
    The People, Pl’ff, v. Merchants’ Bank of Binghamton, Def’t. In the Matter of Petition of E. & G. Friend & Company.
    
      (Supreme Court, General Term, Fourth Department,
    
    
      Filed December 26, 1895.)
    
    Banks—Collecting agents.
    The relation between the former owner of a note and the collecting bank is that of bailor and bailee or trustee and cestui que trust, and the fund received by the receiver of such bank is the property of the owner of the note, or is so far impressed with a trust in his favor as to give him an equitable title thereto; and the owner of the note is entitled to collect it from the receiver of the bank to the extent of the funds he received from the bank that were in its possession when it failed.
    
      Appeal from an order, directing payment of petitioner’s claim in full.
    George F. Lyon, for app’lt ; Mandelbaum Bros., for resp'ts.
   PER CURIAM.

—The petitioners, E. & G. Friend & Co., are merchants in the city of New York. On December 29,1894, they sent to the Merchants’ Bank of Binghamton three promissory notes, payable at that bank, made by Reynolds, Rogers & Lay, who resided in Binghamton, and were depositors in the Merchants’ Bank. Accompanying the notes was a letter to the cashier of the bank, which was as follows: “We beg to inclose for collection, Reynolds, Rogers & Lay, $1,073.25; do. Am. Exch., $1,000; do. ‘Paid/ $1,364.43, for proceeds of which please send New York exchange, and oblige.” Each of these notes was indorsed upon.the back: “Pay to the order of Merchants’ Bk. for collection account of E. & G. Friend & Co.” Friend & Co. had no account with the Merchants’ Bank. The first of these notes was paid at maturity, and the bank remitted the proceeds less their charges. The second matured January 17,1895. On that day the account of Reynolds, Rogers & Lay was not good for the amount of the notes, but they deposited $634.40 to make their account sufficient to meet it. The bank thereupon stamped and canceled the note as paid, returned it to Reynolds, Rogers & Lay, and charged the same to their account. It then sent to Fiiend & Co. its draft upon the American Exchange Bank of New York City for the amount collected, less one dollar, collection fees. Before it was presented, the Merchants’ Bank went into the hands of a receiver, and the American Exchange Bank declined to honor the draft. The amount deposited and standing to the credit of Reynolds, Rogers & Lay in the Merchants’ Bank has neve» been drawn out, and there has been in'that bank at all times since such deposit was made more than riioney enough to pay the petitioners’ claim. The third note had not matured when the receiver was appointed, and it was returned to Friend & Co. On April 3d a motion was made for an order directing the receiver to pay to the petitioners the sum of $999, that being the amount of the note less the commission for collecting it. This motion was based upon the verified petition of Friend & Co., and an affidavit of Frank B. Reynolds. Upon the hearing, the affidavit of George W. Ostrander was read in opposition to such motion; and, upon the hearing, the court granted the order appealed from.

Practically the same question as is presented upon this appeal was before us in the case of Arnot v. Bingham, 55 Hun, 553 ; 29 St. Rep. 878. In that case all the essential facts were substantially like those in the case at bar. We there held that the owners of the note were entitled to collect it from the receiver of the-bank to the extent of the funds he received from the bank that were in its possession when it failed. We also held that the relation between the former owner of the note and the bank was that of bailor and bailee, or trustee and cestui que trust, and that the fund' received bv the receiver was the property of the owners of the note, or so far impressed- with a trust in their favor as to give them an equitable title thereto. If that ease was correctly decided, it follows that the order in this casé should be affirmed. While it must be admitted in that case we were not free from doubt, and that the general term of the Fifth department has held an opposite doctrine, still, upon a re-examination of the question, we are disposed to adhere to our former decision, and affirm the order appealed from.

Order affirmed, with $10 costs and disbursements.  