Bank of the Metropolis v. New England Bank (42 U.S. 234)

by Roger B. Taney

United States Supreme Court

42 U.S. 234

Bank of the Metropolis  v.  New England Bank

This case was brought up by writ of error from the Circuit Court for the District of Columbia.

At the trial in the Circuit Court, it appeared upon the evidence that the Bank of the Metropolis, one of the banking institutions of the District of Columbia, had been for a long time in the habit of dealing and corresponding with the Commonwealth Bank of Massachusetts. They mutually remitted for collection such promissory notes or bills of exchange as either might have, which were payable in the vicinity of its correspondent, which, when paid, were credited to the party who sent them, in the account current kept by both banks, and regularly transmitted from the one to the other and settled upon these principles. The costs and expenses, such as protests and postage, were, of course, charged in such account.

The balance was sometimes in favour of one, and sometimes of the other. On the 24th of November, 1837, the Bank of the Metropolis was indebted to the Commonwealth Bank in the sum of $2200, and in the latter part of the year 1837, the Commonwealth Bank transmitted to the Bank of the Metropolis, for collection in the usual way, sundry drafts, notes, and other commercial paper which would fall due in the ensuing months of February, March, April, May, and June. They were endorsed by E. P. Clarke, cashier, and made payable to C. Hood, cashier, and again endorsed by C. Hood, cashier, to G. Thomas, cashier. Clarke was the cashier of the New England Bank; Hood, of the Commonwealth Bank, and Thomas of the Bank of the Metropolis.

On the 13th of January, 1838, the Commonwealth Bank failed, and on that day Charles Hood, the cashier, wrote a letter to the Bank of the Metropolis, directing them to hold the paper which had been forwarded, as above stated, 'subject to the order of the cashier of the New England Bank, it being the property of that institution.' When this letter was received, the account was examined, and it was discovered that on that day the Commonwealth Bank was indebted to the Bank of the Metropolis in the sum of $2900.

The deposition of Charles Hood, which appeared to have been taken under the act of Congress, was read in evidence by the defendant in error. It stated, among other things, that 'the Commonwealth Bank never, at any time, owned any of said notes or obligations, or any part or either of them, and had never any right, title, interest, claim, or lien thereon, but that the same were at the time of the receipt, and ever afterwards, the property of said New England Bank, and subject to its order and control.'

The reading of this deposition was objected to in the court below, and included in the bill of exceptions; but as the objection was not argued in this court, it is presumed to have been abandoned.

The action was brought by the New England Bank against the Bank of the Metropolis, and the judgment in the Circuit Court was in favour of the plaintiff for the whole amount of the proceeds of the notes and bills in question.

At the trial, a bill of exceptions was taken by the defendant, (the present plaintiff in error,) which, after reciting the evidence, concludes as follows:

Whereupon, the counsel for defendants prayed the court to instruct the jury, that, if they shall believe from the said evidence that the Commonwealth Bank did for a series of years transact business with defendants, and did from time to time transmit notes and other commercial paper to defendants for collection, which were all treated by both parties as if the same were the property of the said Bank of the Commonwealth, who were credited in their account current with the proceeds, and charged with the costs and expenses which accounts were from time to time adjusted upon these principles; that the notes and paper mentioned in said letter of 13th January, 1838, were endorsed and transmitted in the ordinary course of business, without any notification that any other party or person had any interest in said paper, were thus received by defendants, and held by them; that while thus held by them, the said Commonwealth Bank became insolvent or embarrassed in its circumstances, and after such embarrassment the letters aforesaid of the 13th January, 1838, were written, and at the time of their receipt by defendants, said embarrassed state of said Commonwealth Bank was known to defendants, and there was at that period a large balance on general account due defendants from said Commonwealth Bank, and the said paper was all regularly endorsed by the cashier of said Commonwealth Bank to defendants; the said defendants had a right to receive said paper, and the proceeds when recovered, until such balance was paid; and plaintiffs are not entitled to recover; which instruction, as prayed, the court refused to give.

Coxe, for the plaintiff in error.

Bradley, for the defendant.

Coxe argued, 1. As to the law, supposing the Commonwealth Bank and the Bank of the Metropolis to have been the only parties in the transaction; and, 2dly, How far that law was changed by the intervention of the New England Bank. On the first point, he cited 17 Wend. 100; 1 Ryan and Moodie, 271; 1 Rose's Cases, 280, 80; 5 T. R. 488, 491, 493; 1 Esp. Cases, 66; 2 Bla. Rep. 1154.

As to the second point, he argued that it must have been a secret trust between the two eastern banks, which did not follow the specific paper; and cited 1 Rose's Cases, 238, 242, 246, 248; 7 T. R. 355; 7 Mass. Rep. 319, 324; 2 Vesey, 585.

Bradley, contra. As to the question of lien, 3 Bos. and Pul. 494; 6 T. R. 14; 7 East, 224, that special liens must be sustained by proof; also Burrow, 2221; 6 East, 28; 1 Atk. 236. That the onus is on the person who claims a lien, 7 Barn. and Cres. 212, in 14 Com. Law. Rep. 30; 3 Bro. Chan. Cases, 21. No lien for general balance on bills casually left. 7 Taunt. 278; see also 3 Mason's Rep. 222; 1 Maule and Selw. 140; 2 Dall. 60; 1 East, 335; 8 Barn. and Cres. 622, or 15 Com. Law Rep. 319; 7 Bingh. 284; 20 Com. Law. Rep. 130; Doug. 303; 3 T. R. 321; 1 P. W. 318; 3 P. W. 185; 1 Salk. 160; 1 Atk. 234; 2 Barn. and Ald. 327; 3 Barn. and Cres. 376; 1 Peters, 28, 30, 35.

Coxe, in conclusion, examined cases cited on the other side to show that they did not apply, and argued that there was a special usage made out between these two banks. In 1 Livermore on Agency, 261, cases examined, and same distinction drawn as exists here.

Mr. Chief Justice TANEY delivered the opinion of the court.

Notes