BBAL' ,. CITY OJ' SOMERVILLL
and thAt tbiflatter should;therefore be adopted. It must be platn from what has been said that we do not think the language will bear another reasonable construction. To hold that it Will, we must ignore the plain intent of. the testatelr, expressed throughout the will, and find that he contemplated dying intestate as respects the $5,000, not only against the contrary legal presumption, but also against the plain import of his language relating directly to the subject-if not indeed against its express terms. In bequeathing the residue to William he not only takes pains to exc11,idethe $5,000 from the bequest, but speaks of its payment in terms which seem to preclude the idea of contingency. The thought that the children might not receive it, under all circumstances, we think, never entered his mind. That thelegacies are charged on the land, is not open to question. The testatorrningled his real and personal property together and gave the residue to William"after paying his debts and "the above-mentioned 85,000," ,Such language, under such circumstances has been uniformly held, in modern times, to create a charge on the testator's land. Lewis v. Darling, 16 How. 1; Fenwick v. ChapfMn, 9 Pet. 461. The rule in Delaware, where this land is located, is shown to be the same, by the decision in Rambo v. Rumer, 4 Del. Ch. 9. The statl;1tory bond given by William Dean, as executor, was intended to secure the faithful discharge of his official duties, and had no relation to the payment of this legacy. The time when it might become payable was uncertain, while the obligations of the bond were limited to six years; arid expired long before the legacies became due. The bond did not, therefore, "secure" its payment, within the terms of the will, as the appellant urges. The decree of the circuit court is affirmed.
A city treasurer deposited checks in a bank, indorsed by him -For depollt,-04 'he checks were immediately credited to him on his pass book, though not in pur8uance of any agreement to that etrect. He had been a depositor in the bank for some years, but had no agreement that his checks should be treated as cash, or 'hat be should draw against them before collection. The bank became insolven' before the ohecks were colleqted,and their proceeds passed into the hands of a receiver. Held, that no title passed to the bank except as a bailee. and that the depositor was entitled to the proceeds. 4,9 Fed. Rep. 700, aftlrmed.
BANXING-CIJBCXll )'OK CoLLBCTIOll....INSOLTBNCY.
Appeal from the Circuit Court of the United States for the District of Massachusetts. Suit by the city of Somerville against Thomas P. Beal, receiver of the Maverick National Bank, to recover the proceeds of certain checb. From a final decree for plaintiff, defendant appeals. Affirmed. The allegations of thebiU were, in substance, as follows:
Oc:ltober 31, 1891, about a quarter before So'clock tn the treasurer of the city of.Somerville deposited in the Maverick Natioql\l pank, in the name and on aecount of saidcity, checks on different 'banks, amounting to $21,171.40. (2}'!'he treasurer handed the checks, with <>ther deposits, to the receiving teller, with a deposit ticket, and also his pass book, and. the teller at once credited the total amount of the deposit therein. (S) Each of said checks had stamped on its back the following: "For deposit. JOHNF. COLE, Treas. &C01l. City of Somerville." (4) Afterthebank closed its doors on that day, the books of the bank, according to the usual custom, were and balanced, lIlld the amount of said cheeks were placed to the credit ,of said J:lity, and the checks placed in the dearing house drawer, with other checkS intended for presentation at the clearing house on the following Monday. (5) At the time said checks were received by the bank it was irretrievably insolvent, and made so by the operations of .the president and two of the directore. It closed its doore at 3 o'clock on said Saturday, and never :resulI)ed business. On the following day (Sunday) it was declared insolvent, an.d thll 'bank examineJ; took possession of it, and all its assets and property \Vere held by the examiner until the appointment of said receiver. (6) On said Monday the bank examiner caused the checks to be sent to the clearinf( .house, where they were paid, and the proceeds thereof were transferred to and are held by the receiver, separate from. other funds. (7) The treasurer had ·for seve,ral years made deposits with the bank without any special agreement in regard thereto. There was no agreement that checks deposited should be .consid,ered as cash, or that the treasurer could draw against them before collection. The treasurer Dever drew a check for which his deposit was not sufficient without counting the proceeds of uncollected checks, except in a few instances,on a few occasions, by special arrangement with the bank. There was no express understanding that the I'hecks should be credited to the city 'immediately on deposit, but they were alwllYs so credited on the pass book .at the tim.e of the deposit; and the treasurer did not know whether the books 'of the bank were balanced after the close of business on each day, and credits given on the books of the bank for checks deposited on that day, but he did know that the amount of such checks was at once credited to him on his pass book. (8) The bank, in balancing its books at the close of each day's business, credited deposits on that day at their face value, without discount; and it was the custom of the bank, on any of such checks being returned from the clearing house ll ncollected, forthwith to charge off to such depositor the amount of such check, and thus cancel the credit. (9) !twas the practice' of the Maverick and the other banks in Boston, in some cases, to allow depositors to dhiw against checks deposited before such checks are collected, and in some cases not, dependinK upon the bank's opinion of the reliability ,of the depositor and the makers of the checks. (10) The treasurer, at the believed the bank was solvent, and had no time of making said .knowledge or means of knowing of its insolvency. . A to the bill was overruled, (49 Fed. Rep. 790,) and afterwards the case was heard by agreement on the facts stated in the bill, and the further agreed fact "that the officers of the hank had no knowl. edge of the inaolvency of the banJt at the time the deposits were made, unless such knowledge is to be inferred as a matter of.1aw from the facts stated in the billi" and a final decree for plaintiff was rendered thereon. Hmchina &: Wheeler, (Edward W. Hutchinll, Henry Wheeler, and Frank D. Allen, of counsel,) for appellant. Selwyn Z.Bowman, for appellee. Before PUTNAM, Circuit Judge, and NELSON and CARPEN'IER, District Judges.
BEAL tI. CITY OJ' SOMERVILLB. PUTNAM,
Circuit Judge. The conclusion of the circuit court in this was consonant with justice, and it is therefore gratifying that this court finds that the law requires its affirmance. The transaction was primarily a deposit of the checks, with, secondarily, a duty to be performed concerning them by the Maverick National Bank. The fact that the checks were expressly indorsed "For deposit" does not change the nature of what occurred in this instance, as there are no intervening equities, although it emphasizes it. The paying of actual money by a customer into a bank of deposit does not create a bailment, because, by the settled custom, recognized by the supreme court of the United States, the house of lords, and numerous other courts, the bank is authorized to mingle the money at once with its general fund, creating immediately the relation of debtor and creditor, subject by further custom to draft in the usual course of business. But, with reference to the checks claimed by the city of Somerville, the word by which the transaction is ordinarily described may conveniently have, and therefore should have, its full natural force and meaning. A mere deposit would only require a bank to keepibut a usage requiring the Maverick to do in this case something more has continued so long, and is so notorious and universal, that the law can take judicial notice of it, and it happens that its terms and limitations cannot be mistaken. The bank must use due diligence. to collect; and, as collections are completed 1 the bank no longer holds the avails as bailee, but is authorized to mingle them with its other funds, itself a debtor. This, of course, makes the entire and th.us transaction something more than a mere deposit, in any proper sensei but this word well gives color to all that follows, and converts all that is done between the customer and the bank, to and including the actual turning of the checks into money, into locatio opem, according to its meaning as explained by J lldge Story in his work on Bailments, c. 6, art. 2. Aside from the right of the bank to constitute itself a debtor from the time the checks are converted into cash, or its equivalent, instead of a mere tru8tee or agent, no qualification of the strict legal rela.tions created by a bailment is deducible from the general nature of the transaction, the terms in which it is expressed, or the settled custom, or is shown by the appellant. It rests on the appellant to Bupport affirmatively his claim to such departure from the ordinary rules which the law applies to a deposit or other bailment, as is covered by his proposition that the bank from the instant of the deposit became a debtor for the amount of the checks, or their general owner, either with or without a right of return in the event of inability to collect. Such a position would reverse all the prin. ciples applicable to the simple transaction of a deposit, or other bailment, and cannot be sustained except by evidence of a special agreement, or of such practice or custom as would be equivalent thereto. If appellant showed that the city had a legal right to draw against the check!> from the instant of their deposit, so absolute that the bank could not lawfully suspend it by notice or otherwise, pending their collection, this would tend to support his position throughout. But
650 the nin'thparil.graphof the bill, which is admitted and is relied on' by the appelllmti iweighs against him. Appellant is' in error in diseuseing this paragraph as though it bore on a custom, in any proper sense of the word, :which the city is holden to prove. As alleged, it relates to a practiee of some banks/which mayor may not apply to them all, and which iuufficient in this case if it applies to the Maverick. The practice, as alleged, is like any course of action by which a corporation or indiyidual indicates that an option is reserved. If the paragraph admitted in terms that the practice had been acquiesced in by the city, or generally by the customers of the it would show conclusively an option on the part of the bank wholly inconsistent with any theory excepHhat of:bailmen.t. As it stands, its weight, although not very great, :isnecessarily against the appellant. '!'he first impression coming from thefact that the deposit was immediately·entered to the credit of the city on its pass book favors the view of the appellant; but a careful consideration will demonstrate that this was a mere matter of convenience,iapd the entry would have been the same on either theory, as was illustrated in Manu!aetur:t:r,' Nat. Bank v. CQntinental Bank, 148 Mass. 653, 20 N. E. Rep. 193, and Railway Co. v. Johnston, 133 U. S. 566,10 Sup. Ct. Rep. 390. On the other hand, the appellant fails to show that the city had an absolute right to check against the deposit as soon as made, irrevocable by notice from thebankj and that such right did not exist must be received by this court as a matter of judicial knowledge, notwithstanding the-parties in Moor, v. Goddard, 147 Mass. 287, 17 N. E. Rep. and the complainant in this case, seem to have regarded it necessary to prove the practice of a particular bank with reference to this matter., This is inconsistent with any theory except that the bank is a bailee of deposited· checks until they are collected; as is also the admitted faetthat the bank is entitled to return to its customer an uncollectible check,though he neither indorses it nor gives any special agreement to that effect.· The appellant fails to @how any obligation to receive back such checks, except what;arises from the nature of the transaction, unless from special custom; and it is more in harmony with fundamentailprinciplesi to presume that this right to return grows out of the former than the latter. It strains the law to convert the natural 'bliilment into a right of an entirely different character, to incidents be sustained, if at all, by s. cnstom violative of the ordinary rules governing analogous transactions. No autnorities have been cited or found which bind 'this court to the contrary of what is hereinbefore expressed. Railway 00. v.uolvn8thn. t88 U. S. 566, 10 Sup. Ct. Rep. 390, is not in point, a$ the paper in qUEl8tion in that case wasnqt a check, but a sight draft, and the ,decision wasmRde to rest mainly on the ground of fraud, as wasetated by the learned judge from whose decree in the circuit court thislf.ppeal1tutllken. Fltparte Richdale, 19 Ch. Div. 409, is criticized in Balbach v.JJflrt1:i.nghwysen, .16 Fed. Rep. 675. It can be added to iSIlid that,sofar as the 'Cl1setouches this at bar, the differwhat is ent judges who sat in the court of appeal used essentially varying exptessions, of which were unnecessary, beyond the proposition that the
tI. CITY Q1l' SOHERVILI&
in question was, under the special circumstances, a holder for value. Bank v. Loyd, 90 N. Y. 530,so much relied on as establishing an absolute title in the bank from the instant the checks were deposited, may perhaps settle the law for the state of New York. It apparently was so considered by Judge WALLACE as late as 1886, as stated in Railway 00. v. Johnstnn, 27 Fed. Rep. 243. The law of New York was especially found by court of Massachusetts to be as stated in Bank v. Loyd, in Brooks v. Bigelnw, 142 Mass. 6,6 N. E. Rep. 766, and though perhaps not of importance, yet it is noteworthy that the parties deemed it necessary to prove the rule of that state as though local and peculiar, and not to be gathered from the common law. Bank v. Loyd is discussed by the supreme court in Railway 00. v. Johnston, already cited; and its effect is stated (page 575, 133 U. S., and page 392, 10 Sup. Ct. Rep.,) to be in substance that a transfer by a bank of a draft deposited for collection, and indorsed generally, would confer title by reason of "reputed ownership." This was the pith of the New York decision; the question being, not as to title between the primary bank and its customer, but between the latter and another bank to which the draft had been remitted. Bank v. HubbeU, 22 N. E. Rep. 1031, 117 N. Y. from the case 384, (decided November 26, 1889,) can be at bar only by the fact that in the former the checks were expressly indorsed "For collection." They were charged by the depositor to the banker simultaneously with forwarding them, and were in like manner credited at once on reception and before collection, and such as were protested were charged back. The banker did not keep the proceeds of the collections distinct, nor remit them specifically; but they were with his other funds, and remittances of balances were made each week. These covered the existing credits on the books of the banker, whetht'ror not at that time collected. This method of business had continued for many years. Notwithfltanding the checks were indorsed specially "For collection," the transactions as a whole were identical in substance with those usual in connection with a deposit as made and the practical conin the case at bar; and the course of struction given them by the parties were precisely the same as though the checks had been indorsed generally. The special indorsements effected nothing, except to give notice to a· transferee or other stranger. They were covered into the transactions, and added nothing to them; because checks delivered a banker are "for collection" in any view. The checks were accompanied with letters stating that they were inclosed "for collection and credit." The court said that this amounted to a direction to credit after the collection; but the practice was to credit before, so that the letters of advice were thus actually superseded. Moreover, as already said about the word "collection," the word '·credit" added nothing, and was covered into the transactions, because the banker would do this in any event, unless instructed to remit specially. In this case the court of appeals held that the title to the checks remained in the depositor while they were uncollected. In Balbach v. Frelinghuysen, already cited, the United States circuit court for the district of
New JeM,;Wd down as the
of its considerations the rule that a
bank is,'Witil collection, a bailee of checks deposited, or agent of its Qustomersdepositing. Morse, Banks, (3d Ed.) § 187, says:
"The best opinion is that checks on the depositary, credited as cash, form general deposit, in the absence of agreement or usage to the contrary, and that other paper credited as cash is also received on general deposit, subject to the right of the bank to cancel the credit if the paper is dishonored with. out its fault." Section 586 says: "When a customer deposits a check on another bank, without any special contract, the property remains in him, a,nd the bank is his agent until it has notice that the correspondent bank has received the money and credited it," There are many dicta and general expressions touching this matter, some of which had in view the solving of other issues, and some of which were built up from the first class without recognizing the method of its .So far as this appeal is concerned, this court must maintain itself asa tribunal of final jurisdiction, notwithstanding the possibility that the case may in some form rench the Impreme court. If we had a determiqation in point from that court, it would necessarily conclude us; and, if the question at issue had been met by the United States circuit court of appeals in any other circuit, we should, of course, lean strongly to harmonize with it; \;Jut we are obliged to proceed. without either. Although, whenever the law is very doubtful, or the propositions compncated, this court may deri"!e great aid from dicta, expressions of learned judges or text writers, or decisions of local tribunals, it cannot permit itself to be bound or embarrassed by them, when the facts naturally and 6!lsily lead to such just conclusions as we now seem required to accept. We do not find it necessary to consider the other propositions involved in the case. The decree of circuit court is affirmed, with costs.
HITCHCOCK V. BARRE'rT.
(Oircuit Vourt, E. D. New York.
,Vhere the directors of a railway company enter into a contract with third persons, wherebyI' new company is organized, franchises secnred, and a road built and leased to t,he old company, and the profits realized from the transaction are equally divided between the directors and the third persons, the latter are not liable for their profits, even though exorbitant, on suit by stockholders of the old company. unless the contract of lease is rescinded, and the road restored to the new company.
In Equity. Bill by Hitchcock Iud others, as stockholders of the Brooklyn Elevated Railroad Company, against Barrett and others, to restrain the latter from exercising any acts of ownership over certain shares of stock, and to enjoin the company from recognizing their claim toutle therein. Injunction denied. Julien T. Davie8,Wheeler H. Peckham, and J. G. HaU, for plaintiffs. Geo. W. Wingate, Edmund Wetmore, and Wm. H. Paige, Jr., for defendants.
WALLACE, Circuit Judge. 1 am so strongly of the opinion that there is no ground upon which this suit can be maintained that I must decline to grant the interlocutory injunction which has been applied for. This bill is filed by certain stockholders of the Brooklyn Elevated Railroad -Company, against that corporation and one Barrett, to restrain the latter from exercising any acts of ownership upon 23,792 shares of stock of the railroad company, from voting thereon at any election of stockholders -of the railroad company, and to enjoin the railroad company from recognizing any title of Barrett to such shares. The plaintiffs allege that the ,corporation is controlled by directors who affiliate with Barrett, and refuse to protect the interests of the corporation. The substantial facts are briefly as follows: Prior to the 1st day of February, 1887, the Elevated Railroad Company, shortly designated as the" Brooklyn Company," was -operating its railway over various streets in the city of Brooklyn, and another elevated railway company, shortly designated as the "Union .company," owned franchises, which the BrooklynCompany had attempted unsuccessfully to obtain, for constructing and operating a railway over :lertain other streets in the city of Brooklyn. Each company was a corporation organized under the laws of the state of New York. It was desirable for the Brooklyn Company that tHe railway of the Union Company should be built, and, when built, that the properties of the two .corporations should be merged and opEJrated under one management. The Union Company had been organized in June, 1886, by Messrs. Wingate, Cullen & Barrett, upon an understanding with Messrs. Lauterbach .&. Pettus that the former should effect the organization and secure, the franchises, and the latter should provide the money to pay all the expenses and build the railway, and that the profits arising from the trans-