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U.S. Supreme Court

Boatmen's Savings Bank v. State Savings Association, 114 U.S. 265 (1885)

Boatmen's Savings Bank v. State Savings Association

Argued April 1, 1885

Decided April 13, 1885

114 U.S. 265


A depositor having a balance in bank drew his checks upon the bank in favor of a third party. At the time of the presentment of the checks, the depositor had become insolvent, and there was held by the bank a draft endorsed by him but which had not then matured. The bank refused to pay the checks, and afterwards, the depositor having been adjudged a bankrupt and the draft dishonored, credited the amount of the balance on the draft, and proved in bankruptcy for the difference only. The state court decided that the checks constituted an equitable assignment of the amount due by the bank. Held, that the case did not present a federal question.

This suit was brought by the state Savings Association of St. Louis against the Boatmen's Savings Bank to recover the amount of two checks drawn on the bank by the firm of Cobb, Dolhonde & Co., dated respectively September 5, 1874, and October 23, 1874, and presented for payment November 5, 1874. When the checks were presented, there was a balance on deposit in the bank to the credit of the firm more than enough to take them up, but the firm had failed between the dates of the checks and the time of their presentation, and had notified the bank to that effect. The bank on that account refused payment. At the time of the presentation of the checks and also at the time of the failure of the firm, the bank held a draft, not then due, drawn by one Bradley on and accepted by the firm for $3,174, dated October 3, 1874, and payable in forty days from date. On the same day that the checks were presented and refused, it was arranged between the bank and the savings association that if the bank succeeded in collecting this draft from the drawer, it would pay the checks. The draft was never collected, and the checks still remain unpaid.

Cobb, Dolhonde & Co. did not resume payment after their

Page 114 U. S. 266

failure, and on the 23d of March, 1875, they were duly adjudicated bankrupts on a petition filed January 8, 1875. The bank endorsed on the Bradley draft the amount standing to the credit of the firm at the time of the failure, and proved its claim in the bankruptcy proceeding for the balance remaining due after this endorsement was made. Upon this balance dividends were paid by the assignee in bankruptcy. The savings association also proved its claim in bankruptcy and received dividends thereon. The total amount of its claim was much more than the amount of the checks.

The ground on which the savings association sought to recover in the suit was that the presentation of the checks to the bank for payment, while there was a balance of deposits to the credit of the firm exceeding the amount drawn for, charged the bank with a liability to pay the checks to the association as the holder thereof. The defenses set up by the bank in its answer were 1, that the failure of the firm and notice thereof to the bank were equivalent to instructions from the firm not to pay any checks that might thereafter be presented; 2, that the savings association was not the assignee or endorsee of the checks; 3, that in consideration of the agreement of the bank to pay the checks if the Bradley draft was collected, the savings association bound itself not to hold the bank liable if the collection was not made, and 4, that, relying on this agreement by the association, the bank credited the full amount of the balance of deposits in favor of the firm upon the Bradley draft, and proved up its demand against the estate of the bankrupts on account of the draft for no more than remained due after this credit was given, and that dividends were paid by the assignee only on the amount proven. Upon the trial, judgment was given in favor of the savings association for the full amount of the checks, and this judgment was affirmed by the St. Louis Court of Appeals, which is the highest court of the state in which a decision in the suit could be had.

Page 114 U. S. 267

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