First Nat. Bank v. Strauss

Citations

• 66 Miss. 479

Syllabus

<p>1. Bank, Insolvency. Fraud in receiving paper. Rescission.</p> <p>One who indorses a draft and deposits it with a bank, which at the time is known by its officers to be hopelessly insolvent, may, in order to protect himself, on discovering the insolvency, rescind the transfer and stop payment of the paper.</p> <p>2. Bona Fide Holder. Paper received as security.</p> <p>Receiving property merely as security for a pre-existing debt does not constitute the holder a purchaser for value : and, by reason of our non-commercial statute, the same rule applies in this state to bills of exchange and notes taken as security for a debt.</p> <p>3. Bank Receiving Paper por Collection. Bight of owner.</p> <p>In this state where one bank sends to another a draft for collection, duly indorsed, the receiving bank does not become 'a purchaser of the paper for value, although the forwarding bank is indebted to it on account of collections and has failed after the paper is sent. In such cases the real owner of the paper, who deposited it with the sending bank, although having indorsed it to that bank, is entitled to stop payment of the draft, or to recover the proceeds if it has been paid.</p>