 152 U. S. 211, 14 S. Ct. 513, 38 L. Ed. 415, and the many eases following it. Whether the authority to make rules and regulations applies to any other powers of the Federal Reserve Board than those specified in that paragraph (i), or applies to all the powers enumerated in section 11 of the act, or whether Congress can grant the power to make regulations, which are to have the force and effect of a law, to others than the President or the head of a department of the government, it is unnecessary to determine at this hearing, for there is certainly no provision in the act of Congress authorizing the Federal Reserve Banks to make regulations, which shall have the force and effect of law £nd of which the courts must take judicial notice, without be-. ing pleaded and established at the trial by competent evidence.
It will be noticed that in Federal Reserve Bank v. Malloy, 264 U. S. 160, 164, 44 S. Ct. 296, 298 (68 L. Ed. 617, 31 A. L. R. 1261), the court did not determine whether the Federal Reserve Bank was negligent in sending the cheek direct to the drawee bank, as authorized by that regulation of the board, saying:
“For the purpose of the ease, we assume the correctness of the decision below, holding that the Richmond Bank was not negligent in sending the cheek directly to the bank on which it was drawn, and consider only whether the acceptance of an exchange draft, found to he worthless, instead of money, creates, an enforceable liability.”
It then proceeded to hold that the acceptance of an exchange draft, which proves worthless, makes the collecting bank liable tq the payee of the check for the resulting loss. .
Neither of the regulations, that of the Federal Reserve Board, or that of the Federal Reserve Bank was taken judicial notice of by the court in its opinion.
If these regulations or either of them have not the force and effect of a law, the court cannot take judicial notice of them, but they must be pleaded and at the trial established *347by proper evidence. As there was no such plea, the ease having been disposed of on the demurrer to the amended complaint, I concur in a reversal.