
    The American Trust & Savings Bank, Plaintiff, v. Oscar F. Austin et al., Defendants.
    (Supreme Court, Onondaga Special Term,
    December, 1898.)
    Bank and customer — Discount of drafts upon bills of lading — Effect of bank rule that, in collecting, it is only the customer’s agent — Waiver.
    After a bank had, upon bills of lading, discounted drafts drawn by its customer upon his vendee in another city, the vendee refused payment of the drafts upon their presentation to him with the bills of lading, but he afterwards sold the property consigned to him and retained the proceeds. Creditors of the vendor attached the proceeds and, upon an interpleader, they were paid into court.
    Held, that, as the bank had discounted the drafts and had passed their avails to the vendor’s credit, it was entitled to recover from the proceeds in court the amount of the drafts.
    
      That a rule adopted by the bank that, in receiving checks or drafts on deposit or for collection, it was to act only as the agent of the depositor and was to be responsible only for the failure and insolvency of its own collecting agents, was a rule which applied only as between the bank and its customers, that the bank might waive the rule, and that, as against the attaching creditors, the rule did not constitute the bank a mere agent of the vendor.
    Action of interpleader.
    D. R. Cobb, for plaintiff.
    H. E. Miller, for defendants.
   Hiscock, J.

This action became one of interpleader and equity through the fact that one Thalheimer holding some moneys claimed by the plaintiff and also by the present defendants was allowed to pay the same into court and have substituted as defendants herein said present defendants.

One Hoffmeyer shipped from Chicago to said Thalheimer, at Syracuse, two lots of butter. He drew two drafts upon said Thalheimer for the value thereof claimed by him, being nearly $500. Upon said drafts and the -bills of lading for the butter so shipped as aforesaid he obtained from plaintiff the full amount of the drafts, less exchange, etc. -Plaintiff.having advanced the money upon the drafts and bills of lading forwarded the same through its correspondents to Syracuse for collection, but payment was refused by Thalheimer, upon the ground that the butter was not up to the agreed standard. Subsequently, however, he sold the butter and received the proceeds thereof, amounting to the sum of $416, which' has now been paid into court as aforesaid. While the proceeds of said butter either in the form of accounts or moneys were in his hands the defendants other than Austin obtained an attachment against Hoffmeyer which Austin as sheriff purported to levy upon such avails of the butter.

Various questions are raised in the case, but, in view of the decision reached upon the. principal one litigated, it will be unnecessary to consider the others.

It is claimed by the plaintiff that it discounted the drafts drawn by Hoffmeyer as aforesaid upon the strength of the bills of lading accompanying the same, and that by virtue thereof it became the owner of the drafts, and to the extent of the amount thereof, at least, the owner of the goods covered by the bills of lading and the proceeds thereof. Upon the other hand it is insisted by the defendants that the plaintiff received said drafts and bills of lading for collection merely or at least as the agent of Hoffmeyer, and did not become the owner thereof. A consideration of all the evidence upon this subject, which it is unnecessary to recapitulate at length, leads me to the conclusion that the plaintiff’s contention is the correct one, and that it did become the owner of the drafts and bills of lading and of the goods as covered by the latter. No serious contention is raised that plaintiff passed the entire amount of the drafts when it took them, accompanied by the bills of lading, to the credit of Hoffmeyer in his.account, and they were subsequently drawn out by him. Defendants’ contention that plaintiff was acting simply as collecting agent for Hoffmeyer is based largely upon a general rule adopted by plaintiff in its hanking business to the effect that in receiving checks or drafts on deposit or for collection it acted only as agent for the depositor, and beyond carelessness in selecting agents at other points and in forwarding to them it assumed no liability. This rule was made and adopted by plaintiff, and of course, it could if it saw fit, in connection with any transaction, waive it and make the transfer of drafts to it absolute and unconditional. But even if it did not do this in this transaction, the rule does not seem to me to have the effect claimed by defendants. If plaintiff discounted and thereby became the absolute owner of a draft for a customer, and the draft for any reason was not paid, it would naturally expect to charge it back to the customer’s account or compel him in some way to make it good. In the case of a draft so discounted and payable in a distant city, it would be necessary for the plaintiff to utilize a line of collecting agents, and any one of them through failure or insolvency might defeat the collection of the draft and place plaintiff where it might desire to charge the same back against its customer. And as I look at it this rule was intended to cover that part of its transactions with its customers, and as to those acts to make the customer responsible and relieve the bank from liability except within the limits named by the rule.

Findings and judgment in favor of plaintiff, with costs, may be prepared and settled upon one day’s notice if not agreed upon.

Judgment for plaintiff, with costs.  