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Armour Packing Company v. J. Davis, Receiver
Clark, J.: Had the paper, when deposited by the plaintiff in the bank, been endorsed “ for collection,” there can be no question that it would have remained the property of the depositor, for the title would not have passed. Boykin v. Bank, at this Teim. Had the paper been col *554 lected and the pi’oceeds mingled with the general funds of the bank, even if the paper had been endorsed “for collection,” the plaintiff would have been a simple contract creditor with no preference over other creditors.
Bank v. Bank, 115 N. C., 226; Bank v. Davis, 114 N. C., 843.
The point here presented is different from either of the above, and has elicited soine conflict of decision, but it seems now settled by the weight of authority, especially the more recent cases, and it is in accordance with the “reason of the thing,” that, while an endorsement “ for collection ” of a draft or check does not transfer title to the endorsee but merely constitutes him the agent of the endorser, a different result does not follow an unrestricted endorsement, where, though the endorser is credited and the endorsee charged with the amount of such paper, it appears as a fact that the endorsee does not become unconditionally responsible for such amount until the check or draft is actually paid.
Bank v. Hubbell, 117 N. Y., 384 (15 Am. St. Rep., 515). In a very recent case (In re State Bank, 45 Am. St. Rep., 454; 56 Minor, 119) the Court says : “There can be no doubt that if a draft or other paper is delivered to a bank for collection, the mere fact, that the endorsement of the owner is unrestricted will not, as between him and the bank; make the latter the owner of the property.
Neither is it conclusive upon the question of ownership of the paper that before collection the amount of it is credited to the customer’s account, against which he has the privilege of drawing by check. Such privilege is merely gratuitous if the bank may cancel the credit or charge back the paper to the customer’s account when it is not paid bv the maker or drawee. Gites v. Perkins, 9 East., 12; Levi v. Bank, 5 Dill., 104; Balbach v. Frelinghuisen, 15 Fed.
Rep., 675.” And in a late case in the United States .Oir- *555 cuit Court of Appeals (Beal v. Somerville, 50 Fed.
Rep., 647) the same principle is affirmed, the Court pointing out that, though the amount of the ‘paper may be at once placed to the credit of the depositor with permission to him to draw against’it, yet if the tacit understanding from the course of dealings between the parties is that, if the paper is not paid, the amount thereof is to be charged back to the depositor’s account, this is really a bailment for collection and, as between the depositor and the bank, the title never passed, it having passed sub modo only as between the bank and the payee.
As between the depositor and the bank, the question whether title passes or not depends upon whether as a matter of fact the paper was taken for collection, though not so restricted by an endorsement to that effect, or whether it was taken absolutely as a purchase or discount.
To the same purport are Balbach v. Frelinghuisen, supra; Scott v. Bank, 23 N. Y., 289, and 2 Morse on Banks, Sec. 583 c. In the present case it is found that the tacit agreement betAveen the parties, from their course of dealings, ’was that, though the amount was credited to the depositor and he could draw against it, yet, if the paper so deposited Avas not paid on presentation, the amount thereof Avas to be charged up to the depositor’s account or taken off his next deposit ticket.
Tiiis stamps the transaction as being unmistakably a bailment for collection. As nothing had passed,- the fact that the bank had simply given the depositor credit on its books Avould not make the bank a purchaser for value. Bank v. Davis, 114 N. C., 385, citing Mann v. Bank, 30 Kan., 412; Bank v. Valentine, 18 Hun., 416; Bank v. Newell, 71 Miss., 308.
It was further said In re State Bank, supra: “Of course in all such cases the banker, like a factor, has a lien for advances made on the faith of the paper, and consequently *556 the claim of the customer may be modified by the state of his account.” No such question however arises in this case, the balance of the plaintiff’s account, independent of this check, being in its favor at the time of the failure of the bank. Upon the facts found, the check is the property of the plaintiff. Reversed.