Monongahela National Bank v. First National Bank

Citations

• 226 Pa. 270
• 75 A. 359
• 1910 Pa. LEXIS 752

Syllabus

<p>Banks and banking — Checks—Agency—Surrender of money after payment of check — Contract—Illegal contract — Fraud.</p> <p>1. Where a collecting bank receives payment of a check, and on the same day pays back the money on notice that the check was a fraudulent one, and returns the check to the bank which sent it without giving any notice that the check had been in fact paid and the money returned, the collecting bank in a suit against it by the transmitting bank to recover the proceeds of the check which had been paid, cannot set up as a defense the fact that the cashier of the transmitting bank had knowledge of the fraudulent character of the check.</p> <p>2. It is never a defense to an action by a principal for money collected by his agent for the latter to show that in equity and good conscience the money belonged to a third party. He cannot deny his principal’s title.</p> <p>3. If an agent has received money from third persons for his principal by his authority, which money accrued from an illegal transaction between the principal and such third persons, who have no connection with the agent, the principal may recover it from his agent, for, as between them, the receipt of the money for the principal is upon a legal contract, although the money itself accrued under a former illegal transaction.</p>