Fourth Street Bank v. Yardley,
165 U.S. 634 (1897)

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U.S. Supreme Court

Fourth Street Bank v. Yardley, 165 U.S. 634 (1897)

Fourth Street Bank v. Yardley

No. 147

Argued January 12-13, 1897

Decided March 1, 1897

165 U.S. 634


As between a checkholder and the bank upon which such check is drawn, it is settled that unless the check be accepted by the bank, an action cannot be maintained by the holder against the bank.

Page 165 U. S. 635

It is also settled that a check drawn in the ordinary form does not, as between the maker and payee, constitute an equitable assignment pro tanto of an indebtedness owing by the bank upon which the check has been drawn, and that the mere giving and receipt of the check does not entitle the holder to priority over general creditors in a fund received from such bank by an assignee under a general assignment made by the debtor for the benefit of his creditors.

That the owner of a chose in action or of property in the custody of another may assign a part of such rights, and that an assignment of this nature, if made, will be enforced in equity is also settled doctrine of this Court.

The Keystone Bank, through its president, solicited the Fourth Street Bank to give to the former $25,000 of gold certificates, for which the Keystone Bank was to give its check against its reserve account in the Tradesmen's National Bank of New York City. At the same time that this request was made, the president of the Keystone Bank made the further statement that his bank owed a balance at the clearinghouse which it could not meet "because its funds were in the City of New York," and exhibited a memorandum showing the amount to its credit with the Tradesmen's Bank to be in the neighborhood of $27,000. In reliance upon such representations and the statements made supported by the memorandum exhibited, the Fourth Street Bank delivered to the Keystone Bank the certificates requested, and there was delivered a check for $25,000 upon the Tradesmen's National Bank of New York. The draft in question was at once forwarded to the City of New York, and was presented for payment at the Tradesmen's Bank on the following morning, when payment was refused. At the time of presentment, the Tradesmen's Bank had to the credit of the Keystone Bank $19,725.62 in cash and collection items amounting to $7,181.70, in all $26,907.32. Of this amount, $18,056.21 had been remitted by the Keystone Bank on the day previous. Held:

That, it being established that it was the intention and agreement of the parties to the transaction that the check drawn generally should be paid out of a particular fund, such check, as between the parties, is to be treated as though an order for payment out of the specific designated fund.

That, as the Fourth Street Bank contracted and parted with its money on the faith of the representations of the Keystone Bank that there was to its credit in the Tradesmen's Bank a specific sum, and the fund which came into the hands of its voluntary assignee was the fund as to which the representations were made, the Keystone Bank and its assignee were in equity estopped from asserting, to the prejudice of the Fourth Street Bank, that the character and condition of the fund was otherwise than it was represented to be.

By a bill filed in the Circuit Court of the United States for the Eastern District of Pennsylvania, appellant sought to subject

Page 165 U. S. 636

moneys in the hands of the receiver of the Keystone National Bank to the satisfaction of an alleged equitable charge or lien thereon. From a decree dismissing the bill, an appeal was taken to the Circuit Court of Appeals for the Third Circuit. The latter court thereafter certified to this Court two questions of law arising upon the facts stated, which facts are set out in the margin hereof. *

Page 165 U. S. 637

The following are the questions propounded:

"First. Do the above-stated facts show an equitable assignment by the Keystone National Bank to the Fourth Street National Bank of twenty-five thousand dollars of the fund, consisting of cash and collection items or drafts as aforesaid, belonging to the Keystone National Bank in the hands of the Tradesmen's National Bank?"

"Second. If the stated facts do not show such equitable assignment of the whole twenty-five thousand dollars, do they show such equitable assignment of the cash so in the hands of the Tradesmen's National Bank, namely, the sum of nineteen thousand seven hundred and twenty-five and 62/100 dollars? "

Page 165 U. S. 643

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