First National Bank of Hiawatha v. Walsh, Boyle & Co.

Mr. Presiding Justice Freeman delivered the opinion of the court. The question to be determined is that raised by the interplea, namely, whether the carload of flour seized by appellee under the writ of attachment was at the time of the seizure the property of appellant. If it was, then it was wrongfully attached and the judgment appealed from must be reversed. The title of the bank rests entirely upon the bill of lading attached to the draft for $702 drawn by the McGuire Milling Company and deposited in the bank by which the draft was credited to the deposit account of the Mflliug Company. The draft was drawn directly to the order of appellant and was forwarded for collection in the ordinary course of business. The bill of lading which, accompanied it described the flour in controversy, bore the indorsement of the Milling Company and was transferred by delivery. In Lewis v. Springville Banking Co., 166 Ill. 311-316, it is said: 6 6 The delivery uf the three bills of lading or shipping contracts executed by the Union Pacific to the inter-pleader, operated as symbolic delivery of the sheep to the latter (Taylor v. Turner, 87 Ill. 296 and cases there cited), and the shipper being the owner of the sheep and no opposing interest or claim arising on the part of the carrier, consignee or prior indorsee of the bill of lading, no indorsement of the bill of lading rto the interpleader was necessary to transfer the title to it, ’5 citing cases. It was said in that case that even a sale or pledge of the property without a formal bill of lading by the shipper would operate as a good assignment of the property, and the delivery of an informal or unindorsed bill of lading or other documentary evidence of the shipper’s property “would be a good symbolical delivery so as to vest the property in the plaintiffs,” citing cases. This being the law there would seem to be no room for question that the delivery of the bill of lading to appellant transferred the flour and vested the title to it in appellant. To the same effect are M. C. R. R. Co. v. Phillips, 60 Ill. 190-198, and Seckel v. York Nat. Bank, 57 Ill. App. 579.-582. The burden of proof upon appellant as intervener to show that it was owner of the property attached was sufficiently met by the proof of such delivery. It is claimed, however, in behalf of appellee that crediting the account of the Milling Company with the amount of the draft which accompanied the bill of lading did not constitute the bank a holder for value, nothing of value it is said having been parted with by the bank. In support of this contention a number of cases are cited from other jurisdictions, among them Cent. Nat. Bk. v. Valentine, 18 Hun. 417; Drovers ’ Nat. Bank v. Blue, 110 Mich. 31; Mann v. National Bank, 30 Kans. 412; Alpine Cotton Mills v. Weil Bros., 129 N. C. 452. The last .of these eases is similar in some respects to the ease at bar, but in that case when the draft accompanying the bill of lading was returned to the bank unpaid, “the credit originally entered was canceled by charging it back, thus placing the parties in the position they originally occupied,” and it was said that “Weil Bros.' then had a right to demand and maintain an action against the bank for the bill of lading and return of its draft.” In the case at bar, however, the parties have treated the deposit of the draft as a deposit of cash, and the draft has not been charged back. The bank therefore became and remains a debtor to the depositor for its amount. Ward v. Johnson, 95 Ill. 215. In such case, as said in Railway Co. v. Johnston, 27 Fed. Rep. 243, “it should be held that the bank acquires title to the paper just as it would to a deposit of money.” To the same effect are Oddie v. National City Bank, 45 N. Y. 735, and Cragie v. Hadley, 99 N. Y. 131. In the last case it was said: “Where a customer of a bank makes a deposit in the ordinary course of business of drafts or checks which are received by the'bank and credited as money, the title to the drafts or checks immediately vested in the bank.” In Lauterman v. Travous, 73 Ill. App. 670-678, reference is made to the distinction between cases where checks or drafts are left with a bank only for collection and where a deposit is made which the depositor can check against in the ordinary course' of business, since in the former case the ordinary relation of borrower and lender between banker and depositor is not established, while in the latter case it is. In Trust & Sav. Bk. v. Manfg. Co., 150 Ill. 336-339, a deposit of a check was held to vest the legal title thereto in the bank in the absence of fraud. To the same effect is what is said in Am. Exch. Bank v. Mining Co., 165 Ill. 103-113: “It is quite true, as announced in authorities referred to by counsel for appellant, that where a customer makes a deposit in a bank in the ordinary course of business of a draft or check received and credited as money and indorsed by the customer- to the bank ‘for deposit’ to be placed to his credit, the title to the draft or check vests in the bank, subject to the right on the part of the bank to charge it back to the depositor in case it is not paid on presentment.” In Neill et al. v. Rogers Bros. Produce Co. (First Nat. Bk. of Santa Barbara, Intervenor), 23 Southeastern Rep. 702, the facts were similar to those in the case at bar. There attachment proceedings were brought against the Rogers Bros. Produce Company, just as in the case.at bar such proceedings are brought against the McGuire Milling Company. In that case, as in this, the intervening bank held a sight draft with a bill of lading properly indorsed, and claimed to own the property covered by the bill of lading in good faith and for a valuable consideration. It was held (p. 710) that the bank “was the holder for value of the bill of lading and was entitled to the goods until the draft accompanying said bill was paid,” and that the goods were not subject to attachment or to sale' thereunder as the property of the Produce Company. To the same effect is Hass v. The Old National Bank, 91 Ga. 312. Appellee’s attorneys cite Warman v. First Nat. Bank, 185 Ill. 60, in support of their contention. It is said that “by a general deposit in bank the relation of debtor and creditor merely is created between the bank and the depositor,” and that if defenses set up by the maker prevailed against notes discounted by a bank the proceeds of which- had been deposited to the credit of one not indebted to it, the bank can protect itself by refusing to pay the deposit or if it had paid any part, would be entitled to protection pro tanto, and could not claim the protection of being an innocent holder for value. There, however, the question involved was whether by such credit upon its books the bank became a bona fide holder so as to be protected against “infirmities in the paper” so discounted—a very different proposition from any involved in the ease at bar. It was held that the introduction of the discounted notes was sufficient prima facie proof that the bank acquired them bona fide for value in the usual course of business before maturity and without notice of any fact or circumstance impeaching their validity, and that it was the owner of them and entitled to recover the full amount against the makers; and that nothing short of fraud would overcome that evidence or invalidate the bank’s title thus shown. In the ease before us no such question arises, and in any event there is no evidence to dispute the title of the bank to the draft. It is clear in the case at bar that the credit given by appellant was not merely provisional. The draft was accepted as a deposit in the usual course of business against which the depositor was at liberty to draw as so much ,cash. Even if the bank might have been willing to give the Milling Company such credit without the security of the bill of lading, trusting to the latter’s financial responsibility, it did not do so, and the evidence shows that it z was in the habit of being protected on such drafts drawn on flour shipped .by the Milling Company by receiving the bill of lading with the drafts which it accepted and credited as cash deposits. We deem it unnecessary to extend the discussion or to review in detail the holding of the court upon propositions of law. It follows from the views we have expressed that the judgment of the Circuit Court must be deemed erroneous. It will, therefore, be reversed and judgment entered here in favor of the appellant on the interplea, with a finding of fact. Reversed, with finding of fact.