
    The Peoples and Drovers Bank v. Craig as Administrator of the Estate of D. Furtwangler.
    
      Promissory note — Indorsed and sent for collection — Collector no power to sell or transfer — Amount of note remitted by collector regarded as payment, when — Maher becomes liable on reissue of note, when — Instructions to jury as to conceded facts.
    
    1. Where a negotiable promissory note is indorsed for collection and sent to the place of payment, the person receiving such note with such indorsement, has no power to sell or transfer the note. His power is limited to collection.
    2. Where a person receiving such note, remits the amount thereof out of his own funds to the owner as though he had in fact collected the note, such transaction is a payment and extinguishment of the note, and not a transfer thereof.
    3. If such payment is made with the assent of the maker, he becomes liable as for money paid to his use, or liable on the note as a re-issued note; but as to a maker who does not assent to such payment, there is no liability, either on the note or for money paid to his use.
    4. A person making such payment is, as to non-assenting makers, a volunteer, and not entitled to subrogation.
    5. Where the controlling facts are conceded on the trial, it is not error for the court to direct the jury to bring in a verdict in accordance with such facts.
    (Decided November 27, 1900.)
    Error to the Circuit Court of Fayette county.
    On February 19, 1887, R. A. Robinson, H. L. Robinson and D. Furtwangler made and delivered their promissory note to Norman McLean, Admr., and thereby promised to pay to him or order at the People’s and Drovers’ Bank of Washington C. H., Ohio, $480.00, in six months after date. The payee duly indorsed the note before maturity to one William Harry, who also duly indorsed it, and it was by the holder duly indorsed for collection and forwarded at maturity to said People’s and Drovers’ Bank for collection, and was received by said bank and entered upon its collection register, by the cashier, who was said R. A. Robinson, the maker of the note, and who was also principal, said H. L. Robinson and D. Furtwangler being his sureties.
    R. A. Robinson, cashier of the bank, and who was also maker of the note, drew a draft on the Fourth National Bank of Cincinnati, the correspondent of said People’s and Drovers’ Bank, for the amount of the note, and remitted the same to the party from whom the note had been received, and put the note among the cash items of the bank, where it remained until the bank made an assignment for the benefit of creditors in the month of October, 1895, when it passed into the hands of the assignees under the assignment. Afterward the bank was reorganized, and this note, with other assets of the defunct bank, passed from the assignees to the new bank, the present plaintiff in error. D. Furtwangler having died in the meantime, Eli Craig was appointed administrator of his estate, and the new bank having presented the note to him for allowance, and the same having been rejected, an action was commenced on the note by the new bank against the two Robinsons, and Mr. Craig as such administrator.
    The two Robinsons made no defense, but the administrator of D. Furtwangler answered, denying that the bank was the owner of the note, denying the transfer by the assignees, alleging want of power to make such transfer, and averring that the old bank received the note for collection and for no other purpose, that the note was fully paid by R. A. Robinson, cashier, and that the surety was released. Certain demurrers and a motion having been disposed of, there was a reply filed, in effect a general denial.
    The cause was tried to a jury, and at the close of the plaintiff’s testimony, counsel for the administrator demurred to the evidence, and requested the court to direct the jury to return a verdict for the defendant, which the court did; and thereupon the jury brought in a verdict for the defendant, to all of which the plaintiff excepted. A motion for a new trial was overruled, exceptions taken, and judgment entered on the verdict. The circuit court affirmed the judgment, and thereupon the bank filed its petition in this court seeking to reverse the judgments of the courts below.
    The evidence tended to prove, in addition to the above facts, that at the time the draft was drawn to pay the note, Mr. Robinson, the cashier, had no funds in the bank and his account was overdrawn, that he drew no check on the bank to pay for the draft, that when he forwarded the draft in payment, of the note he took the note out of the collections and placed it among the cash items, that it was the custom of the bank when notes were paid, to stamp them “Paid,” and that this note was not so stamped, that under the course of business of thé bank notes purchased were sometimes put into the cash items, that it never became the owner of paper except at the request of some one to purchase it, that the note would go into the cash items by request only, that notes are not paid by the bank unless some arrangement is made with the bank for an equivalent) and that when a draft is issued something must be given to the bank for it.
    
      
      Humphrey Jones, for plaintiff in error.
    The real issue in the case, and the one upon which it turned, was that of payment. The defendant Craig' as administrator, claimed that the note had been paid by Robinson, if not absolutely, at least as to Furtwangler, and that the old People’s & Drovers’ Bank, by reason of payment of the note having been made, never became the owner and holder of it as against Furtwangler.
    We claim that the evidence very strongly tends to establish by inference the fact that the People’s and Drovers’ Bank, on the 27th day of August, 1887, accepted and received the note in payment for the draft of the same amount which it that day issued; that the' issuing of this draft for the amount of that note must have been at the instance of some of the makers upon the note, and that the taking and holding of the note by the bank, in lieu of or as the equivalent of the draft,, must also have been at the instance and under procurement from some of the makers of the note.
    The bank had a perfect right to purchase and advance the amount of that note to the holder thereof, at the request of the principal maker, and it had a perfect right to hold the note for its protection and security for the money thus advanced.
    It could only be without remedy, and could only be deprived of the security which the note afforded, by merely volunteering to pay the amount of it; if the bank was a mere volunteer in advancing the amount of the note to the holder, it then could not recover either as against Robinson or as against any other' makers upon the note, but if it was not in the attitude of a mere volunteer, but took the note in the usual course of business, and accepted the note as a. valuable asset, at the request of some one upon it who was pledged to pay it, it then did not become a volunteer.
    A party paying an obligation or debt of another is not a volunteer where he is requested to pay, or where he is compelled to pay for the protction of his own interests.
    A party may be súbrogated to all the rights of the holder of paper by advancing the amount due upon the same, either at the request of the holder or at the request of the maker. Coe v. Railway Co., 31 N. J., 105; Tradesmen v. Thompson, 32 N. J., 133; Vol. 24 of Am. and Eng. Ency. Law, 283; Gashe v. Lumber Co., 31 Bull., 189, 5 Dec., 130; Putnam v. News Co., 14 Rec., 56, 14 Bull., 109, 6 Dec. (Re.) 1231.
    The agreement may be made with either the debtor or creditor. Frivell v. Zuber, 67 Texas, 275.
    
      Mills Gardner, for defendant in error.
    The bank claims that they paid the note and carried it in the bank as a “cash item.” That when the People's and Drovers’ Bank made an assignment for the benefit of creditors in October, 1895, this paper was found among the cash items, and that it passed to the assignees in and by virtue of the general assignment of the assets and property of the insolvent bank; and this is the character of the title on which the plaintiff in error seeks to recover.
    The old People’s and Drovers’ Bank never became the owner of the paper. It was indorsed to them only for collection, and was what is known in law as a “restrictive indorsement.” The indorsee in such case can only collect the money due on it. He cannot sell or hypothecate the instrument for his own benefit; nor can he hold the indorser liable to himself. 1 Daniel on Negotiable Inst., Sec. 698.
    Indorsement for collection is not a transfer of the title to indorsee, but merely constitutes him the agent of the indorser to present the paper, demand and receive payment and remit the proceeds. National Butchers’ & Drovers’ Bank v. Hubhell, 117 N. Y., 384, 15 Am. State; 515; Freeman’s Nat. Bank v. National Tube Works, 21 Am. Rep., 161, 151 Mass., 113.
    Where a bank to which notes, etc., have been sent for collection makes a general assignment for the benefit of creditors, does not acquire any title to such paper.
    Successive indorsers, of same kind, each acting by direction of preceding endorser. 21 Am. R., 161; 1 Daniel on Negotiable Inst., Sec. 598c; Mechanics Bank v. Packing Co., 1 Mo. App., 200, 70 Mo., 643; Blane v. Crane, 23 Am. Rep., 129.
    The words “for collection” which are frequently inserted in indorsements of negotiable paper put in banks to be collected, make the indorsements restrictive; and the indorser may show that he was not the owner of the paper and did not mean to transfer title either to it or its proceeds when collected. Such indorsement merely makes the indorsee agent for the indorser to collect the amount due, but does not invest him with such title as to make him a proper plaintiff in a suit. 1 Daniel Negotiable Inst., Sec. 698d.
    Payment is not a contract. It is the discharge of a contract. Daniel, Negotiable Inst., Sec. 1221; Lancy v. Clark, 61 N. Y., 209.
    Payment cannot be construed into a purchase. 2 Daniel Negotiable Inst., Sec. 1222; Burr v. Smith, 21 Bart., 262.
    
      An action for money had and received may lie against the party who procures the surrender of a. note without payment. 2 Daniel Negotiable Inst., Sec. 1222; Penobscott R. R. Co. v. Mayo, 67 Me., 470; Morris v. Faurot, 21 Ohio St., 155; Osborn v. McClelland, 43 Ohio St., 284; Church v. Swope, 38 Ohio St., 493; 1 Daniel Negotiable Inst., Sec. 726, last clause.
    The plaintiff obtained no title to the note.
    1. He did not purchase it of the payee- nor any one of the indorsees who had title.
    2. It was not indorsed to the People’s and Drovers’ Bank to transfer title, but for collection only.
    3. If the bank paid it at maturity for the principal, that did not transfer title. The bank could only obtain title by express agreement with the owner off the note. Paying the note, if they did, was only a matter of accommodation to the maker, and when paid could not be reissued. 1 Daniel Negotiable-Inst., Sec. 1238.
    Assignees for creditors get no title.
    If the note was paid by the bank at the request of R. A. Robinson, the principal on the note, that would be a complete discharge of the sureties. Robinson might be a debtor to the bank, not on the note but for-money had and received. Wing v. Terry, 5 Hill, 160; Griffith v. Reed, 21 Wend., 502.
   Burket, J.

The unknown custom of the bank and its private manner of conducting its banking business, could not have the legal effect of changing the rules relating to negotiable instruments, and therefore this case must be determined by a consideration of what was in fact done by the holder of the note, the-bank, and not by the private customs and manner of' transacting the business of the bank. The holder indorsed the note for collection and forwarded it with that indorsement to the bank, and the bank received it for collection, and entered it on its collection book and placed it among its collections, and afterward drew a draft on its Cincinnati correspondent for the amount of the note, and forwarded the draft in payment of the same to the one from whom it had so re-ceived it, and then placed the note into its cash items without stamping it paid. As to the holder of the note who so forwarded it for collection, this was a payment and extinguishment of the note, and not a transfer to the bank. The draft to pay the note was forwarded by Mr. Robinson, the cashier, either in his individual capacity, or in his official capacity as cashier. If in his individual capacity, it was clearly a payment and extinguishment of the note. If in his official capacity as cashier, his act was the act of the bank, and was a voluntary payment, and not an acquiring of the note by transfer, because the note was not sent to the bank to be by it transferred, but to be by it collected, that is, that it should receive payment, and upon payment the note should become extinguished. The indorsement was a restricted one, and the bank had no authority to do more than receive payment, and it could not keep the note alive after payment for any purpose. Payment even by a volunteer was the death of the note. A person who volunteers to pay the note of another cannot by such payment make himself the owner of the note without the knowledge and consent of the holder thereof. He can not act both as buyer and seller at the same time, bargaining with himself. Randolph on Commercial Paper, Sec. 720; Daniel, Neg. Instru., Sec. 698d; Bank v. Hubbell, 117 N. Y., 384; 15 Am. St. Rep., 515; Bank v. Bank, 5 C. L. B., 611; 3 Fed. Rep., 257.

There are some cases both in England and this country in which a stranger paying a note has been held to be a purchaser, subject to all equities of other parties; but in all those cases there was something in the transaction itself showing an intention at the time to become such purchaser, coupled with a power in the holder to sell and transfer the instrument.

The bank furnished the money and remitted it tO' the holder of the note as payment, and the holder received it as payment and had no information that the money was not paid by the makers. Such a transaction is a payment and extinguishment of the note, and not a transfer thereof.

As Mr. Robinson, the maker and also cashier, made the transaction, he must have ■ assented thereto, and become bound to the bank by such assent for a repayment of the money so paid to his use; or an action might be maintained by the bank against him on the note as a re-issued note; but as to the other makers who did not so assent, there was no re-issue of the note, and no liability for the money so paid without their knowledge or consent. Randolph on Com. Paper, Sec. 1425.'

The doctrine of subrogation has no application to payments made by a mere volunteer, and the bank in this case was purely a volunteer. There was no lien or security in the case to be kept alive by subrogation, and therefore it is useless to further consider that question in this case. Randolph on Com. ’Paper, Sec. 1439.

The controlling facts in this case were conceded on the trial, and the jury could not lessen the force of those facts by a consideration of the custom of the bank and its manner of doing business, and therefore-those customs and manner of doing its business were-immaterial, and the court was right in directing a verdict in accordance with such conceded facts.

The plaintiff having no cause of action upon the conceded facts on the trial, the rulings of the court, upon the demurrers and motion are immaterial and need not be considered.

Judgment affirmed.  