
    Scott v. The Ocean Bank in the City of New York.
    The property in notes or bills transmitted to a banker by his customer to be credited the latter, vests in the banker only when he has become absolutely responsible for the amount to the depositor.
    Such an obligation, previous to the collection of the bill, can only be established by a contract to be expressly proved or inferred from an unequivocal course of dealing.
    It is not enough to warrant such an inference that the customer was a large depositor of money and bills, and constantly drawing drafts against his remittances, under an arrangement by which he was allowed interest on his average balances; and that after the banker had transferred a bill remitted to him, after acceptance but before payment, failed and suspended business at the place where the remittance was received, the customer continued to draw upon him as before at an office in another State, where the banker did not suspend business.
    These facts create the relation of debtor and creditor in respect to money received by the banker, but are insufficient to charge him with responsibility for a bill previous to payment, and consequently to vest him or his assignee for a precedent debt, with the property in such bill.
    Appeal from the Superior Court of the city of New York. Actiou by the pkintiff, as the assignee of one Lyell, to recover of the defendant the proceeds of a bill of exchange for $2,000, remitted by Lyell to the Ohio Life Insurance and Trust Company at its office in New York, and by the latter transferred to the defendant, after acceptance, as security for a precedent debt. These facts were found by Mr. Justice Slosson, before whom the cause was tried without a jury, with other facts which are stated in the following opinion. The judge determined, as matter of law, that the ordinary relation of debtor and creditor existed between the Ohio Life Insurance and Trust Company and Lyell, in respect to the account of Lyell with said company, including the $2,000 draft in question: that Lyell was entitled to have a credit in said account for the amount of the draft on the receipt thereof by said company; and that said draft and proceeds thereof received thereon, became, as between it and Lyell, the property of the company, and could be used by it as its other funds were used. He accordingly ordered judgment, dismissing the complaint. Upon appeal, the court at general term reversed the judgment and granted a- new trial. The plaintiff appealed to this court, with the usual stipulation that in case the order for a new trial should be affirmed, judgment absolute should pass against him.
    
      E. L. Fancher, for the appellant.
    
      F. F. Marburry, for the respondent.
   Lott, J.

The facts found by the learned justice, who tried this case without a jury, do not justify his conclusion of lawi that the bill in question on the receipt thereof by the Ohio Life Insurance and Trust Company became, as between it and James Lyell, on whose account it was received, the property of the company, and could be used by it as its other funds were used. It is not shown nor claimed that there was an express agreement between the company and Lyell, that he should, on the receipt by it of the bills remitted, be entitled to have a credit in the account between them for the amount thereof; nor is it found that in the course of the dealings between them any credit was in fact ever given to him for any of such bills till the proceeds thereof were realized and received. All that is found in relation to such dealings is that Lyell, who was a banker' at Detroit and kept an account with that company at its office in the city of Hew York, made from time to time between June, 1857, and the 24th of August in that year, remittances to it and drew drafts upon it: that he was a large depositor with it of money and bills: that there was an arrangement between him and it that he should be allowed interest at the rate of four per cent per annum on his average balances, and that on the said 24th day of August, on which day the company failed and suspended payment, Lyell had standing to his credit on the books of the company a cash balance of $108,483.56 exclusive of the bill in question: that such bill was received by the company in the usual course of business on the 20th of August for account of Lyell, who had been in the habit of remitting in the same way that this was: that the bill was on the day of its receipt accepted by the drawees on presentation, and returned to the company, in whose possession it remained till its transfer to the defendant on the 24th day of the same month, and that Lyell had at that time not been credited with said bill by the company; but after the commencement of this action the book-keeper of the assignees of the company, without' the knowledge of Lyell or the plaintiff, credited Lyell with the-proceeds thereof in his account with the company.

The only other fact bearing on this point is, that after the stoppage of the company in New York, it continued to do business in Cincinnati, Ohio, and that Lyell drew his drafts on it from time to time during the month of September, 1857, to the amount of $98,236.84. This course of dealing, and the arrangement referred to for the allowance of interest to Lyell on his average balances, would, it is conceded, create the ordinary relation of debtor and creditor between the company and Lyell in respect to the money received by it; but no inference can be legally drawn therefrom, that the bills so remitted were credited, or were intended to be credited, as cash on the receipt thereof, or that the company ever paid or were bound to honor drafts on account of the same until paid. Lyell was a depositor of money as well as of bills, and although he made remittances to the said company and drew drafts upon it,” it does not follow from those facts alone that the-drafts were drawn on account of or were limited to the remittances, nor if they were, that they might be made for the bills remitted before Collection, as well as the money. Ho reasons are disclosed in the case from which it can be reasonably inferred, that the company would consent or had any inducements to consent to treat as cash, and make itself debtor for, every bill that might be remitted to it without reference to the standing and responsibility of the parties, which in many cases might be unknown, especially when Lyell himself, as in the case of the bill in question, was not a party to such bill. It is more reasonable to assume that it would at least reserve the right to elect, whether to give credit absolutely or not before the proceeds were realized; and until such election was made, and credit was in fact given therefor, the bill would be held by it as the property of Lyell, and not its own. ■ When, therefore, it appears that the bill in question was retained in the possession of the company after its acceptance, and that no credit had been given for it at the time it was passed to the defendants, and when nothing is disclosed in the whole course of dealings between the parties to show that any bill was ever credited or agreed to be credited in account before its collection, or that Lyell ever drew or was entitled to draw upon the company, or that it was bound to accept drafts otherwise than upon and for funds actually received in cash, it must be considered that the company'at the time of the transfer stood in the relation of agents for its collection merely. There is no ground based on those dealings (and no other is claimed), for the conclusion that the ordinary relation of debtor and creditor between the company and Lyell in relation to the bill in question existed, or that it had become as between them the property of the company. Lyell consequently continued to be the owner of it at the time of its transfer, and the defendants never acquired any right to it as against him or the plaintiff who had succeeded in his title. The facts found by the court below, show that they received it, with other securities, to secure a precedent indebtedness of the company to them, and that they neither advanced nor paid any new consideration on receipt of this bill, and they only gave credit for its proceeds after it was paid, in extinguishment of so much, of the defendants’ account against the company. The defendants therefore were not bona fide holders thereof for value, and are not entitled to its proceeds as against the plaintiff. It follows, that the judgment of the Superior Court at special term was erroneous, and that the order for a new trial was properly granted, and the plaintiff under the stipulation is entitled to judgment absolute,

All the judges concurring,

Ordered accordingly.  