Imagens da página
PDF
ePub

bank unless when the deposit was made it was understood and intended to be used for such purposes.2

§ 255. Money deposited with bank to pay note is not payment. In the case of St. Paul National Bank v. Cannon, 48 N. W. Rep. 526, it appears that money due on a note which was payable at a certain bank was deposited in the bank at the maturity of the note with directions to pay it; held, that the deposit is not a payment. The court, in discussing the question,

says:

"It is alleged in the answer that at maturity Loeffelholz did pay the note at the Bank of Minnesota "by depositing and leaving with said bank a sum of money sufficient to pay said note and mortgage, and then and there instructing said bank to pay said money to the lawful owner thereof."

"It is admitted that the money was paid to the Bank of Minnesota by Loeffelholz. The note was not at the bank, but was then held by the plaintiff as collateral security. Although the note was by its terms payable at the Bank of Minnesota, the mere depositing the money in that bank, in order that it might be applied in payment of the note, did not constitute a payment of it. In such a case the bank receiving the money is to be regarded as the agent of the person paying it, the holder of the note not having deposited it at the designated place for collection or payment. The law is well settled. Adams v. Improvement Commission, 44 N. J. L. 638; Hill v. Place, 48 N. Y. 520; Caldwell v. Cassidy, 8 Cow. 271; Gas Co. v. Pinkerton, 95 Pa. St. 62; Wood v. Savind, etc., Co., 41 Ill. 267; Caldwell v. Evans, 5 Bush (Ky.), 380; Ward v. Smith, 7 Wall. 447; Freeman v. Curran, 1 Minn. 169 (Gill, 144); 3 Rand Com. Paper, § 1119, and cases cited."

§ 256. Application of deposit on note.

It has been held that where a bank holds a note of a depositor it is not bound to immediately upon the maturity of the note apply the funds of the depositor in payment of the

same.

A bank having money on open account to the credit of a maker of a note, which it holds, is not obliged to apply the

2 Stebbins v. Lardner, 48 N. W. 847; Hall v. Marston, 11 Mass. 575.

money thereon before bringing suit, even if it has the right to make such application without consent.3

Where the depositor has authorized the bank to pay his note when presented and the bank acting under such directions pays the same, applying all of the funds to his credit then in the bank and advancing an amount in addition thereto necessary to pay the same, the amount so advanced is like an overdraft and may be recovered from the maker of the note.

3 Doctor and others v. Riedel and another, 96 Wis. 158.

CHAPTER XXXVIII.

COLLECTIONS BY BANKS.

§ 257. Subject treated Duty of bank.

[ocr errors]

In the presentation and treatment of this subject the object directly in view is to give general direction and the rules of law as to the duties and liabilities of the bank in accepting and making collections.

If it receives the collection it becomes responsible and must return the same or the proceeds derived therefrom, or render a good and sufficient cause in failing to do either.

The first question presented to the banker after receiving the collection, is to determine what are his duties. This is established by the indorsement and instructions accompanying the collection.

§ 258. Relationship existing between the parties.

As between the parties, a deposit of commercial paper for collection, and the bank receiving it, the position is held, by a number of leading authorities to be that of bailor and bailee.

This position, however, is by many of the courts denied, and the relationship arising by the deposit of commercial paper with a bank for collection, is held to be that of principal and agent.

The first question presented to the banker by the deposit of commercial paper for collection, is the practical one: "How are collections received?"

The contract entered into between the parties at the time of receiving the collection, which prescribes the duties of the collecting bank, governs and establishes their relationship.

A collection may come into the possession of the bank either by the owner personally presenting the same or it may be received through the mail from a person or bank transmitting the same. In either case, when received by the bank, the first duty of the bank is to scutinize every such instrument carefully before its entry upon the bank's collection register.

The purpose of this close scrutiny is to determine if possible whether the note or instrument has been disfigured or in any way changed after its issue by the drawer. If, upon examination (the collection being a note), it appears that it is irregular, it should not be accepted and entered upon the collection register.

If notes or collections are presented by strangers they should be held for investigation before acceptance and entry and at the time and before the acceptance they must be properly indorsed.

§ 259. Indorsement.

The language used controls, governs and directs the bank and establishes its relationship with the owner of the paper. The form of the indorsement either makes the bank a bailee of the collection or an agent representing the owner.

In commercial law an indorsement is defined to be "that which is written on the back of the instrument in writing and which has relation to it."

The indorsement does not necessarily have to be made upon the back of the instrument. It may be made upon the face of the instrument and this does not in any way affect or destroy its legality.

The indorsement is made primarily for the purpose of transferring the rights of the holder of the instrument to the bank.

It is sometimes made for additional security, and consequently there are several kinds of indorsements. They are defined as follows:

"First. An indorsement in full or a special indorsement is one in which mention is made of the name of the indorsee.

"Second. A conditional indorsement is one made separate to some condition, without the performance of which the instrument will not be or remain valid.

"Third. A blank indorsement is one in which the name of the indorser only is written upon the instrument.

"Fourth. A qualified indorsement is one which restrains or limits or qualifies or enlarges the liability of the indorser.

"Fifth. A restrictive indorsement is one which restrains the negotiability of the instrument to a particular person or for a particular purpose."

The note or instrument bearing an indorsement which may be one of the above described, the bank receiving the same should examine the indorsements carfully and mark on each note the date of its maturity. This is very important, for if the due date of the note should be entered or marked a day too late, the drawer failing to pay, the bank would be held by the error, as the notice of protest to the indorser would be too late to hold him.

The notes after being "timed," as stated, are recorded or should be recorded in what is known as the "collection register," and usually from this book the notes are copied into the "tickler."

A bank may have what is called a "foreign collection register," in which all notes, checks or drafts which are payable in another place are registered.

The collection having been duly indorsed, and the bank receiving and accepting it, assumes the duties imposed upon it by law to undertake to make the collection.

The bank, as previously stated, is governed as to its duty, as to the treatment of the instrument by the nature of the indorsement, and the law which imposes certain obligations upon it.

§ 260. Nature of relationship between the parties.

As previously stated, when a collection is received and accepted by the bank, the relationship between the parties is fixed by the indorsement of the instrument. In such a case the law defines the duty of the bank.

A special agreement may be entered into at the time of the acceptance of the collection specifically defining by instructions the duty of the bank, which agreement, in relation to the collection, must be strictly complied with.

§ 261. When a bank becomes bailee.

A bailment, as defined by Professor Joel Parker, "is a delivery of something of a personal nature by one party to another, to be held according to the purpose or object of the delivery, and to be returned or delivered over when that purpose is accomplished."

« AnteriorContinuar »