St. Louis & San Francisco Ry. Co. v. Johnston, 133 U.S. 566 (1890)
U.S. Supreme CourtSt. Louis & San Francisco Ry. Co. v. Johnston, 133 U.S. 566 (1890)
St. Louis and San Francisco Railway Company v. Johnston
Argued December 19, 1889
Decided March 3, 1890
133 U.S. 566
APPEAL FROM THE CIRCUIT COURT OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK
A customary depositor in a bank in New York deposited with it a sight draft on a railway company in Boston. It was described as a "check" on the deposit ticket, which distinguished between "checks" and "bills." He had made similar deposits before, never drawing against them, the bank always reserving the right to charge exchange and interest for the time taken in collection. The depositor's bank book was with the bank at the time of the deposit. No entry was made in it until some days later, and then not by direction of the depositor. The receiving teller applied to the cashier for instructions on the receipt of the deposit and was directed to receive it as cash. The bank sent the draft to Boston for collection, and it was collected there. Before that was done, the bank in New York, which was insolvent when the transaction took place, suspended, closed its doors, and never resumed. Held that the question whether the bank had become the owner of the draft or was only acting as the agent of its customer was one of fact, rather than of law, and that there was not enough evidence to establish that the customer understood that the bank had become the owner of the paper.
When a bank has become hopelessly insolvent and its president knows that it is so, it is a fraud to receive deposits of checks from an innocent depositor ignorant of its condition, and he can reclaim them or their proceeds, and the pleadings in this case are so framed as to give the plaintiff in error the benefit of this principle.