Open main menu

Page:Harvard Law Review Volume 2.djvu/55

This page needs to be proofread.


had discounted notes for H, and the latter, wishing to anticipate payment, gave the bank checks for the amount of the notes less rebate of interest. These checks the bank received and charged to H*s account as depositor, and made entries in its books that the notes were paid. As a matter of fact, the bank had previously sold the notes. About a month after this, and before the notes be- came due, the bank failed. It was held that an order requiring the receiver to pay the notes out <rf the funds in his hands was pro- perly granted ; that the transaction between the bank and H was not in their relation of debtor and creditor, but that by it a trust was created, the violation of which constituted a fraud by which the bank could not profit and to the benefit of which the receiver was not entitled.

In two cases in Kansas,^ the facts were very similar and the de- cisions the same as in People v. Bank of Rochester,* and the same principle is involved in other decisions.* The decided weight of authority is shown by these cases. In the case of Illinois Trust & Savii^ Bank v. The First National Bank of Buffalo* the Circuit Court for the northern district of New York reached an opposite result, holding that though the defendant had collected a draft as agent for the plaintiff, and had kept instead of remitting the pro- ceeds, and in a few days had suspended payment, the plaintiff had no priority over other creditors. But three years later the Supreme Court of New York decided* on almost precisely the same facts that the party sending the draft for collection was en- titled to such priority, the court saying, " If the identical money collected by the bank did not pass into the hands of the receiver it makes no difference, for, in some shape or form, they went to swell the assets which fell into his hands." ^

There were several decisions^ under the late national bankruptcy

1 Peak V, ElUcott, 30 Kan. 156; ElUcott v. Barnes, 31 Kan. 170.

« 96 N. Y. 32.

» Harrison v. Smith, 83 Mo. 210 (overruling Mills v. Post, 76 Mo. 426) ; StoUer v, Coates, 88 Mo. 514; Thompson r. Gloucester Bank, 8 Atl. Rep. 97 (N. J.); People V, Bank of Dansville, 39 Hun, 187 ; McColl v. Fraser, 40 Hun, 11 1 ; McLeod v. Evans, 66 Wis. 401.

  • 15 Fed. Rep. 858; and see, to the same effect, Bank of Commerce v, Russell, 2

Dill. 215. ^ People r. Bank of Dansville, 39 Hun, 187.

• A decision to the same effect has recently been rendered in New Jersey, Thompson V, Gloucester Bank, 8 Atl. Rep. 97.

T White V. Jones, 6 N. B. R. 175 ; In re Hosie, 7 N. B. R. 60* ; In re C. & T. R Manufg Co., 12 N. B. R. 203.