Lindauer v. Fourth National Bank

Geo. G. Barnard, J. The defendant had no title to the draft in question that enables it to retain the money it received thereon, as against the true owner. It was sent to the defendant for collection, and was received by it for collection only. That the First Hational Bank of Hew Orleans, the bank which sent the paper for collection, had overdrawn its account and had telegraphed that remittances were on the way, by force of which the defendant continued to pay its drafts, can make no difference. The draft did nof belong to the Hew Orleans bank, The Hew [84] Orleans bank did not claim to own it, never transferred it to the defendant or attempted to transfer it. The defendant advanced no money—gave no credit on this draft. The remittances referred to in the telegraphic dispatches, to the extent of over $60,000, did come, and the defendant received them. In the same package came the plaintiff’s gold draft, for collection. It was on the remittances of the Bank of Hew Orleans—its own funds—that the credit was given, and not on the plaintiff’s demand expressly sent for collection. The judgment should be affirmed, with costs. [New York General Term, June 7, 1869. Cardozo, J., concurred. Clerke, P. J. The decisions of the United States courts, upon the question involved in this case, have never been countenanced by the courts of this State. The principle laid down in McBride v. The Farmers’ Bank of Salem, Ohio, (26 N. Y. Rep. 450,) disposes of this case. A bank, receiving from another negotiable paper for collection, obtains no better title to it, or the proceeds, than the remitting bank had, unless it becomes a purchaser for value, or makes new advances on the faith of it, without notice of any defect of title; and it does not become such purchaser, or make such advances, by reason of its having a balance against the remitting bank, for which it had refrained from drawing, or from having made further advances after the receipt of the negotiable paper, in reliance upon a course of dealing between the banks, without any special reference to it. In this case the referee finds that the defendant made no advance to the First Hational Bank of Hew Orleans upon this bill of exchange, or upon the credit of it. The judgment should be affirmed, with costs. Judgment affirmed. Clerke, Geo. G. Barnard and Cardozo, Justices.]