Court Opinion

ID: 8865146
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:02:16.165187+00
Date Added: 2024-06-11T17:05:58.208757
License: Public Domain

SWAYNE, District Judge
(after stating the facts as above). While it is well established that the checks of depositors, in the ordinary course of business with the bank, do not become the property of the bank, and the relation of debtor and creditor is not established, but 'that of principal and agent prevails up to the time the check is collected, and money is received by the bank, yet we think the decision of this case need not rest upon that weli-established proposition of law. It is true that the late president of that bank vigorously denied that he had any knowledge of the insolvency of the hank before ihe night in question. It is plainly evident, not *574only from the conditions which the bank has since been shown to have been in, — conditions which he could not avoid knowing, — but also from the records of the president and cashier, of which this court will taken judicial notice, he could not have been telling the truth. His action setting these checks and other deposits of the 5th of August aside, failing to mingle them with the moneys of the bank, is strong proof that he was aware that the bank was hopelessly insolvent. The testimony of the bank examiners shows that the bank had been hopelessly insolvent for months. The officers were where they could have known, they should have known, and must have known its actual condition. Of this insolvency, however, it is evident that the appellees had no knowledge or intimation, for they not only allowed their large deposit to remain in the bank, but sent that which is in controversy here, which they would not have done if they had had the slightest intimation that the bank was in trouble. The action of the bank in thus receiving said checks for collection was such a fraud upon the appellees as gave them the right to demand the return of the checks. We do not feel called upon to cite any authorities to establish the doctrine that the checks received under such circumstances did not become the property of the bank, but remained that of depositors, who have, under the circumstances, the right to recover the same; and the judgment of the lower court is therefore affirmed.