Court Opinion

ID: 9418786
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:39:28.393888+00
Date Added: 2024-06-11T17:10:14.467210
License: Public Domain

Mr. Justice Stone,
dissenting.
I think the judgment should be affirmed.
The case was tried upon the pleadings alone, and we are asked to determine an important question of law on only a partial presentation of the facts upon, which its correct solution depends. Upon the facts disclosed, it would seem that the petitioner could not rightly defeat respondent’s counterclaim by setting up that the drafts, which are the subject of it, are held-by the Clearwater bank upon an agency in behalf of some of its depositors which they are not bound and have not chosen to assert. But even if that could properly be allowed, the burden rests on petitioner to show that -the agency of the Clear-water bank created by the deposit of the 'items for collection, was continued with respect to the drafts which are the subject of the counterclaim, so that they were held *153by the collecting bank as agent, not as owner. This the petitioner has failed to do.
From the pleadings it appears that the checks were deposited with the Clearwater bank by its customers, in the usual course, for collection, and were' forwarded by it, in turn, to the St. Petersburg bank for collection; that the St. Petersburg bank collected the checks and paid the amount of the collection to the Clearwater bank by the drafts in question, made payable to its order. The two banks had each, for a long time, been sending drafts and checks to the other for collection and remittance, and the demand of the St. Petersburg bank, to which the counterclaim was interposed, was for an amount similarly due for items which had been collected for it by the Clearwater bank. It is not shown what credits were given by the Clearwater bank to the depositors for the checks when received, or that any of them were restrictively endorsed, or that in the transactions between the two. banks either appeared to the other to be acting otherwise than as owner of the checks which it forwarded for collection. See Douglas v. Federal Reserve Bank, 271 U.S. 489. On the argument it was conceded that all were endorsed without restriction. There is no allegation that the Clearwater bank ever held the drafts, received from the St. Petersburg bank, as agent for its depositors, and. none that the depositors ever asserted such an agency, or that they have made any claim to the drafts. Whether or not, in the usual course of business, it credited its depositors with the amount of the drafts on their receipt is not revealed.
The authority and duty of the Clearwater bank, as an agent for collection, was to receive legal tender in payment of the collection items, and nothing else. In receiving and retaining the drafts made payable to its own order, without designating the bank as agent, it took *154them, not as agent, but for its own account. By taking them in payment it discharged the drawers of the collection items. Having thus precluded collection in legal tender, it at once became the bank’s duty to credit its depositors with the items collected. Federal Reserve Bank v. Malloy, 264 U.S. 160, 165. By thus crediting the drafts it would have performed fully its duty as a collecting agent, for such a credit was all that was expected or could have been required if the collection had been made in legal tender. In either case the agency would then have come to an end beyond recall, the bank would have become a debtor to its depositors and the unqualified owner of the drafts which it had accepted in payment of the collections. See Commercial Bank v. Armstrong, 148 U.S. 50, 58; Marine Bank v. Fulton Bank, 2 Wall. 252; Planters’ Bank v. Union Bank, 16 Wall. 483, 501; Phoenix Bank v. Risley, 111 U.S. 125; Burton v. United States, 196 U.S. 283, 297; Douglas v. Federal Reserve Bank, supra. There is no presumption, even under the Florida statute, that an agency of a bank to collect paper for its depositors survives the receipt by it of drafts in payment of the collection. Its survival necessarily depends on special circumstances not here disclosed. It cannot be presumed, in the absence of appropriate allegations or proof, that the depositors have claimed any ownership in the drafts or that, in the absence of such claim, the Clearwater bank did not, as it was legally bound to do, credit its depositors with the amount of the drafts on or after their receipt, or that it afterward occupied any relationship to its depositors other than that of debtor. There is thus a failure to allege directly, or by any necessary inference, the essential facts on which the petitioner’s case depends, to show that the depositors of the Clear-water bank have any right to treat the drafts in its hands as their property.
*155But even if we are to say, on this record, that the depositors were entitled to claim ownership of the drafts in the hands of the Clearwater bank, they have not done so, and the St. Petersburg bank may not assert for them an interest in the drafts which they are not bound to assert, and have never claimed, for themselves. Unless Federal Reserve Bank v. Malloy, supra, on which the opinion of the Court relies, is to be overruled, neither the St. Petersburg bank nor the Clearwater bank could treat the depositors of the latter as owners of the drafts, without their consent. In that case, which arose under the statute of Florida involved in the present case, the bank had received paper restrictively endorsed for collection from another bank, which had received it from its customer.. In turn it forwarded the paper to another bank for collection, from which it took a draft, payable to its own order, in payment of the collection item. This Court held that the bank received the paper as agent to collect it, but that in receiving the draft as payment instead of legal tender, the forwarding bank acted outside its agency. Hence it could not treat the owner of the paper sent for collection as the owner of the draft which it had thus wrongfully received, without his consent or ratification. Here the rights of the Clearwater bank upon the drafts had accrued before the receivership of either bank. What their rights then were they continued to be unless they were altered by some act of its depositors. Ownership of the drafts was not in suspension. It had already been lodged in the Clearwater bank by its own unauthorized act. Some affirmative act of ratification or adoption was necessary by its customers before the wrongful act of the Clearwater bank could be relieved of its consequences and before the burden of ownership, acquired by it in,its own right because without authority, could be transferred from it to its depositors. Allowance of the counterclaim *156upon the drafts, like payment of them before such an act of adoption, obviously could not result in double liability of the St. Petersburg bank, since the payment or allowance would be made to the one entitled to receive it.
Other circumstances make the present case an even plainer one for denying to the petitioner any right to assert that the drafts, which the Clearwater bank received and is compelled to hold as owner, are held upon an agency. The two banks, as the court below pointed out, were mutual agents for collection. On the record we. must take it that they dealt,with each other as the owners of the collection items, which each bank received from the other without notice of the interest in them of the other’s depositors for collection. In Bank of the Metropolis v. New England Bank, 1 How. 234, 6 How. 212, this Court laid down the rule that when banks mutually act ¿s agents for collection, each for the other, and paper transmitted for collection appears on its face to be the property of the transmitting bank and remitted for its account, they are entitled to settle their mutual demands for items collected by striking a balance, no matter who the owner of the collected items may be. Each deals, and is entitled to deal, with the other in reliance upon the security of the paper, endorsed without restriction and transmitted or expected to be transmitted in the usual course of the transactions between them. See also Reynes v. Dumont, 130 U.S. 354, 392; Joyce v. Auten, 179 U.S. 591, 597. The application here of the principle involved. would not seem to be affected by the fact- that drafts drawn for balances due from the one bank to the other were sent daily, rather than weekly or monthly. Even though the depositors here might have asserted an ownership in the drafts, which nevertheless they did not assert, it would be a departure from this salutary principle to say that the St. Petersburg bank can deny to the *157Clearwater bank the rights of ownership in the drafts which the latter cannot itself deny.
Not only has petitioner failed to sustain the burden of showing that the depositors of the Clearwater bank, or any of them, have asked or consented to be treated as owners of the drafts,, or otherwise adopted the act of the Clearwater bank, but it appears that it would be to their disadvantage to do so. We need not close our eyes to the obvious fact that the only possible advantage sought in behalf of the St. Petersburg bank by resistance to the counterclaim—the benefit of a distribution by the Clear-water bank to creditors larger than that of the St. Peters-burg bank—is identical .with the advantage which the depositors will retain by treating the Clearwater bank as their debtor, instead of asserting ownership in the unpaid drafts. In the circumstances, to speak of the Clearwater bank as suing upon its counterclaim as an agent and as not bearing the burden of ownership, is to speak in terms of legal fiction, not of reality. Notwithstanding our judgment denying to’the Clearwater bank the right to counterclaim upon the drafts because the ownership of them is not in it but in its depositors, the depositors, if they have not already done so, are free to prove their claim against the Clearwater bank as a debtor, because they have never become owners of the drafts. The Clearwater bank, then, has no choice but to bear the burdens of ownership of the drafts, which it has received and retains as owner. It should equally be entitled to the benefits. These include the right to set up the drafts as a counterclaim to its indebtedness to the St. Petersburg bank.