damage in order to recover and if you were reasonably sure that he had not been damaged it might be good policy to defend the case. In this connection I would refer you to Western National Bank v. White, 62 Tex. Civ. App. 374, 131 S. W. 828. In that case it was held that one not a merchant or trader who sues a bank in which he is a depositor for erroneously dishonoring a check must, to recover for loss of credit, allege and prove the loss. The Court reversed a judgment for the plaintiff as damages had never been alleged or proved. (1914.)

NOTE. The Court in Wildenberger v. Ridgewood Nat. Bank, 230 N. Y. 425, 130 N. E. (1921) 600 [1392], in onsidering an appeal held that some injury to credit would be inferred, and sent the case back for jury deermination of the damages. See generally 4 A.L.R. 954. In all states having statutes as set forth in 1371 the depositor must prove damage, whatever the rule may have been prior to the enactment of such statute.

1376a. Dishonor of check for insufficiency of fundsWhere deposit is made by mail in bank's box at post office one half hour before dishonor.-We have quite a number of customers living in the country, whose deposits are made through the mails. These mails arrive at various hours during the forenoon, one at such an hour as to be placed in our box at from 1:00 to 1:30 P. M. Our bank closes at 2 P. M. Suppose we should not send to the office and get our mail just before the closing hour and a note or check of one of our depositors should go to protest because of our not getting our mail from our box and crediting such customer in time to keep his check from being dishonored, are we in any way liable for damage?

Opinion: I fail to see how a bank could be held liable in the case stated, where it refuses payment of a check of its customer because of insufficient funds just before the closing hour at 2 P. M. and the check is protested, simply because at 1:30 P. M. there is deposited in its mail box at the postoffice remittance from its customer sufficient to cover the amount, which has arrived shortly before that hour but which has not been called for.

Assuming the remittance in the mail is of moneyfor if it was of checks the bank, in the absence of agreement, would not be obliged to give credit for their amount before collection-the deposit by the customer in the mail is not a deposit in the bank as the mail is the agent of the customer and not of the bank in such a transaction, and until the deposit is received at the bank, the latter does not become indebted therefor nor under obligation to honor checks against such deposit.

Nor would it be held that the bank was derelict in its duty to its customer because it failed to send to the postoffice for its mail at a given hour. I think its practice in this regard would be governed solely by its own convenience, and unless the bank had made some special agreement with its customer that it would call at the postoffice at a particular hour in order to receive a remittance from him, there would be no neglect of duty and no liability to the customer in the case stated. (1920.)

1381a. Where a check which has never been presented is returned unpaid, implying a lack of funds, there is an injury to the credit of the drawer for which the negligent collecting bank is responsible to him in damages. We will probably have suit brought against our bank [a South Carolina institution] for damages claimed by non-collection of check, and we will be glad to have you give us your opinion and refer us to cases of similar nature. Several weeks ago we received for deposit from one of our valued customers a check which had been given him for five dollars drawn on a small country bank. We immediately sent this check through Several our regular correspondent bank for collection. days later the check was returned to us unpaid and we collected the amount of the check from our depositor and he in turn collected the amount from the drawer

of the check. Now, after several weeks of time, the drawer of the check, through his attorney, claims that the check was never presented to the bank on which it was drawn and that bank makes written affidavit that the check was not presented for payment, and claims we are liable by reason of our correspondent bank, acting as our agent, not presenting the check for payment. The check in question bears our correspondent's indorsement but has no written explanation for its having been returned unpaid, although it is probable that the bank submitted reason on separate slip attached to check which now has been removed. The attorney claims the reason the bank knows the check was not presented is that they would have paid the check even if, by so doing, his account should have shown an overdraft.

Opinion: The statement of the facts in this case that the check was not presented comes from the drawee bank, and there is no opposing statement by your correspondent that the check was presented before being returned unpaid.

Assuming the fact to be that the check was never presented but was returned unpaid, the question is as to the responsibility of your bank in damages for injuring the credit of the drawer. Most of the decisions in which banks have been held liable in damages because of injury to the credit of the drawer have been in cases where the check has been duly presented and the drawee bank, although having sufficient funds, has, by mistake, refused payment, resulting in its dishonor and protest. The South Carolina rule on the point has been declared in Lorick v. Palmetto Bank & Trust Co. 74 S. C. 185, 54 S. E. 206, 7 Ann. Cas. 818, in which it was held that where a bank, by mistake, refuses to pay the check of a depositor not shown to be a trader having funds to her credit, the depositor is entitled to a verdict for temporate damages without proof of actual damages.

But presumably the drawer's credit is equally injured where his check is never presented and it is returned unpaid, under such conditions as to imply a lack of funds. In this case the injury is not caused by the drawee but by the bank holding the check for collection. Peabody v. Citizens State Bank of St. Charles, 98 Minn. 302, 108 N. W. 272, is the nearest case in point. In that case the check was wantonly protested by the St. Charles bank without due demand of payment having been made of the bank upon which the check was drawn and after tender of payment. The court upheld a judgment against the presenting bank and declared that the drawer might recover temperate, compensatory damages, without alleging and proving special damages. Another case is Continental Bank v. Bowdre Brothers, 92 Tenn. 723, 23 S. W. 131, where a collecting bank addressed a postal eard concerning the drawer of a draft to the transmitting bank stating "Bowdre in the hands of a notary," which was an error as Bowdre had not refused to pay the draft and was perfectly solvent. These words were held actionable per se.

In the present case the $5 check was not protested, but it was returned unpaid, although not presented, and refund of the money demanded and received. Under the principles above announced, it would seem that such act might make the returning bank liable in damages.

Under the law of South Carolina a bank is held liable for the acts of its subagents. Harter v. Bank of Brunson, 92 S. C. 440, 75 S. E. 696. Assuming your correspondent wrongfully returned this draft unpaid without presenting same, I think your bank would be held liable for temperate damages to the drawer but in turn would have recourse upon your correspondent bank whose act caused the injury, and if your bank is sued it might be the proper procedure to notify that bank to come in and defend. (1917.)

1384a. Arkansas statute construed-Who is "Trader?"-What constitutes proof of damage-Refusal of merchant to extend credit.-Four cheeks of the keeper

of a boarding and rooming house for merchandise, lumber and purchases from a drug store were dishonored because her account had without authority of law been charged with an obligation from her to the bank before its maturity. Ark. 1921, Act. 496, § 10, p. 524 provides that "A depositor, whether a merchant or trader or otherwise, may recover from any bank doing business in this state for or on account of its wrongful dishonor of his check only upon allegation and proof of such special damages as have proximately resulted to him therefrom." Under this, merchants and traders, as well as others, must prove actual loss to their credit before they can recover more than nominal damages. "Plaintiff was not a merchant or trader and did not suffer any damage to her credit."

"Trader" defined." "In construing the Federal Bankruptcy Act it has been generally held that a merchant or trader is one whose business it is to buy merchandise, goods, or chattels to sell the same at a profit. One engaged in running a rooming and boarding house is not a merchant or trader. One engaged in the business of running a boarding and rooming house is not engaged in the purchase and sale of merchandise or chattels, but is engaged in furnishing the traveling public

with a temporary home and with food. It is true that groceries and other merchandise are purchased for use in running rooming houses and feeding the boarders; but the articles are used by the roomers and served to the boarders in a changed rm."

"Plaintiff, not being a merchant or trader, was not entitled to recover more than nominal damages under the proof made. Her testimony that she suffered damages to her credit in business was not sufficient to allow her to recover more than nominal damages. She must show the facts and circumstances which occasioned the damage and the amount thereof. At most she only showed in the present case that her checks were dishonored by the bank, and that she suffered some inconvenience thereby. It is not shown that she suffered any loss of patronage to her rooming and boarding house, or that she was prevented from supplying her guests with food or other articles necessary for their use and comfort. It is shown that one of the merchants in question refused to extend her credit any further, but she continued to buy from him for cash. She was not entitled to recover under the proof made more than nominal damages." State Bank of Siloam Springs v. Marshall, 260 S. W. (Ark. 1924) 431. (1925.)

UNIFORM INTEREST RATES 1403a. Inter-city agreement for maximum interest rates on savings deposits.-Please advise us whether or not we [a South Carolina bank] would violate the law to enter into an agreement with the other banks of the town as well as other banks in surrounding towns, in which we agree on maximum interest to be paid on savings deposits. We feared this might be in violation of the trust laws and yet we know that the city clearing houses enter into such agreements.

Opinion: The Sherman Act (Act of July 2, 1890) provides: "Sec. 1. [U. S. Comp. Stat. § 8820]. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal." What is made unlawful and punishable by this Act is the restraint, monopoly or attempted monopoly "of trade or commerce, among the several states or with foreign nations."

In the first place, the Act applies to interstate, and not intrastate commerce. In the second place, the restraint (as used in the Act) must be direct and not merely incidental, and also undue, that is, unreasonable. Standard Oil Co. v. U. S. 221 U. S. 1, 55 L. ed. 619, 31 Sup. Ct. Rep. 502, 34 L.R.A. (N.S.) 834; U. S. v. Keystone Watch Case Co. 218 Fed. 502. The cases bearing the nearest analogy to the proposed form of agreement submitted in the question are the Live Stock cases, decided by the U. S. Supreme Court in Anderson v. U. S. 171 U. S. 604, 43 L. ed. 300, 19 Sup. Ct. Rep. 50, and Hopkins v. U. S. 171 U. S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40. Those cases held that the adoption by the Kansas City Live Stock Exchange of a rule fixing minimum rates of commission to be charged for selling live stock did not violate the Act, as it had only an indirect relation to interstate commerce. The court in the Hopkins case said: "The contract condemned by the statute is one whose direct and immediate effect is a restraint upon that kind of commerce which is interstate." The distinction made in the Hopkins case between agreements fixing minimum charges for facilities or services in connection with interstate commerce which relate to or affect such commerce only indirectly and are not in restraint thereof and agreements whose direct and immediate effect is to restrain interstate commerce, is recognized by the U. S. Supreme Court in all subsequent cases construing the Sherman Act. See Loewe v. Lawlor, 208 U. S. 274, 52 L. ed. 488, 28 Sup. Ct. Rep. 301; Swift

v. U. S. 196 U. S. 375, 49 L. ed. 518, 25 Sup. Ct. Rep. 276; Field v. Barber Asphalt Paving Co. 194 U. S. 618, 48 L. ed. 1142, 24 Sup. Ct. Rep. 784; Montague v. Lowry, 193 U. S. 38, 48 L. ed. 608, 24 Sup. Ct. Rep. 307.

Even assuming that the depositors of money are engaged in interstate commerce, the agreement would at most only indirectly affect such commerce and possibly enhance the expense to those engaged in the business. It would seem that such an agreement is too remote from interstate commerce to fall within the prohibition of the Federal Anti-Trust Act as construed by the U. S. Supreme Court. The South Carolina statute with respect to conspiracies in restraint of trade provides: "Any corporation organized under the laws of this or any other state or country, and transacting or conducting any kind of business in this state, or any partnership or individual, or other association of persons whatsoever, who shall create, enter into, become a member of or a party to any pool, trust, agreement, combination, confederation or understanding with any other corporation, partnership, individual or any other person or association of persons, to regulate or fix the price of any article of manufacture, mechanism, merchandise, commodity, convenience, repair, any product of mining, or any article or thing whatsoever, or to maintain said price when so regulated or fixed,

or

the price or premium to be paid for insuring property against loss or damage by fire, lightning, storm, cyclone, tornado, or any other kind of policy issued by any corporation shall be deemed and adjudged guilty of a conspiracy to defraud, and to be subject to the penalties as provided by this Article." S. C. Code of Laws (1922) Civ. Code, § 3534.

The language of this statute "to regulate or fix the price of any article," etc., "or to maintain said price when so regulated or fixed," was evidently not considered by its drafters broad and comprehensive enough to include insurance, and so a special clause was added including insurance, eo nomine, within the scope of the statute. A fortiori an agreement among banks to fix a maximum rate of interest to be paid on savings deposits is not to be included in the inhibition of the statute by implication or inference, and not being specifically mentioned, such an agreement is evidently not within the (1922.) purview of the Act.

1404a. Not unlawful for banks to agree between themselves not to pay interest on new accounts.-It is re

quested that I forward my opinion whether an agreement between the Omaha Clearing House banks to refuse to pay interest on new accounts but only on existing accounts coupled with an agreement for uniform rates of interest on savings and banking accounts, would be in violation of the Sherman Anti-Trust Law, U. S. Comp. Stat. § 8820.

Opinion: I had occasion to go into this question with reference to the New Orleans Clearing House rules in opinion 1398. Nothing has been decided since to change my view that an agreement between clearing house banks fixing a uniform scale of collection charges, or uniform interest rates or agreeing not to pay interest would not be in violation of the Sherman Anti-Trust Act as it would only remotely, if at all, affect interstate commerce. The more recent cases on the general subject are collected in the decision of the Supreme Court of the United States in American Column and Lumber Co. v. U. S. 257 U. S. 377, 66 L. ed. 284, 42 Sup. Ct. Rep. 114, 21 A.L.R. 1093 and note, wherein an open competition plan as carried out by competing manufacturers of hardwood lumber for the purpose of stabilizing prices, was held to violate the statute; but this was a combination of lumber dealers engaged in a large way in the transportation and sale of lumber in interstate commerce and the decision does not detract from the rule of interpretation laid down in previous decisions of the Supreme Court that where the subject matter of the agreement does not directly relate to interstate commerce but is only indirect or incidental, the act is not violated. See Ellis v. Inman, etc. Co. 131 Fed. 182, for another decision to the same effect.

There is no Nebraska statute prohibiting such an agreement, and in my opinion the Sherman Anti-Trust Act would not be violated thereby. (1923.)

LEGALITY OF UNIFORM AGREEMENTS 1406a. Agreement establishing uniform rate for foreign exchange.-There has been submitted to the Clearing House Association of this city a recommendation of the foreign exchange departments of the various banks to establish a uniform rate of charge for their foreign exchange departments, copy of which recommendation is enclosed. The point was raised at the last meeting of the Clearing House, as to whether or not this agreement would be legal, if entered into, and it was duly moved and seconded that the Clearing House submit the proposition to the General Counsel of the American Bankers Association. We should be pleased to receive your opinion on this matter.

Opinion: The agreement proposed to be entered into by the Clearing House banks of your city, in brief, provides for a rate committee of three with power to establish and fix rates to be charged for foreign exchange by member banks, making it the duty of such committee to notify members thereof, and it imposes a fine upon any member who violates the agreement, payable to the local Chapter of the American Institute of Banking; also a personal fine upon an employee violating the agreement payable to the informant; also a fine upon any member or employee who allows any rebate, agreement or gratuity to a customer payable to the informant; and is permits withdrawal by a member bank upon ten days' notice.

The first question to be considered is whether an agreement among the clearing banks establishing a uniform rate to be charged by the foreign exchange departments of such banks would violate the Federal or state anti-trust laws.

The Federal law (Sherman antitrust act § 1, July 2, 1890; U. S. Comp. Stat. §§ 8820 et seq.) provides that: "Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract or engage in any such

Clearing House banks in many cities of the country have entered into agreements binding among themselves for the maintenance of uniform rates of charge for exchange and collection and uniform interest rates and it has never yet been held by any court that such agreements are violative of anti-trust laws or otherwise illegal and there is a Mississippi statute [Anno. Code (Supp. 1921) § 3629] which authorizes clearing houses "to provide uniform charges for collections of accounts or orders, and for uniform rates of exchange or discounts nor [not] to exceed the legal rates of interest and discount.

The question has been up before successive attorneysgeneral of the United States. Some years ago interests antagonistic to the out-of-town collection charge rules of the New York Clearing House made contentions successfully to Attorneys-General Knox, Moody and Bonaparte that such rules were in violation of the Sherman anti-trust law, with request that proceedings be instituted for a restraining order; but such contentions were never deemed worthy of affirmative action and it would appear that the Department of Justice considered that the decisions of the United States Supreme Court in the live stock cases (Hopkins v. U. S. 171 U. S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40; Anderson v. U. S. 171 U. S. 604, 43 L. ed. 300, 19 Sup. Ct. Rep. 50) demonstrated that the act was not violated.

In the Hopkins case, commission merchants in Kansas City who received consignments of cattle from Western states, fed the stock, prepared it for market and sold it for shipment to other states, formed the Kansas City Live Stock Exchange and adopted rules with penalties for violation which, among other things, fixed minimum rates of commission to be charged for selling the live stock. It was held that the nature of the business the defendants were engaged in was not interstate commerce, although the cattle, relating to which the services were performed were, when coming from another state, articles of interstate commerce; that the services performed were collateral to such commerce and in the nature of a local aid or facility provided for the cattle owner towards the accomplishment of his purpose to sell them; that an agreement among those who rendered the services relating to the terms upon which they would render them, was not a contract in restraint of interstate trade or commerce and that the Sherman Act was not intended to cover such kind of agreements.

The Supreme Court of the United States early held in the case of Nathan v. Louisiana, 8 How. 73, 12 L. ed. 992, that the dealer who buys and sells bills of exchange and who thereby realizes a profit "is not engaged in commerce, but in supplying an instrument of commerce. He is less connected with it than the shipbuilder, without whose labor foreign commerce could not be carried on." The distinction made in the Hopkins case between agreements fixing minimum charges for facilities or services in connection with interstate commerce which only relate to or affect such commerce indirectly and are not in restraint thereof, and agreements whose direct and immediate effect is to restrain interstate commerce, is recognized by the Supreme Court in many subsequent cases under the Sherman Act and supports bills of exchange would not be a violation of that act. the conclusion that an agreement among banks to maintain uniform rates of charge in the selling of foreign

In 1910 the rules of the New Orleans Clearing House Association, which establish a uniform minimum scale of charges for collection of out-of-town items, came into question. An individual who had been charged for collection of a draft on a Texas point laid the facts before the United States District Attorney at New Orleans, who presented the facts to the grand jury, being inclined to the view that the rules in question constituted a violation of the anti-trust act, but before finally so advising the grand jury, consented to give consideration to contrary legal opinions and also to be guided by the advice of the Attorney-General of the United States. General Counsel of the American Bankers Association having been so requested, prepared an opinion upon the subject, in which he maintained there was no violation, which was submitted to Attorney-General Wickersham. The matter having been fully presented to the Attorney-General, the advice of the latter to the District Attorney at New Orleans was that the criminal prosecution be dropped and the grand jury thereupon so voted. You will find copy of this opinion published in the Journal of the American Bankers Association for February, 1911, and you are referred to same for a fuller presentation of the reasons why an agreement of the character in question is not a violation of the Federal anti-trust act.

In 1912 suit was brought in the Court of Common Pleas of Allegheny County, Pa., by three of the banks in the Pittsburgh Clearing House against all the other banks (Farmers Deposit National Bank, et al. v. Peoples National Bank, et al.) alleging illegal combination and conspiracy in the adoption of rules under penalty requiring the banks to make uniform charges on drafts and collections and pay uniform rates of interest' on balances. It was contended that such rules were unreasonable restraints upon interstate trade and commerce and unlawful as a conspiracy at common law and an injunction was asked restraining the clearing house from carrying out such rules. This case never came to trial.

In 1916 the Superior Court of the State of Washington for King County rendered a decision in Peoples Savings Bank v. First National Bank, et al. [affirmed 102 Wash. 436, 173 Pac. 52]. In that case the Seattle Clearing House adopted a rule fixing a maximum rate of interest on savings deposits and one of the members objecting, it thereafter proposed to dissolve and reorganize without the objecting member. The bank in question sought an injunction restraining the other member banks from enforcing this rule as to it fixing the rate of interest to be paid on deposits and also from organizing a new Clearing House. The court dismissed the action. It held that interest paid by the banks was not an article or commodity subject to the rule against restraint of competition "that in practice there has always existed among its members a common agreement in rates of interest, exchange and collection charges," and that each had agreed to abide by the rules adopted. The court held there was nothing unlawful in such an agreement. Without prolonging this discussion, it would seem that the rules proposed to be adopted by the member banks of your Clearing House for the fixing and maintaining of uniform rates of charge for the issuance of foreign bills of exchange, would be lawful at common law and do not violate the Sherman anti-trust act; nor do I think they would be in violation of the Indiana statute enacted to prevent combinations to restrain trade which provides, "That every scheme, design, understanding, contract, combination in the form of a trust or otherwise, or conspiracy in restraint of trade or commerce, is hereby declared to be illegal, . . Provided, however, that it shall be a good defense to any action growing out of any violation of the provisions of this act or any other act or common law relating to the subject-matter of this act if the defendant shall plead and by a fair preponderance of the evidence prove that such violation is not in restraint of

trade or commerce or does not restrict trade or commerce or limit or reduce the production or increase or reduce the price of merchandise or any commodity natural or artificial or prevent competition in manufacturing." (Ind. Anno. Stat. (1914) § 3866-1.) There are a number of decisions in Indiana construing and interpreting various phases of the above statute as applied to trade, manufacture, transportation, etc., but I fail to find any decisions involving the question of the agreement of members of a Clearing House Association to establish a uniform rate of exchange. But as already shown, under the Sherman anti-trust act, such an agreement would not be a contract or conspiracy in restraint of trade or commerce and the same reasoning would apply under the Indiana anti-trust act.

Just a word in conclusion concerning the penalty provisions. So far as they impose a personal fine upon an employee violating the agreement, such employees are not parties to the agreement and I doubt if the fine would be enforceable against them. With reference to the fines for violation imposed upon the member banks themselves by agreement between them, these would be enforceable, but I think the courts would probably hold that they were in the nature of penalties, rather than liquidated damages so that recovery, if the matter was taken to court, might not necessarily be of the full amount but apportioned to the actual damage or loss sustained by the other members. It is not proposed to go into an extended discussion of this phase of the subject for the main question, as I take it, is the legality of the agreement fixing uniform rates of charge upon which the conclusion, as already stated, is that such an agreement is not illegal either at common law or under Federal or States anti-trust acts. (1922.)

PAYMENT OF “NO GOOD" CHECKS THROUGH THE CLEARING HOUSE

1410a. Some courts hold failure to return check within precise time limit fixed by rules constitutes irrevocable payment-Contrary cases.-A few days ago there was presented at our bank a check of $250 signed by a party who does not carry a checking account with us. The check being enclosed in the clearing house items was not found until four o'clock in the afternoon. When returning said item to the bank in this city where it was originally deposited, the bank refused to take it up because our runner was fifteen minutes late, the clearing house providing that checks must be returned not later than four o'clock p. m. The check bore the indorsement of a responsible business house in Denver, and we are anxious to ascertain whether or not our institution would have recourse on the indorser, since the bank where it was deposited refused to debit the account of the indorser, claiming that by returning the item after hours, it was equivalent to payment by us. We are anxious to have your opinion.

Opinion: To the general rule that money paid under mistake of fact is recoverable there are certain well recognized exceptions as, for example, where a bank mistakes the signature of its depositor and pays a check bearing forgery thereof it cannot, in general, recover the money from a bona fide holder who has received payment; or where a bank pays a check to a bona fide holder in mistake as to the sufficiency of the funds, such payment is a finality and it cannot, ordinarily, recover the money paid.

Equally where a bank pays a check drawn by a person who has no account, popularly known as a bogus check, to a bona fide holder thereof, such payment is ordinarily binding and non-recoverable, provided the holder of the check has not been guilty of such negligence in acquiring the instrument from an unidentified stranger without inquiry as, according to some courts, would make it liable to refund.

This rule would apply to the case submitted by you so as to preclude recovery from a responsible indorser

provided the bogus check was finally and irrevocably paid by reason of its presentation through the clearing house and non-return within a stipulated time. The pertinent inquiry here, as I see it, is whether the delay of fifteen minutes after four o'clock, the stipulated time, in making return of the check was fatal and resulted in its final and irrevocable payment by the bank.

Certain analogous cases will be examined as having a bearing on the question. In State Bank v. Weiss, 46 Misc. 93, 91 N. Y. Supp. 276, three checks were presented through the New York Clearing House which were worthless because the drawer had no account with the drawee. This fact was ascertained when the messenger brought them from the clearing house. The Clearing House rule required return of not good checks the same day not later than three o'clock (although this rule was not in proof) but the drawee did not return the checks and the only proof of notice of worthlessness and demand of restitution was the bringing of an action on the checks against the indorsing payees six days later. It appeared that at five o'clock on the day of collection, the payees inquired of the bank in which they had deposited the checks and were told the checks were all right and later in the afternoon delivered the goods for which the checks were given to the drawer of the checks. The court held that the drawee bank was debarred from recovering.

In National Exchange Bank v. Ginn, 114 Md. 181, 78 Atl. 1026, 33 L.R.A. (N.S.) 963 and note, a bank paid a check through the clearing house at a time when a receiver of the drawer had been appointed, but in ignorance thereof. The drawer was indebted to the bank. Upon learning of the insolvency it returned the check to the presenting bank but the latter refused to receive it on the ground that the return was not made within the time prescribed by the clearing house rules. The bank sued the payee to recover the money. The court held that the clearing house rules were binding only between members and that failure to return the check within the prescribed time did not impair the bank's rights against the payee where it otherwise had a right of recovery; but in the present case the payment of the check was a finality, equally as in a case where payment was made without sufficient funds, and was non-recoverable.

In a more recent Maryland decision where a check bearing a forged certification of the drawee bank was cashed by another bank, a member of the clearing house, and put through the clearing house for collection, the rule fixing noon as the latest hour for corrections on worthless items did not defeat the right of the drawee bank to repayment on the item where the forgery was discovered at 2:15. The court held that the bank which cashed the check for the forger suffered no loss by this delay, it already having paid out the money. The delay of the drawee in discovering the forgery did not relieve the clearing member, for no loss was occasioned thereby. Nat. Bank of Baltimore v. Drovers' & Mechanics' Nat. Bk. 143 Md. 168, 122 Atl. (1923) 12, 30 A.L.R. 1019 and note.

In Preston v. Canadian Bank of Commerce, 23 Fed. 179, the rules of the Chicago Clearing House provided that checks, found not to be good, were to be returned to the bank which collected them by 1:30 p. m. of the same day. At 42 minutes past one the drawee examined the drawer's account, found that it was insufficient to meet a check which had come through the clearings that morning, sent the check back to the presenting bank and demanded its repayment at fifteen minutes before two o'clock, which was refused. In an action brought against the presenting bank it was held the drawee was not entitled to recover. The court said the parties had agreed upon a time limit within which such mistakes should be rectified and unless the mistake was corrected within that time, the right to correct was lost. A similar conclusion was reached under -a clearing house rule to the effect that after two p. m.

checks cleared that morning would be considered paid as if paid in currency unless already sent back, it was held that the drawee bank could not recover on forged items after the time was up, although the bank sought to be charged back was not injured by the delay. Nat. Bank of Commerce v. Mechanics' American Nat. Bank 127 S. W. 429, 148 Mo. A. (1910) 1.

However, in Citizens Central Nat. Bank v. New Amsterdam Nat. Bank, 128 App. Div. 554, 112 N. Y. Supp. 973, an overdrawn check was presented through the New York Clearing House, the rules of which required return of not good checks before three o'clock on the same day. Between half past two and twenty-five minutes of three, the drawee returned the check by messenger who went as directly as possible to the presenting bank (an uptown institution) reaching there and presenting the check to the paying teller between four and ten minutes after three o'clock. Return of the amount was refused upon the ground that the demand, having been made after three o'clock, was too late. There was no evidence that any change in the situation to such bank's detriment had occurred. The drawee sued the presenting bank. The court interpreting the constitution of the Clearing House, § 15 of which provided that "all checks returned as not good shall be returned the same day directly to the bank from whom they were received and the said bank shall immediately refund to the bank returning the same the amount which it had received through the clearing house .. and rule one of the clearing house which provided that "return of checks not good should be made before three o'clock of the same day," said:

"It should be emphasized that while in the case at bar the language of the constitution of the clearing house is that the checks 'shall be returned the same day directly to the bank from whom they were received' the rule seems to be rather advisory than mandatory, reading that return 'should be made before three o'clock of the same day.' There is in this case no question of the voluntary payment over the counter where the laches of a paying teller in not discovering that the depositor's account was not sufficient to warrant the paying of the check might under certain circumstances not be considered as constituting a payment by mistake which could be recovered or save the operation of the rule that a payment in due course discharges the check." The court pointed out that the fact that the check was not good was discovered some little time before the hour at which the presenting bank had the right to consider and treat the check as good and an attempt was directly made to return the check within the time limited; but as the defendant bank was an uptown bank, the messenger arrived there a few minutes after three o'clock. From this failure to arrive on time no harm came to the defendant, it had lost no rights against the maker of the check or the indorser and it had a right to present and protest for non-payment. In view of all this the court reached the conclusion that the refusal of the presenting bank to repay the amount received under the circumstances disclosed was bitrary and unwarranted by the language of the clearing house provisions and gave judgment in favor of the drawee bank. One of the justices in this case dissented, holding that the banking day closed at three o'clock and that failure to return a not good check under the rules of the clearing house left the bank in the position of having accepted and paid the check and the rules of law applicable to a paid check applied. It was no answer to say that the bank which had received the amount of the check must show itself to be injured by the delay as, if the rule was not complied with, the drawee bank lost the right to return the check. The bank presenting the check would be affected by its return after the close of banking hours in its claim to hold an indorser for nonpayment of the check. To hold the indorser it was bound to present the check and protest for non-pay

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