pay over again to any bona fide indorsee to whom C might transfer the check for value.

Such a case actually occurred in your State (Head v. Cole, 53 Ark. 523). The maker of a negotiable note was garnisheed as debtor of the payee before its maturity. The court ordered the maker to pay the creditor, which was done. The payee subsequently, but still before maturity, negotiated the note to a bona fide holder and the maker was held liable to pay over again to the latter. The following language of your Supreme Court is pertinent:

"Although the payee held this note, it was not due; and as no steps were taken to impound it, he was able to transfer it with all the evidence of ownership and authority; and the purchaser took it with no notice of the garnishment. Where it appears that the garnishee is a debtor on commercial paper given to or held by the defendant the court should decline to render any judgment against the garnishee unless it first compels the delivery of the paper into court, or until the paper matures and it is made to appear that the defendant still holds it. That is to say the court should protect the garnishee against the danger of paying the debt twice. It is a hardship that the appellees

twice pay a debt; they might have averted the hardship by care and prudence. If the court improperly rendered judgment against them as garnishee they might have appealed."

Even assuming, therefore, that the bank is indebted to C upon this check the order of the court is defective and would be overturned on appeal. But I believe it is erroneous to hold that the bank is indebted to Cat ail or has any funds in its possession belonging to C. The bank is indebted to its depositor A. It has never been held in Arkansas, so far as I am aware, that the delivery of a check is an assignment pro tanto to the payee or holder of the funds in bank; and the great weight of authority is to the contrary. There is, therefore, no indebtedness to C for which the bank can be garnisheed by the latter's creditor and the order of the court that the bank must pay money which it owes A to a creditor of C will not be sustained by the higher court. The bank can settle its indebtedness to A by paying his check to the rightful holder, but it is entitled to the surrender of the check as a condition of so doing.

For the above reasons I think the garnishment will not hold good and the order will be set aside. I notice you say the bank neglected to file an answer. Should it be said that the bank, by not answering, admitted its indebtedness and rendered itself liable, the case of Nelson v. Blank, 67 Ark. 347, is to the effect that where a garnishee in an attachment suit has failed to answer satisfactorily, the proper practice is to institute suit against him, and a personal judgment against the garnishee in the original suit is not authorized. (1908.)

408a. Check not an assignment of deposit-Bank cannot be held for funds of defendant received after service of writ.-Mr. A had a land deal passing through this bank (South Dakota) out of which he was to get certain commissions. Some of his creditors heard of this and we were served with summons in garnishment and levy on execution for any funds that might pass through our hands belonging to Mr. A. Mr. A and his attorney conceived the idea of merely having the consideration of the deal passed through our hands thereby leaving no funds of his upon which to levy. Later his attorney gave Mr. A a check for his commission and the question arises whether we would be held responsible under the garnishment or levy if we paid the amount of the check to Mr. A, upon presentation at the window? Opinion: The South Dakota Rev. Code (1919), § 2470, provides that "from the time of the service of the summons upon the garnishee he shall stand liable to the plaintiff to the amount of the property, money, credits and effects in his possession or under his control, belonging to the defendant and of all debts due

or to become due to the defendant, except such as may be by law exempt from execution.” (Comp. L. 1913, Chap. 156).

Before the passage of the Negotiable Instruments Act, in South Dakota, the giving of a check operated as an assignment of the fund in bank to the payee. Turner v. Hot Springs Nat. Bank, 18 S. D. 498, 101 N. W. 348. But the Negotiable Instruments Act overturned this rule by the provision that "a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank and the bank is not liable to the holder, unless and until it accepts or certifies the check." Sec. 189.

In the case stated, the defendant, Mr. A, had no deposit in the bank and the bank was not indebted to him at the time of service of the writ. Subsequently thereto, the attorney of Mr. A drew his check on the bank payable to Mr. A. The question is whether the bank would be responsible if it paid this check to Mr. A upon presentation at the window. I think there would be no responsibility. Even had the check been issued before the service of the writ, it did not constitute an assignment of the deposit to the payee so as to make the bank liable to Mr. A thereon. The funds represented by the check do not belong to Mr. A, but to the drawer thereof and continue to be his property until the bank, as agent of the drawer, pays the same to Mr. A. At no stage of the proceedings while the bank has dominion over the fund, does Mr. A have a garnishable interest therein. It has been expressly held that before acceptance of an order, the drawee is not indebted to the payee, so as to be subject to garnishment in a suit against the latter. Stone v. Dowling, 119 Mich. 476, 78 N. W. 549.

Furthermore, in this case, the check was not issued until after the service of the writ and even though the check constituted an assignment so as to make the bank indebted to the payee, which as above shown is no longer the law in South Dakota, the garnishee would not be answerable for funds acquired after service of the writ. See for example, Cogswell v. Mitts, 90 Mich. 353, 51 N. W. 514, holding that garnishee process cannot reach an indebtedness created after the writ is issued. (1917.)

re

409a. Rival claimants to deposit, one claiming ownership, the other holding a check against the account.One of our tellers cashed a check, and upon presenting same to the bank on which it was drawn, was turned marked, "Account Garnished," After looking into the matter we find that a certain gentleman was hurt in an accident and upon being taken to the hospital he gave his money to a girl friend asking her to keep it for him and instructed her to pay certain bills, which she did, having put the money in the bank and checked it out in her name, and when he instructed her to pay the hospital bill she told him that she never had the check book with her and stalled around in producing same. This made him suspicious of her and so he got action by garnisheeing her account. Now we hold a check against this account, she having left town, and he seeks to get judgment against this account. Who gets the money?

Opinion: Under the Negotiable Instruments Act a check of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof, and the drawee is not liable on the bill unless and until he accepts the same. Consequently, when the check was refused payment by the bank upon which drawn, your only recourse is against the drawer of the check and you have no right of action against the bank on which the check was drawn. In an action against the drawer, however, you might attach her account and then the question would be whether the garnishment by the gentleman who claims the money belongs to him would hold good. If he can prove his story, his garnishment would take precedence. On the other hand, this woman put the money in the bank in

her own name and checked it out and the gentleman might not be able to prove what he alleges namely that it was his money which he had given to her to keep for him. If not, then you might have recourse upon the account by attaching same in an action against the drawer of the check, although as said, the bank is not liable directly to you for the money. (1921.)

BANK NOT LIABLE AS GARNISHEE WHEN NOT INDEBTED TO NOR HOLDING PROPERTY OF PRINCIPAL DEBTOR AT TIME WRIT IS SERVED

410a. Innocent purchaser of negotiable paper should be protected from garnishment proceedings against bank. One of our customers has purchased drafts from us which he has not cashed and the question comes up, can these drafts be affected in any manner by a garnishment?

Opinion: Concerning your drafts which the customer has purchased but not cashed, the decision of your Supreme Court in Head v. Cole, 53 Ark. 523, 14 S. W. 898, shows that the courts will protect you fully. In that case the maker of a note was garnished by a creditor of the payee before maturity and while the note was still in the payee's possession. The payee afterwards transferred the note before maturity to an innocent purchaser. The court said: "Although the payee held this note, it was not due; and, as no steps were taken to impound it, he was able to transfer it with all the evidences of ownership and authority; and a purchaser took it with no notice of the garnishment but with the apparent guaranty usually attendant upon the transfer of commercial paper. The protection to purchasers of such paper would be destroyed if their rights were affected by proceedings against any or all of the prior parties of which they had no notice. Where it appears that the garnishee is a debtor on commercial paper given to or held by the defendant, the court should decline to render any judgment against the garnishee unless it first compels the delivery of the paper into court, or until the paper matures and it is made to appear that the defendant still holds it. That is to say, the court should protect the garnishee against the danger of paying a debt twice without destroying the essential properties of commercial paper, which we are confident the Legislature never intended to impair by the enactment in reference to garnishments." (1911.)

GARNISHMENT OF SPECIAL DEPOSIT

412a. Rights of creditor where bank is furnished with a list of checks to be paid.-This bank received a special deposit of $9858.05 and at the same time a complete list of the checks drawn against the deposit was given to the bank as follows:

"I, the undersigned, hereby deposit with you the sum of $9858.05 and deposit said funds for the following specific purpose, on which I have this day issued checks to the following named persons, as follows:

(Here follows a detailed list of the checks issued naming the parties, the amounts, etc.)

All of said checks having been issued and are now outstanding and drawn as against this special deposit, and you are hereby directed to charge said account with the total amount of said checks as of this date whether the same are presented to the bank herewith, or whether the same are being held, it being the special intention of the undersigned that all of the above deposit is being made for the specific purpose of taking care of said checks, that is:-in so far as it may be necessary to take said amount to pay said checks.

Dated this 21st day of March, A. D. 1922.
E. C. P

The deposit consisted of two drafts and the bank reused to credit the deposit at once, pending the collec

tion of such drafts and in the meantime agreed to hold the listed checks for payment pending collection of the deposited items. Shortly after the arrangement above referred to had been completed with the bank and before returns had been obtained from these items, the bank was garnisheed by a creditor of the depositor. We desire to know the status of this special deposit as compared to the garnishment. Would the special deposit under the circumstances take precedence and the bank be discharged as garnishee or should the attachment stand?

Opinion: Upon the theory of implied acceptance of a beneficial trust, it has been held that a deposit made by defendant expressly for the use or benefit of another cannot be subjected to garnishment or attachment, the arrangement being accepted by the bank and the bank agreeing to make the payments agreed upon, although the beneficiary has not in fact accepted the arrangement. (Babcock Print. Press Mfg. Co. v. Ranous, 164 N. Y. 440, 58 N. E. 529, (holding that where by agreement with its local agents, a foreign insurance company made a deposit for the benefit of certain policy holders, the deposit was not subject to garnishment at the instance of other policy holders); Rogers Locomotive & Works v. Kelly, 88 N. Y. 234 (where a corporation made a deposit under express direction that it was for the payment of interest coupons upon its bonds, and the bank agreed to pay such coupons upon presentation, out of such fund, it was held that the fund was not subject to garnishment at the instance of creditors of the depositor, although the holders of the coupons had not presented them for payment and had no knowledge of the trust.) It has also been held that such an arrangement may be ratified by the beneficiary even after garnishment. (Alexander v. Wade, 106 Mo. App. 141, 80 S. W. 19.) It has likewise been held in Iowa that a special deposit to meet outstanding checks is not subject to garnishment at the suit of general creditors of the depositor. (Dolph v. Cross, 153 Iowa, 289, 133 N. W. 669, where the court said, inter alia: "The facts pleaded show that the execution defendant made the deposit for the specific purpose of meeting the checks which he had just issued, and this fact was made known to the bank officials at the time of the deposit. The form of the bookkeeping was not controlling. That was a mere matter of convenience. The bank officials understood that they received this money for the express purpose of paying checks already issued for that exact amount. Whether the facts pleaded show an equitable assignment to the check holders we need not determine. The deposit was special and not general. It was made for the benefit of the particular check holders. The bank received it as such. It is enough

to say that the contract of deposit was made for the benefit of third parties, and that such third parties were entitled to avail themselves of it. If the bank itself had been a creditor of the depositor, it could not have applied such deposit upon its own claim. We see no reason for holding that the right of a garnishing creditor could rise any higher than that of the bank itself if it were a creditor. The appellee relies upon the Negotiable Instruments Act, which provides: "A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank and the bank is not liable to the holder unless and until it accepts or certifies the check." Section 189. This section does not cover the situation here presented. The intervener is not relying upon the 'check of itself.' He bases his claim, not only upon the check, but upon the further fact that a special deposit was made to meet this very check after the issuance thereof. The bank, having received the deposit for such specific purpose, was bound by the conditions imposed. We reach the conclusion that the deposit in question was special, and not general, and that it did not create the mere relation of debtor and creditor between the bank and the depositor in the ordinary sense, and that the right of

the check holders, for whose benefit it was deposited, was superior to that of the garnishing creditor, and that the claim of the intervener thereto to the amount of his check should have been sustained.") This decksion is conclusive of the instant case. A special deposit was made by the depositor, as evidenced by the instructions to the bank, copy of which is attached, and the bank received it as such. If the bank itself had been a creditor of the depositor, it could not have applied such deposit to its own claim; and the garnishing creditor has no higher right than the bank itself if it were a creditor.

The case of Kaesemeyer v. Smith, 22 Idaho, 1, 123 Pac. 943 (1912), 43 L.R.A. (N.S.) 100 and note, would seem, at first view, to have a contrary bearing but can be differentiated. In that case, the court held (to quote from the official syllabus):

"Where S. deposits in the Exchange National Bank the sum of $1,500, and thereafter personally demands and receives payment of $700 of said sum, and at the time such payment is made furnishes the bank with a statement of checks issued by S. against the balance of the deposit fund, and at such time makes no arrangement with the bank that such balance is to be a special deposit, and the bank does not accept such deposit as a special deposit, such deposit remains a general deposit and is subject to attachment.

"Where S. issues a check against his general account on deposit at a bank, such check is not an equitable assignment of the fund standing to the credit of S. in the bank, notwithstanding the fact that S. made the deposit for the purpose of paying such check, and a garnishment of the bank in a suit against S. before such check is presented creates a lien on the deposit superior to that of the payee of the check."

But in the Kaesemeyer case there was no arrangement with the bank that the balance was to be a special deposit and the court specifically held that the bank did not accept it as such and that the deposit was general and subject to attachment. In the present case, however, the deposit was special and the bank expressly agreed to apply the deposit, when the drafts were collected, to payment of the checks. (1920.)

NOTE. The above case was brought to trial and in First Nat. Bank of Cherokee v. Propp, 200 N. W. (Iowa 1924) 428, it was held that where money was placed in the bank, together with writing that it was to be used used for payment of certain specified outstanding checks, there was a special deposit not subject to garnishment. In this case the deposit was not in form of cash but in form of negotiable instruments payable on demand.

TIME AND PLACE OF SERVICE OF WRIT 417a. Process served on Sunday at banker's home outside of banking hours.-Does an officer of a national bank have to accept service of a Writ of Garnishment outside of banking hours, when not at the bank? The writer was approached Sunday, at home, by the deputysheriff, who desired to make service on a Writ of Garnishment. Was the writer correct in refusing to accept such service, other than at the bank during banking hours?

Opinion: The general rule is that a writ of garnishment must be served at the place designated by the statute. (Leonhard v. John Hope, etc., Engraving, etc., Co. 21 R. I. 449, 44 Atl. 305.)

However, the New Mexico statute provides that the writ may be served upon the garnishee wherever he may be found in the county. (N. M. St. 1915, § 2532.)

The New Mexico statute provides that no civil process shall be issued or served on Sunday, except in case of rapias, attachment or replevin, when the plaintiff, or his agent, shall make oath that he is in danger of being subjected to loss, or serious inconvenience, unless process shall be issued or served on Sunday. In all

other cases, any civil process issued, or the service thereof, on said day, shall be void. (Ibid. § 1791.)

we

So, in the case submitted, while the service of a writ of garnishment upon the officer of a bank away from the bank would be good service, the service of such a writ on Sunday would be absolutely null and void. (1924.) 418a. Service of writ during the act of withdrawing deposit. From Kentucky-This morning when opened our doors at 9 o'clock one of our customers immediately stepped in, walked up to the window and informed the cashier that he desired to withdraw the balance he had on deposit. The cashier told him that it would be necessary for him to write a check, and immediately left the bank, As soon as the cashier stepped out on the street an official presented him with a notice of attachment on this particular customer. The cashier returned to the bank in about four or five minutes and found that the customer in question had withdrawn his funds. I might state for your information that the cashier did not recognize the customer when he first presented himself at the window as being the man whose account was later attached.

Will you please give us your opinion as to whether or not the bank is liable in this instance. Would the fact that the cashier was served with the attachment notice on the street instead of the banking house or place of business make any difference?

Opinion: The Kentucky statute provides that all corporations except foreign insurance companies carrying on business in the state shall at all times have one or more known places of business in the state, and an authorized agent or agents thereat, upon whom process can be served. (Carroll's Ky. Stat. 1915, Chap. 32, § 571.)

It is likewise provided by statute that in an action against a private corporation the summons may be served, in any county, upon the defendant's chief officer, or agent, who may be found in the state; or it may be served in the county wherein the action is brought upon the defendant's chief officer or agent who may be found therein. (Ky. Civ. Code, 1919, § 51-3. See L. & N. R. Co. v. Coleman, 7 Ky. L. Rep. 229 [holding that in an action against a private corporation summons may be served upon defendant's chief officer residing in the state, wherever he may be found]; C. & O. Ry. Co. v. Heath, 87 Ky. 651, 9 S. W. 832 [holding that where the jurisdiction of actions against corporations is either local or transitory, the plaintiff may elect the local jurisdiction and have the summons served on the chief officer wherever he may be found in the state].)

With regard to service of writ of attachment upon a corporation, the statute provides that the sheriff shall serve same by delivering a copy thereof, with notice specifying the property attached, or the debt or demand owing by it, to the officer or agent upon whom a summons may be served according to the provisions of § 51 (supra) and by summoning the corporation to answer as a garnishee in the action. (Ky. Civ. Code, 1919, § 203-3.)

It would seem from these provisions of the Kentucky statute that the writ or process may be served upon the officer wherever he may be found, whether in the bank or out of it.

Of course, a writ of attachment can only affect funds belonging to debtor at the time of the service of writ, and if the debtor had actually withdrawn his funds even a fraction of a minute before the writ was actually served and its lien attached to the fund, then the bank would not be answerable in the garnishment proceedings. In the instant case it does not clearly appear whether the customer had wholly completed the withdrawal of his deposit before the cashier was served with the writ of attachment outside the bank, or not. But assuming the writ of attachment was served upon the cashier outside the bank a minute or two before the customer inside the bank had completed the with

drawal of funds over the counter, nevertheless such withdrawal having been before the cashier brought the writ into the bank and to the knowledge of the teller whose function it was to pay the customer's check upon presentment, I think the bank would be protected in such payment and not liable under the writ of attachment for the funds so withdrawn.

While there is no decided case upon the point, the analogy of the rule governing checks paid after death of drawer but before knowledge or notice thereof has been brought home to the bank is applicable. Although death revokes authority of the bank to pay the check, still the courts protect the bank where it makes payment before notice of such revocation has been brought home to it. Likewise where a stop payment order is given to an officer while away from the bank and funds are paid out in the interim before his return to the bank (Albers v. Com. Bank, 85 Mo. 173; Freund v. Importers, etc., Nat. Bank, 76 N. Y. 352; Curtice v. London City, etc., Bank, 1 K. B. 293 [where a telegram placed in the bank's letter-box was held to be an insufficient countermand].)

It would seem, therefore, that in the instant case the proper answer for the bank to make to the writ would be "no funds of defendant in possession, and no debt owing;" for when the cashier who was served with the writ returned to the bank and endeavored to comply with the mandate thereof, and sequester the debt owing by it to the depositor, he was confronted with the situation that an examination of the account of the depositor revealed the fact that there was nothing to his credit, and the cashier should so make answer. (1920.) 419a. Garnishment takes precedence over checks dated before but not presented until after service of writ-Deposits made after service not covered.-In case a Garnishee Summons is served on us for a depositor's balance, can we pay and charge to customer's account checks that are presented after garnishee is served, such checks bearing date previous to date of service of Garnishee Summons?

Suppose A to be a depositor of ours, B gets judgment against A and has a garnishee summons served on us for A's account. The garnishee summons is served on us January 10, 1912, A having a balance of $40 to his credit. On January 11, 1912, we receive by mail from a Chicago bank a check drawn by A for $10 dated January 8, 1912. On January 12, 1912, we receive through clearance with another bank in our town a check drawn by A for $5 dated January 8, 1912. Can we pay these checks and charge them to A's account, deducting them from his balance of $40 on January 10,

1912.

Would deposits made between January 10, 1912, and the date of hearing in court (say January 25, 1912), be covered by the garnishee summons.

Opinion: The garnishee summons, when served, takes precedence over checks dated and issued before, but not presented to the bank until after the date of service of the summons. It was formerly the law of Illinois that the giving of a check on a bank constituted an assignment of the deposits to the payee, but this rule has been changed by the Negotiable Instruments Act, § 189, under which "a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies the check."

It follows that, having a balance of $40 on January 10th, the date of service of summons, the bank can be held for that amount to the judgment creditor and has no right to pay and charge against such balance, the two checks presented on January 11th and 12th, although dated January 8th which was before service of the summons.

As to your further question whether deposits made between the date of service of the summons and the date of hearing in court would be covered by such

garnishee summons, would say I understand the rule to be that an indebtedness created after the writ is served is not covered. For example, it has been held in Michigan that the right to hold a garnishee depends upon the garnishable character of the attached claim at the time of serving the process; a subsequent change in its status not enlarging plaintiff's rights. Old Second National Bank v. Williams, 112 Mich. 564. Without taking time for the examination of authorities elsewhere, I presume the same rule holds good generally. (1912.)

420a. Garnishment served at 10:43 A. M. takes precedence over checks presented at clearing house at 10:30 A. M.-Kindly advise if it has ever been determined if the delivery of checks at a clearing house constitutes a legal presentation of the same for payment. This question arose in the following manner:

A member bank was served with a writ of attachment garnishing a depositor's account at 10:43 a. m. The local clearing is made at 10:30 a. m. In this clearing were several checks drawn on this depositor's account and covering the greater part of the amount that he had on deposit. The question is, did the delivery of these checks to our clearing house clerk constitute a legal presentation or were they not legally presented until they were actually in the bank and the clearing house balance had been settled? Would a bank be justified in returning such checks under the clearing house rules for the reason that the account had been attached?

Opinion: The presentation of a check at or through the Clearing House is, according to the authorities, a legal presentment for payment but the check is not finally but only provisionally paid at the time of exchange of checks and adjustment of balances and if, when it reaches the drawee bank, the account is not good for the amount, the check is not paid but may be returned within the time fixed by the Clearing House Rules. The above proposition is supported by the authorities cited below and it follows that where the account of a depositor is garnished at 10.43 A. M. after the time of presentment of his check at the Clearing House at 10.30 A. M. but before they have reached the bank for examination and payment, the checks at the time of garnishment have not been paid, the garnishment holds and the bank can return such checks under the Clearing House Rules for the reason that the account has been garnished.

In Columbia-Knickerbocker Trust Co. v. Miller, 215 N. Y. 191, 109 N. E. 179 checks were presented at the Clearing House at 10 A. M. and were received at the drawee bank at 10.30. At noon, before the drawee had an opportunity to check up the items received from the Clearing House, the drawer suspended and the checks were returned as unpaid within the time fixed by the Rules. The court held that checks had not been paid. It said: "Doubtless, the adjustment of balances by the Clearing House constitutes a sort of tentative or provisional payment, but that adjustment occurs without an opportunity to the members to examine the items, verify signatures, compare the amounts with the drawers' accounts, and the like and regardless of whether the checks are good. The constitution of the Association contemplates that the members will directly adjust between themselves claims arising from the return of the checks. If thus appears that the question of payment is not, and cannot be, ultimately decided until the bank upon which the checks is drawn has had an opportunity at its banking house to examine the checks. As between the immediate parties to the transaction then there was plainly no payment. The tentative or provisional payment through the usual exchange of credits was to stand if upon examining the check after it reached its banking house the bank upon which it was drawn concluded to pay it. reached that conclusion, nothing more remained

Mit

to

be done, and the tentative or provisional payment became final. That arrangement obviated the necessity. of having some one stand at the counter of the City Bank to receive payment, and in practical effect answered the same purpose.'

In Hentz v. National City Bank, 159 App. Div. 743, 144 N. Y. Supp. 979, involving a similar state of facts, where the drawer failed after his checks had been presented at the Clearing House and were returned by the drawee for that reason,, the court held there had been no payment and said: "A payment through the clearing house and a payment over the counters of a bank upon which a check is drawn are entirely different. The clearing house is simply a representative of all the banks who are members of it. Its purpose is to enable these banks to go to the clearing house each day and there present checks drawn on other clearing house banks received the day before and receive from the clearing house checks drawn on the presenting bank which have been sent in by some other member. The clearing house then balances the check sent by a bank against those sent to it, and later in the day a bank either pays or receives the balance due to or owing by it: in other words, it is an adjustment of balances, solely for the convenience of the banks who are members of the association. It is in no sense a payment binding upon the bank upon which it is drawn, so far as the payee named therein is concerned, since under one of the rules of the clearing house association a check or draft thus received may be returned to the bank from which it is received at any time that day before 3 o'clock in the afternoon.

"The payment of a clearing house balance is not a payment of any particular check and does not become so until the time within which the check may be returned has expired. This would seem to follow from the necessity of each case, because a bank upon which a check is drawn has no opportunity to examine it until after it has been received from the clearing house. Among the checks presented at the clearing house may be forged checks, checks drawn against insufficient funds, and checks upon which payment has been stopped; but, irrespective of their validity, all of them must, in making payment through the clearing house, be charged against the bank upon which they are drawn in order to ascertain and adjust the balance; and, if a check be thus paid, then the bank can protect itself under the rules by returning it to the bank from which it was received within the time specified."

In Eastman Kodak Co. v. National Park Bank, 231 Fed. 320, the court said: "Payment is a matter of intent, and it seems to me quite clear that the mere entry of the items upon a sheet in the clearing house is not intended as a payment. It is what Mr. Justice Miller calls it in Columbia-Knickerbocker Trust Co. v. Miller, 215 N. Y. 191, 109 N. E. 179, 180, 'a sort of tentative or provisional payment.' As between the immediate parties to the transaction, then, there was plainly no payment, 215 N. Y. 196, 109 N. E. 180. The rules make it clear that the whole day must expire before the credit entries are to be taken as receiving the assent of the debtor members, and it makes no difference for what reason they decline to admit the item."

In First National Bank v. National Bank, 100 Misc. 31, 185 N. Y. Supp. 15, the above views were reiterated but in that case after a check was received from the clearing house, the account of the drawer was charged with the amount. This was held to constitute payment and the subsequent act of the bookkeeper in striking out the charge after notice of suspension of the drawer, did not alter the status. the proposition of what constitutes payment, the court quoted from Baldwin Bank v. Smith, 215 N. Y. 76, 09 N. E. 140, L.R.A.1918F. 1089 as follows: "All

On

that is necessary to constitute payment is the intention to make the application which may be evidenced in a variety of ways, e. g., by bookkeeping entries, by canceling the note and surrendering it to the makers, by the drawing of a check by the makers and its acceptance in payment by the bank."

It follows, as already stated, that where an account is attached or garnished after checks against the account are presented at the clearing house but before they have been finally paid at the bank, the garnishment takes precedence and the checks could be returned as unpaid. (1923.)

421a. Writ served at 9:01 A. M. takes precedence over check received in mail 8:30 A. M. but charged up at 11:00 A. M.-The question has arisen with the officers of this institution (Rhode Island) with regard to the payment of checks where the account has been attached. I would cite the following example:

cor

A check comes in for payment through our respondents and arrives at the bank at 8.30 A. M. In the ordinary course of business this check is charged to our customer's account between eleven and twelve o'clock. When, in your opinion, is the check actually paid?

This question comes up as a result of an attachment which was placed on the account at 9.01 A. M. and the point we would like to determine is-whether this attachment operates as against the account even though checks come in through correspondents for payment and are received at the bank prior to the time of the attachment. We would also like to inquire whether, in your opinion, a bank account can be attached prior to 9 A. M. (which is the hour the bank opens for business)?

Opinion: Where a check is received by the drawee bank through the mail, the liability of the bank to pay, does not become fixed upon mere presentment of the check but the check will be regarded as paid and the drawer's control over the funds ceases at the point of time when the check is actually charged to his account on the books of the bank. Thereafter the fund is held for the credit of the holder. (See opinion "Payment of check received through mail." JOURNAL, A. B. A., May, 1917, page 899, and cases cited.) In the case stated, therefore, the checks were not paid at the time they were received in the morning's mail, 8.30 A. M., and not until they were charged to the drawer's account between 11 and 12 A. M., and it would follow that on attachment placed on the customer's account at 9.01 A. M., being served before the checks were paid, would have priority. Prior to acceptance or payment of the check the bank remained debtor of its customer for the amount and the mere presentment of the check did not constitute an acceptance or bind the bank to pay. The theory upon which a bank is entitled to defend in attachment or garnishment proceedings is that at the time of service of the writ, it is not indebted to the depositor, the defendant in the principal action. But at the time of the service of the writ, in this case 9.01 A. M., it was so indebted for mere presentment of the check prior to service of the attachment did not change its relation as debtor, the check not having been accepted or paid at the time of such service.

In reply to your further question whether a depositor's account can be attached prior to 9 A. M., which is the hour the bank opens for business.

The Rhode Island statute provide for reaching debts due to defendants in civil actions and judgment debtors. and property of such debtors in the hands of third persons, by what is known as trustee process (writ of garnishment), served upon such third parties, such writs taking effect and the lien thereof attaching to all such debts and property from the date of service. ([R. I. Gen. Laws (1923) c. 349, § 14] R. I., Chap. 299, § 14.)