페이지 이미지
PDF
ePub

70 Led 421,46 Sup 1.12.

614

3 FEDERAL REPORTER, 20 SERIES

for

CAPITAL GRAIN & FEED CO. v. FEDER. 7. Pleading cm 6mJudicial notice will not be AL RESERVE BANK OF ATLANTA. taken of regulations of Federal Reserve

Board. (District Court, N. D. Georgia. January 8,

A regulation of the Federal Reserve Board 1925.)

is not such departmental action as will be juNo. 659.

dicially noticed without pleading. 1. Banks and banking On 175(12)- Under At Law. Action by the Capital Grain & agreement with collecting bank, its corre

Feed Company against the Federal Reserve spondents held agents of depositor.

Bank of Atlanta. On demurrers to petiWhere a check was deposited in a bank for

tion and answer. collection and credit, subject to an agreement

Each demurrer sustained that “this bank acts only as collecting agent in part, and overruled in part. and assumes no liability on account of delay or

Kendrick L. Scott and McDaniel & Neely, loss while items are in transit or until it receives final actual payments from its corre

all of Atlanta, Ga., for plaintiff. spondents," the correspondents through which Randolph & Parker, of Atlanta, Ga., it sends the check for collection are not its defendant. agents, but agents of the depositor, and any right of action against them for delay or default is in the depositor.

SIBLEY, District Judge. This is an ac2. Banks and banking am 161(2)-Duty of col- tion at law for damages on account of al

lecting bank primarily governed by local law leged negligence of the Federal Reserve and usage.

Bank of Atlanta in the handling of a check The duty of a correspondent bank receiving sent it for collection. Demurrers to the pea check for collection is primarily regulated by tition and to the answer are for decision. the law and the custom of banking at the place where it does business, but may be affected by

The petition sets up that petitioners, a special instructions given or agreements made. partnership doing business under the name

Capital Grain & Feed Company, having a 3. Banks and banking C 171(3)-Collecting

bank not negligent in forwarding check di deposit of more than $7,500 in the Merrect to drawee.

chants' Bank of Montgomery, Ala., drew Under Acts Ga. 1919, p. 207, $ 36, and Acts their check for that sum, payable to the orAla. 1919, p. 856, § 1, similar statutes provid- der of Fifth National Bank of New York, ing that checks drawn on a bank in another had it certified by the Merchants' Bank, and city, within or without the state, may be sent

sent it to the Fifth National Bank for colfor payment by the collecting bank direct to the drawee bank without incurring liability, lection and credit; it being agreed with the provided it has used due diligence in other re- latter bank as follows: spects, a collecting bank located in either of “This bank acts only as collecting agent those states is not chargeable with negligence and assumes no liability on account of delay for following such practice.

or loss while items are in transit, or until 4. Banks and banking am 171(1)-Special cir. it receives final actual payments from its

cumstances may require extra effort by col. lecting bank.

correspondents." If a collecting bank has knowledge that the The check was forwarded by the Fifth drawee bank in failing condition and liable at National Bank to the Federal Reserve Bank any time to suspend, due diligence may require of New York, and by the latter to defendthat some extra effort at collection be made.

ant, who received it on the morning of De5. Banks and banking w161(3)–Collecting cember 19, 1922. On the afternoon of the

bank accepting draft in payment takes the next day the check was sent for payment dirisk of its being paid.

rect to the drawee, Merchants' Bank of It is the general rule of law that a collect: Montgomery, which was a member bank of ing bank, which accepts in payment of the check to be collected the draft of the drawee on an

defendant, reaching it on the morning of other bank, takes the risk of the draft being December 21st. Merchants’ Bank charged paid.

the check to plaintiff's account and sent its 6. Payment Cw3—State law permitting banks draft on the defendant in payment, which

to pay checks in exchange held unconstitu- was received in Atlanta December 22d. tional.

Though there were funds to the credit of Act Ala. Sept. 30, 1920 (Acts 1920, p. 36), the Merchants' Bank sufficient to pay the providing that, when a check is presented or forwarded to the payee bank for payment draft, it was not paid and proceeds remitthrough another bank or agency, it may at its ted to the New York bank. The following option pay or remit the same in money or in day the Merchants’ Bank was put in the exchange drawn on its reserve agent, is un

hands of a receiver, and it is now impossible constitutional and void as an attempt by the state to make a class of debts payable at the to collect from it beyond some dividends option of the debtor in something other than paid by the receiver, which have reduced gold or silver coin.

the loss to $3,750. Negligence is claimed 3 F.(20) 614 in that defendant knew the weak condition tual final payment is received by it, except of the Merchants' Bank and should not in case of want of due diligence on its part have delayed collecting the check as it did, as aforesaid.” This statute was held to enshould not have sent it direct to the drawee, ter into the contract of deposit for collecbut should have . presented it for payment tion, and since the effect of it was to rein cash over the counter; the Merchants' lieve the receiving bank from liability for Bank having on hand all during December the defaults of its correspondents, they were 21st and 22d, cash sufficient to pay it, and held to be intended not to be agents of the should not have accepted the draft in pay- receiving bank and answerable only to it, ment, or, having done so, should not have but of the owner of the check and answerdelayed paying the draft until after the able to him. Otherwise the owner would be failure of the Merchants' Bank. Notice of wholly without remedy on the one hand, the facts was not given by defendant until and on the other a principal would have the afternoon of December 23d, and this is escaped responsibility for the negligence of also charged as negligence.

its own agents, and those agents have es[1] 1. The first contention urged is that caped responsibility to any person. In the the defendant had no such relations with present case the agreement is that the replaintiffs as to be liable to suit by them, ceiving bank “assumes no liability on acbut is answerable only to the forwarding count of delay or loss while items are in bank. Under the quoted agreement with transit or until it receives final actual paythe Fifth National Bank, that bank did not ments from its correspondents.” The subaccept ownership of the check, though it stance of this agreement is exactly the same was payable to it, but was to act only as as the Florida statute and must be held to an agent for its collection. Had there been have the same consequences. Each correno other stipulation, since the transaction spondent is the agent of plaintiffs and anwas in the course of banking business done swerable to them for its conduct. The plainin New York, what is termed “the New tiffs may therefore sue the defendant for its York rule” would have applied, by which negligence. it would be held that the Fifth National [2-4] 2. While the relationship between Bank had undertaken to make the ultimate plaintiffs and the collecting bank is concollection, furnishing the necessary agencies trolled by the law and the contract at the and means therefor and not merely to pro- place of deposit, as has just been ruled, the cure for the plaintiffs other agents to make duty of the correspondent bank is primarily it. Exchange National Bank v. Third Na- regulated by the law and the customs of tional Bank, 112 U. S. 276, 5 S. Ct. 141, banking at the place where it does its busi28 L. Ed. 722. The result would be that ness, and may be affected likewise by spethe correspondent banks to which the check cial instructions given it or agreements was forwarded would be the agents of the made. When the Fifth National Bank, Fifth National Bank and not of plaintiffs, through the Federal Reserve Bank of New and for nonfeasance, at least, would not be York, procured the Federal Reserve Bank accountable to plaintiffs, as they would be of Atlanta to act for plaintiffs in collecting if their agents. The plaintiffs would be en- this check, the parties must have expected titled to hold the Fifth National Bank, and the thing to be done according to the law it alone, responsible. But the New York and customs applying in Atlanta and Montrule is, after all, only a presumption of gomery. While the original rule of law law as to what the parties to such a trans- was that a check ought not properly to be action intended to agree to. It may be al- sent for payment direct to the drawee bank tered or abrogated by statute, or departed (Reserve Bank v. Malloy, supra), yet in from by mere agreement otherwise. Fed- both Georgia and Alabama there are closely eral Reserve Bank of Richmond v. Malloy similar statutes enacting that checks drawn et al., 264 U. S. 160, 44 S. Ct. 296, 68 L. on a bank in another city within or withEd. 617, 31 A. L. R. 1261. In that case out the state may be sent for payment by the deposit for collection was made in Flor- a collecting bank direct to the drawee bank ida, where the Legislature had enacted that, without incurring liability; "provided, how“When a bank receives for collection any ever, such forwarding bank shall have used check

and forwards the same for due diligence in other respects in connection collection as herein provided (i. e., with- with the collection of such instrument." out delay, in usual commercial way in use See Georgia Acts 1919, p. 207, § 36; Alaaccording to the regular course of business bama Acts 1919, p. 856, § 1. Under this of banks), it shall only be liable after ac- legislation the mere sending the check to

[ocr errors]

the drawee for payment is not negligence part of the bank to pay it. Merchants' and the collecting bank is not rendered lia- Bank v. State Bank, 10 Wall. 604, at pages ble for consequences which were not rea- 647, 648, 19 L. Ed. 1008. It may well be, sonably to be foreseen by it. If, however, however, that the payment due on the certhe drawee bank is known to the collecting tified check is only in such medium and at bank to be in a failing condition; as is al- such time and place as would have been leged here, and liable at any time to sus proper had the check not been certified. So pend payments, due diligence may require it becomes necessary to examine the applicasome extra effort at collection to be made. tion of this statute to ordinary checks. In Whether such was the case here, and what Thompson v. Riggs, 5 Wall. 663, 18 L. Ed. due diligence would have required to be 704, where the point at issue was the proper done under the circumstances, are questions medium of payment, it was said: of fact to be determined by a jury. Ordi- "Where the deposit is general, and there narily a forwarding for presentment on the is no special agreement proved, the title of day after receipt of a check is considered the money deposited, whatever it may be, sufficient diligence. 5 Cyc. 532; Comer v.

passes to the bank

and the bank Dufour, 95 Ga. 376, 22 S. E. 543, 30 L. R. becomes liable for the amount as a debt, A. 300, 51 Am. St. Rep. 89. But here which can only be discharged by such money again notice of special circumstances might as is by law a legal tender.” be considered by the jury to require great- In Farmers' Bank v. Federal Reserve er haste.

Bank of Richmond, 262 U. S. 649, 43 S. [5,6] 3. The general rule of law is that Ct. 651, 67 L. Ed. 1157, 30 A. L. R. 635, a collecting bank which accepts in payment a statute of North Carolina, which gave the of the check to be collected the draft of the bank the right to pay its check by another drawee on another bank takes the risk of check, except where the depositor, in drawthe draft being paid. Reserve Bank v. ing his check, specified that it should be Malloy, supra. The defendant here, while payable in money, was held good, because it did not pay the draft on it sent by the it did not deprive the depositor of the right Montgomery bank, did not return it and de- to collect his debt in money, but simply mand the check back, but let matters stand, made his failure to specify that mode of so that it may be found to have accepted it. payment a consent to the payment by check. But it is contended that no harm was done The statute here goes much further and is thereby, because the Alabama bank had the fundamentally different. It offers no basis right, under the Alabama statute approved of presumed consent in the payment of a September 30, 1920 (Acts 1920, p. 36), to particular check and could involve the contender the draft in payment. The material sent of the depositor only by supposing part of this statute is:

that in making his deposit with such a law “Whenever a check or checks are for- on the statute books he consented thereto. warded or presented to a bank for payment But the statute does not pretend to reguby any federal reserve bank, express com- late the terms on which deposits in banks pany or post office employee, other bank, in Alabama shall be made. It baldly enbanker, trust company, or by any agent or acts an option in payment of them whereagents thereof, or through any other agency by the bank may have an absolute choice of or individual, the paying bank or remitting paying in cash or by check. This is, on its bank may pay or remit the same, at its op- face, a plain effort to make a debt by gention, either in money, or in exchange drawn eral deposit dischargeable by something else on its reserve agent or agents in the city of than gold or silver coin or other medium New York or in any reserve city within the fixed by constitutional federal authority. Sixth Federal Reserve district.”

The depositor so far from being presumed This act is said to be unconstitutional in to consent thereto, should rather be prethat thereby the state of Alabama has made sumed to have treated the law as void and something else than gold and silver coin without effect on his rights. Had the act tenderable in payment of the debts of the merely made the place of payment optional Merchants' Bank to its depositors. The and authorized the drawee to refer the holdholder of an uncertified check has no debt er of the check to its reserve city for payagainst the bank. First National Bank v. ment, or if the check to be given on the reWhitman, 94 U. S. 343, 24 L. Ed. 229. serve city were made only tentative and to Where, however, the bank has certified the be payment when itself paid in lawful check for the drawer, as was done here, a money, the case would have been different. direct and primary obligation arises on the It is true that a check, as between the par

[ocr errors]

8 F.(20) 614 ties giving and receiving it, is ordinarily not due to a want of notice, nor avoidable not payment until itself paid, unless ex- by notice, but to the other matters discussed pressly taken as payment; but in the case above. The plaintiff's case must stand or of a commercial check presented and paid fall on these. Paragraphs 15 and 16 will by another check, the first check is taken be stricken. up and marked "paid" and charged to the 7. The answer is not demurrable as drawer, and he and all prior indorsers are whole. Its denials put the plaintiffs on discharged. There is no dishonor and pro- proof of many of their allegations. It sets test or other means taken to hold them lia- up that the draft sent the defendant in payble. The second check is thus, by force of ment could not be paid when received becommercial custom, necessarily payment, cause in excess of the available balance on and this statute şo declares. Moreover, the hand to the credit of the Merchants' Bank, statute is so broad as to appear to apply but that items in course of collection for it also to the second check given in payment when available would have rendered the of the first, if on an Alabama bank. So draft good. A jury might conclude that the that it, when presented, might itself be defendant acted prudently in holding the paid by another check and so no money draft to await these collections instead of ever be collectible in Alabama, or any other sending it back to Montgomery. state where a similar law should be enacted. 8. The general reference, in paragraph 17 The statute, as written, is an effort by a of the answer, to the rules and regulations state to make a class of debt's payable at of the Federal Reserve Board and to busithe option of the debtor in something else ness usages and customs adds nothing to than gold and silver coin, and is void. It the defense. These are not to be judicially affords no reason why the defendant here noticed, but must be pleaded and proved in should not have demanded money in pay- order to be available. On the other hand, ment of the check in its hands for collec- the general reference to the statutes of tion.

Georgia and Alabama is unnecessary but [7] 4. It is also contended that the Re- unobjectionable; such public laws of either serve Board Regulation J, Series 1920, sub- state as are applicable and valid being jusec. 8, which was in force at this time, au- dicially noticed and applied without pleadthorized the sending of this check direct to ing or proof. the drawee and the remittance back by 9. Paragraph 20 of the answer is defecdraft. This regulation, I think, is not such tive as pleaded. If the rules and regulaa departmental action as will be judicially tions of the reserve banks referred to were noticed without pleading, as a statute would sufficiently pleaded, the knowledge of them be. Its provisions, not appearing in the on the part of the plaintiffs would be mapetition, cannot be considered on a demur- terial. Their knowledge of the statutes inrer thereto.

volved is not material, for all persons are 5. Furthermore, the petition alleges that bound to know the statutes binding on the draft which the Merchants' Bank sent banks with which they deal. The contento defendant was good, and that defendant tion that plaintiffs knew of the pending inneglected to pay it and remit the proceeds solvency and failure of the Merchants? promptly, and that the loss really resulted Bank, and if they had succeeded in withfrom that neglect. If that be the truth, drawing their deposit it would have been plaintiffs have a cause of action for this

a preference of them, void under the Alaconduct independently of all else. 6. The demurrers to the petition will bama law, seems to state a matter of de

fense. The failure of the defendant to setherefore be overruled, except those to paragraphs 15 and 16, touching the failure to

cure a collection, the benefit of which the give notice to the drawer of the situation. plaintiffs could not retain, would not be a It affirmatively appears that nothing was damage to them; it appearing that they unpaid except the draft made by Merchants have received equal treatment with other Bank on defendant. The plaintiffs were

creditors by the receiver. The allegation not parties to it and not to be notified of that one of the plaintiffs, being a director its dishonor. Moreover, notice of its non- of the Merchants' Bank, ought to have payment, if it were bad, could have been known of its condition, is irrelevant and given only 24 hours before the receivership, stricken. Such obligation would not in this and plaintiffs could have made no collection case be the equivalent of actual knowledge. without procuring and surrendering this This portion of the defense is retained, draft. The damage, if any was done, was though meagerly pleaded, for further inves

ance.

tigation of the law and facts that may be The physical things were two pieces of real applicable thereto.

estate situate on Walnut street, PhiladelJudgment may be taken upon the demur. phia. This real estate was under date of rers in accordance with this opinion. April 17, 1916, conveyed by the then gran

tor (now the decedent) to the Girard Trust rried lifrado 20.

Company et al. Admittedly all interest, GIRARD TRUST CO. et al. v. McCAUGHN, right, or title of any kind which she had Collector of Internal Revenue.

in the real estate was at an end when she (District Court, E. D. Pennsylvania. February died. She had made a will, which follow3, 1925.)

ing her death was duly probated. Of this

will the plaintiffs are the executors. The No. 11084.

will, however, deals in no way with this 1. Internal revenue m8-Question of what is real estate, for the reason, already stated,

an interest in land determinable by law of that all interest of any and every kind state where land located.

which the testatrix had formerly had in it For purpose of tax under Act Cong. Feb. 24, 1919, 8 402 (Comp. St. Ann. Supp. 1919, ceased at her death.

The tax, however, $ 633644c), question of what is an interest in which her estate was required to pay, was land in Pennsylvania is determinable by law fixed by measuring it by the value of her of Pennsylvania.

estate as if she had died seized of this real 2. Internal revenue Om8_Land conveyed in estate and it had passed at her death as

trust held not part of decedent's estate for part of her estate. tax purposes; "land."

This takes us back to the deed of conveyLand conveyed by decedent in trust for her.

Aside from the taxing statutes, and self for life, with remainder to another, held not part of decedent's estate, nor within Act assuming that no such laws had ever been Cong. Feb. 24, 1919, § 402 (Comp. St. Ann. enacted, an analysis of this conveyance disSupp. 1919, § 633644c), providing that "val- closes the following as its effect in law and ue of the estate," for purposes of the tax, fact: What is commonly called the legal should include value of “any interest" with respect to which decedent had “at any time title passed to the grantees.

This title, created a trust * to take effect in pos- however, included no beneficial ownership session or enjoyment at or after" death of de- in the grantees. Their title was that of cedent; "land" being defined as the concept of trustees. The terms of the trust were (or the right to appropriate a described portion of included) that the title should be held and space, not a corporal, physical, tangible thing. [Ed. Note.-For other definitions, see Words

used so that the rents, issues, and profits and Phrases, First and Second Series, Land.)

thereof should be paid to the grantor, or,

at her election, she should be permitted to At Law. Action by the Girard Trust occupy the premises as long as she might Company and I. Minis Hays, executors of live. In short, the grantor reserved or bethe estate of Annie Bradford, deceased, came the beneficial owner of a life estate in against Blakely D. McCaughn, Collector of the real estate premises. This life estate Internal Revenue for the First District of was qualified or defined by the obligation the State of Pennsylvania. On motion for of the life tenant or grantor to keep down judgment. Plaintiffs held entitled to re- incumbrances, by paying for the upkeep of cover, and entry of formal judgment au- the premises if the income was insufficient thorized

for this purpose. The conveyance was Joseph Carson and Hampton L. Carson,

made upon the “further trust upon the both of Philadelphia, Pa., for plaintiffs.

death of said grantor to assign, transfer, George W. Coles, U. S. Atty., and L. and convey unto Emma Wood Hays, LeRoy Deininger, Asst. U. S. Atty., both

her heirs and assigns, absolutely of Philadelphia, Pa., and Thomas H. Lew- and in fee,” the premises conveyed, or any is, Jr., Sp. Atty. Department of Internal property which under the powers given the Revenue, of Washington, D. C., for de- trustees might be substituted for the propfendant.

erty conveyed. This means that the title to

the real estate was held by the grantees in DICKINSON, District Judge. The ques- trust for the decedent, who held therein a tion raised is a demurrer question. It is particular estate for life, and for Mrs. Hays the lawfulness of a tax exaction. It was for an estate in remainder in fee. admittedly lawful if certain property was

The defense to the claim for the return properly included in the "value of the es- of the tax payment is that the taxing act tate," which measures the sum of the tax. measures the sum of the tax properly payThis takes us to this property. What is it? able by the value of the decedent's estate

« 이전계속 »