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Statement of the Case.

It is also settled that a check, drawn in the ordinary form, does not, as be

tween the maker and payee, constitute an equitable assignment pro tanto of an indebtedness owing by the bank upon which the check has been drawn, and that the mere giving and receipt of the check does not entitle the holder to priority over general creditors in a fund received from such bank by an assignee under a general assignment made by the debtor

for the benefit of his creditors. That the owner of a chose in action or of property in the custody of an

other may assign a part of such rights, and that an assignment of this nature, if made, will be enforced in equity, is also settled doctrine of

this court. The Keystone Bank, through its president, solicited the Fourth Street Bank

to give to the former $25,000 of gold certiticates, for which the Keystone Bank was to give its check against its reserve account in the Tradesmen's National Bank of New York City. At the same time that this request was made the president of the Keystone Bank made the further statement that his bank owed a balance at the clearing-house which it could not meet “ because its funds were in the city of New York," and exhibited a memorandum showing the amount to its credit with the Tradesmen's Bank to be in the neighborhood of $27,000. In reliance upon such representations and the statements made supported by the memorandum exhibited, the Fourth Street Bank delivered to the Keystone Bank the certificates requested, and there was delivered a check for $25,000 upon the Tradesmen's National Bank of New York. The draft in question was at once forwarded to the city of New York, and was presented for payment at the Tradesmen’s Bank on the following morning, when payment was refused. At the time of presentment the Tradesmen's Bank had to the credit of the Keystone Bank $19,725.62 in cash and collection items amounting to $7181.70, in all $26,907.32. Of this amount $18,056.21 had been remitted by the Keystone Bank on the day previous. Held, (1) That, it being established that it was the intention and agreement

of the parties to the transaction that the check drawn generally should be paid out of a particular fund, such check, as between the parties, is to be treated as though an order for payment out of

the specific, designated fund; (2) That as the Fourth Street Bank contracted and parted with its

money on the faith of the representations of the Keystone Bank that there was to its credit, in the Tradesmen's Bank, a specitic sum, and the fund which came into the hands of its voluntary assignee was the fund as to which the representations were made, the Keystone Bank and its assignee were in equity estopped from asserting, to the prejudice of the Fourth Street Bank, that the character and condition of the fund was otherwise than it was represented to be.

By a bill filed in the Circuit Court of the United States for the Eastern District of Pennsylvania, appellant sought to sub

Statement of the Case.

ject moneys in the hands of the receiver of the Keystone National Bank to the satisfaction of an alleged equitable charge or lien thereon. From a decree dismissing the bill an appeal was taken to the Circuit Court of Appeals for the Third Circuit. The latter court thereafter certified to this court two questions of law arising upon the facts stated, which facts are set out in the margin hereof.

1 On the 19th day of March, 1891, the said Fourth Street National Bank advanced twenty-tive thousand dollars ($25,000) in clearing-house gold certificates to the said Keystone National Bank to enable it to meet its debtor balance in the Philadelphia clearing-house under these circumstances. On said date Gideon W. Marsh, the president of the Keystone National Bank, acting on its behalf and by its authority, came to the banking room of the said Fourth Street National Bank, in the city of Philadelphia, and there represented to the officials of that bank that the Keystone National Bank owed a balance at the clearing-house which it could not meet, because its funds were in the city of New York, and exhibited to them a memorandum showing a balance to the credit of the Keystone National Bank in the Tradesmen's National Bank of the city of New York of about twenty-seven thousand dollars ($27,000), stating that his bank wished to draw against it and get clearing-house certificates; and he asked the Fourth Street National Bank to accept the draft of the Keystone National Bank for twenty-five thousand dollars ($25,000) against this “reserve account in the New York bank” – that is to say, against the said fund in the Tradesmen's National Bank and give his bank clearing-louse gold certificates therefor. Relying upon these representations of Marsh, and on the faith of his statement, supported by the said memorandum, that the Keystone National Bank had in the Tradesmen's National Bank the specified fund against which it proposed to draw, the Fourth Street National Bank gave Marsh, for the use of the Keystone National Bank, clearing-house gold certificates to the amount of twenty-five thousand dollars ($25,000) and took its draft, of which the following is a copy : • Keystone National Bank.

No. 5086.

“ PHILADELPHIA, March 19, 1891. “Pay to the order of R. H. Rushton, cashier, ($25,000) twenty-five thousand dollars.

"JOHN HAYES, Cashier. " To the Tradesmen's National Bank, New York.”

R. H. Rushton was the cashier of the Fourth Street National Bank.

The books of the Keystone National Bank show that on the 19th day of March, 1891, it had to its credit in the Tradesmen's National Bank of the city of New York the sum of twenty-six thousand nine hundred and seven and oo dollars ($26,907.32), and on the same day an entry was made therein charging against that credit the said draft for twenty-five thousand dollars ($25,000) it had given to the Fourth Street National Bank.

Counsel for Appellant.

The following are the questions propounded :

“ First. Do the above stated facts show an equitable assignment by the Keystone National Bank to the Fourth Street National Bank of twenty-five thousand dollars of the fund, consisting of cash and collection items or drafts as aforesaid, belonging to the Keystone National Bank in the hands of the Tradesmen's National Bank?

“Second. If the stated facts do not show such equitable assignment of the whole twenty-five thousand dollars, do they show such equitable assignment of the cash so in the hands of the Tradesmen's National Bank, namely, the sum of nineteen thousand seven hundred and twenty-five and 10% dollars?"

Mr. Samuel Dickson and Mr. Richard C. Dale for appellant.

The draft for twenty-five thousand dollars ($25,000) was duly forwarded to New York for collection and was presented for payment to the Tradesmen's National Bank on the morning of March 20, 1891. Payment thereof was refused upon the ground that the drawee had not in hand funds of the drawer sufficient to pay the same. In fact, the Tradesmen's National Bank had in cash and in collection items (drafts) for the Keystone National Bank the sum of twenty-six thousand nine hundred and seven and 36 dollars ($26,907.32), of which eighteen thousand and fifty-six and too dollars ($18,056.21) were remitted by the latter-named bank to the former on March 19, 1891, and the rest previously. The Tradesmen's National Bank then had in hand in cash to the credit of the Keystone National Bank the sum of nineteen thousand seven hundred and twenty-five and mo is dollars ($19,725.62), and had in addition the said collection items to make up the full sum of twenty-six thousand nine hundred and seven and e dollars ($26,907.32). Afterwards this money was paid and the said collection items or drafts were turned over to Robert M. Yardley, the receiver of the Keystone National Bank, and out of the collection items he realized sixtyone hundred dollars ($6100), and he thus had in his hands from this source when the bill in this case was filed the sum of twenty-five thousand eight hundred and twenty-tive and mo? dollars ($25,825.62) in cash.

On the 20th day of March, 1891 (some time during the morning), by the order of the Comptroller of the Currency of the United States, the Keystone National Bank was closed, and thereafter Robert M. Yardley was appointed receiver thereof.

Mimo

Argument for Appellee.

Mr. Silas W. Pettit for appellee.

I. The paper given by the Keystone to the Fourth Street Bank was a check in ordinary form on the Tradesmen's Bank for $25,000, and was represented by Marsh to be drawn against the balances which he alleged the Keystone had with the Tradesmen's Bank upon a deposit account such as banks usually keep between themselves. Under the Banking Act Philadelphia national banks can count as part of their reserve against the amount of their notes in circulation and deposits the amounts they have to their credit with New York national banks. Rev. Stat. SS 5191, 5195.

So far, therefore, the check in question is the same as any check drawn by any depositor upon a bank in which he has a deposit account.

Although many respectable authorities, such as Chancellor Kent, Mr. Byles and Mr. Morse, have held that the holder of a check drawn against sufficient funds has a right of action against the drawee, the weight of authority is the other way. Saylor v. Bushong, 100 Penn. St. 23, 27; Bank of Republic v. Millard, 10 Wall. 152, 157; Florence Mining Co. v. Brown, 124 U. S. 385. Mr. Morse himself, although strongly arguing the other way, concedes that “the most numerous body of decisions sustains the view that a check is neither a legal or an equitable assignment as between drawer and payee, nor a sufficient foundation for any action by a holder against the bank.” Morse on Banks, $ 193.

A check is clearly not an assignment of money in the hands of a banker; it is a bill of exchange payable at a banker's. The banker is bound by his contract with his customer to honor the check when he has sufficient assets in his hands; if he does not fulfil his contract he is liable to an action by the drawer, in which heavy damages may be recovered if the drawer's credit has been injured. I do not understand the expressions attributed to Mr. Justice Byles in the case of L'eene v. Beard, but I am quite sure that learned judge never meant to lay down that a banker who dishonors a check is liable to a suit in equity by the holder. Hopkinson v. Forster, L. R. 19

Argument for Appellee.

Eq. 74. See also First National Bank v. Whitman, 94 U. S. 343; Laclede Bank v. Schuler, 120 U. S. 511; St. Louis & San Francisco Railroad v. Johnston, 133 U. S. 566, 574.

Bills of exchange and checks do not stand on the footing of orders drawn upon a particular fund with a manifested intention to create a lien thereupon, and the tendency and preponderancy of authorities seem in favor of the rule that neither a bill of exchange nor a check on a bank can operate as an assignment or appointment of the fund in the drawee's hands, or create any manner of lien upon it. Dana v. Third National Bank, 13 Allen, 445–448. As this case arises between a Pennsylvania and a New York bank, it may not be out of place to note that the rule of this court has been fully adopted by the courts of both those States. Saylor v. Bushong, 100 Penn. St. 23; First National Bank v. McMichael, 106 Penn. St. 460; Ætna Bank v. Fourth National Bank, 46 N. Y. 82; People v. Merchants' Bank, 78 N. Y. 269; Risley v. Phoenix Bank, 83 N. Y. 318.

It is to be remembered, however, that in many of the States the rule is that the giving of a check does in law operate as an equitable assignment pro tanto of the fund against which it is drawn. This is (or formerly was) the law in Missouri (see First National Bank v. Coates, 3 McCrary, 9), and hence it is contended that the cases of checks on banks cited by appellant are not in point here because governed by the law then prevailing in that forum.

No doubt no writing, and no particular form of words written or verbal, is needed to constitute a valid assignment in equity of a debt or other chose in action; any expression, written or verbal, is sufficient which shows the intention to transfer or appropriate a particular debt or fund to the assignee for a valuable consideration, and this is true likewise of most forms of personal property.

That ordinarily a check drawn in the usual course of business upon a deposit in a bank would operate as such an assignment is quite clear from the reasoning of the cases in those States which hold it to be such, but for reasons of commercial convenience too well established to need to be stated or

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