Court Opinion

ID: 3485946
Source: CourtListenerOpinion
Date Created: 2016-07-05 21:12:15.680983+00
Date Added: 2024-06-11T13:36:26.662936
License: Public Domain

The American Motor Car Sales Company, a corporation not resident in the State of Maryland, kept a large and active account with the Capitol National Bank of Indianapolis and frequently deposited with that bank drafts drawn by the American Motor Car Sales Company upon different persons and corporations. It appears from the testimony of Mr. Kahler, the assistant cashier of the Capitol National Bank of Indianapolis, who was also the person in charge of the discounts of that bank, that bills of lading *Page 181 
calling for one or more automobiles were sometimes attached to these drafts so deposited, and sometimes there were no bills of lading attached, but that under the course of dealing between these parties, all drafts so deposited were entered as cash and passed to the credit of the American Motor Car Sales Company and became immediately subject to their check after it was credited upon their pass book. He also testified that there was no agreement between the bank and the Motor Car Sales Company in respect to these drafts. The Motor Car Sales Company of Indianapolis drew a draft to the order of the Capitol National Bank of Indianapolis on the Auto and Accessories Manufacturing Company, a corporation under the laws of Maryland, in the City of Baltimore, for the sum of $2,165.00, with a bill of lading attached calling for several automobiles. This draft with the bill of lading attached was deposited by the Motor Car Sales Company in the Capitol National Bank of Indianapolis by which the proceeds were credited as cash to the Motor Car Sales Company, both upon the books of the bank and upon the pass book of the Motor Car Sales Company, and the draft was by that bank sent to the Merchants' National Bank of Baltimore for payment, and it was paid on May 7th, 1909, by the Auto and Accessories Manufacturing Company. On the same day, May 7th, 1909, the Auto and Accessories Manufacturing Company issued out of the Superior Court of Baltimore City a non-resident attachment against the American Motor Car Sales Company upon an alleged indebtedness of $2,750, for commissions due on sales of nine automobiles, and for cash advanced, and the attachment was on the same day laid in the hands of the Merchants' National Bank of Baltimore, and it was summoned as garnishee. The garnishee appeared and pleaded nullabona, and upon replication and issue joined thereon, verdict was rendered for the garnishee under the instruction of the Court, and judgment entered thereon; and from that judgment the plaintiff in the attachment has appealed. The only evidence in the case as to the general course of *Page 182 
dealing between the Motor Car Sales Company and the Capitol National Bank of Indianapolis, and as to this particular transaction between them, is the testimony of Mr. Kahler, to which we have already referred for a general statement of the case, but we will now refer briefly more particularly to his testimony. When he was asked by plaintiff's counsel if he took the draft for collection, he replied: "No; we took it and credited it as cash." Being further asked, "But you took the draft for collection, did you not?" he replied, "No, sir." "Why didn't you?" "Because it was the same as a discount." "Why do you call it the same as a discount?" "Because it was subject to their check immediately after it was passed on to their pass book;" and under continued pressure from counsel for plaintiff, he continued to assert that it was not taken for collection for the drawer, but was placed to its credit as cash and forwarded for payment.
Mr. Barthel, the general bookkeeper of the National Bank of Baltimore was called as a witness for the plaintiff, and it was sought to prove by him some custom of national banks applicable to this case, and three exceptions were taken to the refusal of the Court to allow him to answer certain questions propounded for that purpose.
The first question asked was: "What is the custom of National Banks where they take drafts from customers that are in excellent standing with them, and carrying large balances, in cases where they take drafts on other concerns in other cities?"
The second question is: "Can you state whether, if a draft is put in bank by a depositor in good standing with the bank, it is carried to the credit of the depositor, as cash?"
The third question is: "Will you please state whether or not drafts that are put in, in the manner I have indicated even though they may be marked `for collection,' are carried as cash to the depositor's credit, if the depositor is in good standing with the bank?"
These rulings all involve the same principle and may be considered together. Before evidence of a custom or usage *Page 183 
can be received, it must appear that there exists a usage established long enough to have become generally known, and to warrant a presumption that the contract in question was made in reference to it; and that the usage is uniform in reference to the business and localities involved in the inquiry. In this case the witness was not asked whether there was any usage relating to the subject of inquiry, nor was his attention directed to the field to be covered by it, and it by no means follows that the same usage which may prevail in bank management in Baltimore, or in Eastern cities, obtains in Indianapolis or in the cities of the West, and the failure to show these preliminary conditions constitutes a substantial objection to these questions.
Moreover, proof of usage can not be received if it contradicts expressly, or by implication, the language or the substance of the contract. Jones on Evidence, 2nd Ed., page 585. "Usage may be admissible to explain what is doubtful; it is never admissible to contradict what is plain." Here the draft was drawn to theorder of the bank and was indorsed by it alone, for collectionfor it, and when this is considered in connection with the clear and uncontradicted testimony of Mr. Kahler as to the circumstances of the transaction, such a usage as the plaintiff sought to show, would contradict the conclusion naturally to be drawn from those circumstances and from his testimony. Balt.Base Ball Club v. Pickett, 78 Md. 375; First Nat. Bk. ofBalto. v. Taliaferro, 72 Md. 169, 170. There was no error in the rejection of these questions. The principal question in this case, viz, the ownership of the draft when it was deposited in the Indianapolis Bank and credited as cash to the depositor, both upon the books of the bank, and also upon the depositor's pass book, was raised by the granting of an instruction to the jury at the close of the plaintiff's case, "that there is no evidence in this case that the garnishee had at the time of the laying of the attachment in this case, or has since had, or now has, any property, funds or credits of the defendant, and therefore their verdict must be for the garnishee." *Page 184 
Upon this question it was said in Tyson  Rawls v. WesternNat. Bank, 77 Md. 419, "there has been much apparent conflict between the authorities; * * * but this conflict has been more in appearance than in reality."
In Morse on Banking, 4th Ed., 1903, Vol. 2, secs. 575 and 577, the general rule is thus stated: "A deposit being made by a depositor in a bank, in the ordinary course of business, of money, or drafts or checks received and credited as money, the title to the money, or drafts or checks is immediately vested in and becomes the property of the bank," sec. 575.
"When a bank receives from a customer a check on another bank for the special purpose of collection, the title does not pass by the special indorsement for that purpose, nor does the receiving bank owe the amount until the check is collected. But where the customer has a deposit account with the bankers with whom he is accustomed to deposit checks payable to himself, which are entered on his pass book, and to draw against such deposits, an indorsement of the words "for deposit" on a check so deposited, is, in the absence of a different understanding, presumption of more than a mere agency or authority to collect; it is a request and direction to deposit the sum to the credit of the customer and gives to the bankers authority not only to collect, but to use the check in such manner as, in their judgment and discretion, having reference to the condition and necessities of their business, may make it most available in their possession, and they may have it certified by the bank on which it is drawn," section 577.
Section 575 is supported by reference to the case of Nat.Citizens' Bank v. Howard, 3 Howard's Pr. Rep. N.S. 512, and section 577 by reference to Nat. Commercial Bank v. Miller,77 Ala. 168. The text is supported by numerous well considered cases, and is in accord with the current, and, in our opinion, with the weight of authority.
In Titus  Scudder v. Mech. Nat. Bank, 35 N.J.L. 589, the Court said, speaking of certain checks which had been *Page 185 
deposited with the bank: "They were received and credited in the same way as bills or notes of other banks. By such crediting, the bank became the owner of these checks as they do of legal tender notes or bank bills so deposited." And in Hoffman v. FirstNat. Bank of Jersey City, 46 N.J.L. 605, it was held that a check deposited by general indorsement of the payee and passed to the credit of the depositor, from that moment became the property of the bank, and the bank became liable to the depositor to pay any check drawn upon it to the amount of his deposits.
In Metropolitan Bank v. Lloyd, 90 N.Y. 530, Murray deposited certain checks for collection; others he deposited and took credit for as cash upon his pass book. The check in controversy in that case was of the latter class. The Court said: "It is true no express agreement was made transferring the check for so much money, but it was delivered to the bank and accepted by it, and the bank gave Murray credit for the amount and he accepted it. That was enough. The property in the check passed from Murray and vested in the bank. * * * The dealings between the parties show that it was the intention of both parties to make the transfer of the check absolute, and not merely to enable the bank to receive the money upon it as Murray's agent. * * * The appellant urges that the check was not delivered by Murray as the result of a negotiation or application for its discount, or sale or for a credit, and if we look for such negotiation in the words of the parties only, this must be conceded, but if we take the conduct of the parties during the transaction it is otherwise. They adopted a mode of intercourse which fulfilled the function of spoken words, and brought about a result as intelligibly as words could have done."
In Cragie v. Hadley, 99 N.Y. 131, citing and approvingMet. Nat. Bank v. Lloyd, supra, the Court said: "The general doctrine that upon a deposit being made by a customer in a bank, in the ordinary course of business, of money, or of drafts or checks, received and credited as money, the title *Page 186 
to the money, or to the drafts or checks is immediately vested in and becomes the property of the bank, is not open to question."
In St. Louis  S.F. Ry. v. Johnston, 27 Fed. Rep. 245, JUDGE WALLACE relied upon 90 N.Y., supra, and said: "The intention of the parties in the particular transaction may be ascertained from the course of their previous dealings. When it appears that it has been the uniform practice between the parties in their past dealings to treat deposits of paper as deposits of cash, their intention to do so in the particular transaction should be inferred in the absence of new and inconsistent circumstances." It is true that this decree was reversed in133 U.S. 567, but the Court said, "the question was one of fact rather than of law," and, "that so far from there being shown an unequivocal course of dealing tending to support the conclusion (of the Circuit Court) it seems to us the tendency of the evidence is otherwise." There is therefore nothing in that reversal to impair the legal principle announced so emphatically by JUDGE WALLACE.
In Amer. Trust Bank v. The Gueder Mfg. Co., 150 Ill. 336, the payee of a check indorsed the same "for deposit" to be placed to his credit, and mailed the check to his banker, who gave him credit for the amount, and after indorsing it "for collection and return" forwarded it to the drawer for payment. The Court held such deposit was in legal effect a negotiation of the same so as to vest the legal title in the bank, with the right to charge it back to the depositor in case it was not paid on presentment and that the credit given the depositor was a sufficient consideration for the assignment.
To the same effect are the cases of Cody  Moore v. Bank ofGrand Rapids, 55 Mich. 379; Security Bank of Minnesota v.North Western Fuel Co., 58 Minn, 141, and Ayres v. TheFarmers' and Merchants' Bank, 79 Mo. 421.
Zane in his work on Banks and Banking, pages 210 to 212, seems to take the position that banks in which checks *Page 187 
and drafts have been deposited for the credit of the depositor can only be regarded as owners of the paper, in favor of third persons who have acquired intervening rights, though he says there are cases which hold that if the deposit is credited as cash the title passes to the bank, and he adds: "The conflict of authority is not capable of being explained, but the true rule is that of Beal v. Somerville, 50 Fed. Rep. 647." That case will be referred to later.
Whatever conflict there may be, or want of harmony, in the decisions in other States or jurisdictions, a careful examination of the two Maryland cases, Tyson  Rawls v. Western Nat.Bank, 77 Md. 412, and Ditch v. Western Nat. Bank,79 Md. 192, leads us irresistibly to the conclusion that title to the draft in question here had vested in the Indianapolis Bank under the decision in the last-named case, and that there is no conflict in this State upon the question as here presented.
In Tyson  Rawls v. Western Nat. Bank, the checks which were the subject of controversy were sent to Nicholson  Sons by Tyson  Rawls, indorsed, "For collection for account of Tyson 
Rawls, Greenville, North Carolina." Nicholson  Sons credited these checks to them as cash and treated and used them as their own property, but Tyson and Rawls did not know and did not inquire how Nicholson  Sons dealt with them. Nicholson  Sons endorsed them for value to the Western Nat. Bank, which collected them and held the proceeds as its own. Nicholson  Sons failed subsequent to such indorsement, and were, in fact, insolvent at that time, but this was not known to Tyson  Rawls nor to the Western Bank. The Court said: "When a check, draft or promissory note is indorsed in blank, or to the order of the bank, and the proceeds credited to the depositor as cash, the bank becomes the owner of the paper by virtue of the indorsement. And, in case it is not paid at maturity it has the ordinary remedies which belong to the endorsee of instruments of this character which have been dishonored. * * * This indorsement was not adequate to pass to Nicholson *Page 188  Sons the title to these papers. * * * The words `for collection' evidently had a meaning. That meaning was intended to limit the effect which would have been given to the indorsement without them, and warned the party that contrary to the purpose of a general or blank indorsement, this was not intended to transfer the ownership of the paper or its proceeds." One of the cases relied on by the appellant in the case at bar is Butchersand Drovers' Bank v. Hubbell, 117 N.Y. 384, but in that case the endorsement was for collection simply, and the Court inTyson  Rawls v. Western Nat. Bank, page 419, cites that case to sustain its opinion saying that the opinion in 117 N Y "contains a very clear and convincing exposition of the difference between the rights of the banker in case of a deposit of a check or draft indorsed in blank, and one where the paper is indorsed for collection."
Tyson  Rawls v. Western Nat. Bank was argued before all the judges; JUDGE McSHERRY dissenting and the opinion was delivered by JUDGE BRYAN.
In Ditch v. Western Bank, 79 Md. 192, which grew out of the same failure of Nicholson  Sons, Ditch  Bros., holders of a check indorsed to them by the payee, indorsed the same "for deposit to the credit of J.S. Ditch  Bro.," and deposited it with Nicholson  Sons, who entered the same as cash to the credit of Ditch  Bros., both on the books of the bank and on the depositor's pass book, and indorsed the check to the Western Bank, by which it was paid to Nicholson  Sons who afterwards made an assignment for the benefit of its creditors, and it was held that the title had vested in the bank which held it and had paid for it. That case was argued before six judges, JUDGES BRISCOE and BOYD not sitting, and the Court declined to hear counsel for the appellee. The case was subsequently reargued before all the judges except JUDGE PAGE, who, however examined the briefs of counsel and noted his concurrence in the opinion of the Court. The opinion in both these cases was written by JUDGE BRYAN, and they both *Page 189 
evince the most careful consideration of the subject. In the latter case, he reviewed at some length the principal cases urged by the appellant, among which is Beal v. Somerville, 50 Fed. Rep., supra, stated by Mr. Zane to lay down the true rule for such a case. JUDGE BRYAN says: "It being our opinion that Nicholson  Sons acquired title to this check, we must declare our carefully considered judgment. If other tribunals for whose learning and ability we entertain the greatest respect, have arrived at conclusions different from our own, we do not feel called upon to abandon the deliberate convictions which we entertain."
In that case JUDGE FOWLER delivered a vigorous and exhaustive dissenting opinion, in which CHIEF JUDGE ROBINSON and JUDGE ROBERTS concurred, and it was doubtless in view of this dissenting opinion that JUDGE BRYAN used the emphatic language just quoted. JUDGE FOWLER reviewed and analyzed the leading text writers, and a number of the decisions adverse to the view expressed by the majority opinion, but without avail to shake the deliberate convictions entertained by the majority. The question here presented, and there decided, upon such full deliberation, must be regarded as finally settled by that decision.
Judgment affirmed with costs to the appellee above and below. *Page 190