Commercial Bank of Pa. v. Armstrong

Citations

• 148 U.S. 50
• 13 S. Ct. 533
• 37 L. Ed. 363
• 1893 U.S. LEXIS 2205

Syllabus

<p>A bank in Ohio contracted with a bank in Pennsylvania, to collect for it at par at all points west of Pennsylvania, and to remit the 1st, ll'th and 21st of each month. In executing this agreement the Pennsylvania bank stamped upon the paper forwarded for collection, with a stamp prepared for'it by the Ohio Bank, an endorsement “ Pay to ” the Ohio Bank “ or order for collection for” the Pennsylvania Bank. The Ohio bank failed, having in its hands, or in the hands of other banks to which it had been sent for collection, proceeds of paper sent it by the Pennsylvania Bank for collection. A receiver being appointed, the Pennsylvania Bank brought this action to recover such proceeds. Held,</p> <p>(1) That the relation between the banks as to uncollected paper was 'that of principal and agent, and that the mere fact that a sub-agent of the Ohio Bank had collected the money due on such paper was not a commingling of those collections with the general funds of the Ohio Bank, and did not operate to relieve them from the trust obligation created by the agency, or create any difficulty in specially tracing them;</p> <p>(2) That if the Ohio Bank was indebted to its subagent, and the collections, when made, were entered- in their books as a credit to such indebtedness, they were thereby reduced to possession, and passed into the general funds of the Ohio Bank;</p> <p>(3) That by the terms of the arrangement the relation of debtor and creditor was created when the' collections were fully made, the funds being on general deposit with the Ohio Bank, with the right in that bank to their use until the time of remittance should arrive.</p>