
    NATHANIEL E. JANNEY & ROBERT H. MILLER vs. BANK OF MISSOURI GARNISHEE OF WILLIAM SMITH.
    •The bank of Missouri does not become debtor to the holder of a United Stales government draft, until it is accepted, although she lias funds of the government on -deposit, properly subject to--the payment of it.
    APPEAL FROM ST. LOUIS COURT 'OF COMMON PLEAS.
    '•Crockett & Briggs for appellants.
    1st. Thadthe drawing of the bill of exchange in queslion'by paymaster Walker, was pro tanto-an assignment'of tho fund on'deposit with the bank to the use the payee or'Miy subsequent holder ■'of the said-bill; and that when the hank had notice of the drawing of said bill, and was notified’ that Colburn and Smith wore the lawful holders of said bill, the hank thereupon became liable to Colburn and Smith, or to Smith os surviving partner for the proper application of said fund. :Mandcville vs. Welch 5 Wheat. 277; Legro vs. Staples 4 Ship. R. 252; Turnan vs. Jackson & ^Peters 580 Debbesse vs. Naiper 1 McCord 106 ; Johnson vs. Thayer 5 Shop. R. 401; Bailey on Bills 36; Gibson vs. Cook 20 Pick. 15, Corse vs. Craig 1 Wash. C. C. R. 424; Robbins vs. Bacon 3 Greenleaf 346; Brooks vs. Hatch 6 Leeghs R. 534.
    2d. That the bank, after notice of the draft, was bound to apply tho funds on deposite,- to its liquidation. If she had failed, or refused so to apply them, she would have been liable to Colburn and Smith, even without an accoptanco, in an action at law for a misapplication of the funds ; and if so liable, then she had effects in her hands when she was summoned, which may be reached by gamisheement
    3d. That if -the bank would not have been liable to Smith as surviving partner, in an action at law, without acceptance for a misapplication of the fund, she was without doubt liable in a court of equity, and could have been compelled to apply tile fund in payment of the bill. If at the time tho garnishee was summoned, Smith could have enforced this equitable right, then under the statute regulating garnisheements in cases of attachment, his interest in the fund was liable to attachment, and tile garnishee may be compelled in this form of proceeding so to apply the fund.
    4th. That the rule established in the case of Mandevillo vs. Welch 5 Wheat. 277, that a bill of ■exchange drawn upon a particular fund, operates as an assignment only when it is drawn for the whole fund—does not apply to drafts upon banks of deposite, which from their very nature, and from tho unvariable course of business and established usage are bound to pay drafts upon funds •deposited in any amounts that the depositor choses to draw for; consequently, a draft for a part of tho amount deposited, operates as an assignment pro tanto.
    5th. The bank was liable to Colburn and Smith oven without acceptance, because her conduct ■on being notified by Lewis of the existence of the draft, was equivalent to a pledge that tho bill should be paid when presented by the lawful holder; and Smith being the lawful holder, the bank was liable to him for the amount of the bill.
    Bailey on bills 393, 394, 395; Yatesvs. Bell 3Barn. & Aid. 643: Stewart vs, Frye 7 Taunt. 530.
    6th. That an obligation to accept tile hill was fairly to be implied from the custom of trade, and the course of business between the bank and the government. If so, the bill operated as,an assignment pro tanto.
    Manderville vs. Welch 5 Wheat. 277.
    7th. That if Smith’s interest in the fund could have been enforced only in equity as between him and the bank, it was nevertheless such an interest as can be garnisheed. The statute regulaing attachments contemplates, that all demands duo from the garnishee to the defendant, shall be held for the debt. Sec. 12 requires the officer to declare to the garnishee “ that he attaches in his hands dll debts due from him to the defendant.’’ See. 13 provides that till persons shall bo summoned as garnishees who shall be found in possession of goods, money or effects of the defendant, and'aZio such as the .plaintiff or his attorney shall direct.
    ¿¡¡Sec. 27 provides that' the plaintiff may exhibit allegations and interrogatories, touching the. property, effects and credits attached, and require such garnishee to make full, direct and. true answers on oath. Sec. 25 provides that if it shall appear that the garnishee is possessed of property or effects of defendant, or is indebted to defendant, tiro value of the property and effects, or of the, debt, shall-be ascertained, and judgment rendered for the amount. In none of those ■ sections, nor in any cither, is there a distinction made between legal and equitable demands: all •credits, effects and debts, of whatsoever nature, may be attached : the whole proceeding partakes more of an equitable than a legal remedy. If, therefore, Smith had an equitable lien upon the .fund in the hands of the bank, it could bo reached by garnisheement.
    Bay for appellee.
    1st. Although file drawing of a bill of exchange for a valuable consideration is, ill theory, as 'between the drawer and the payee a contract by which the former sells or assigns to the latter funds in the hands of the drawee to the amount of the bill, yet this implied contract creates no privity between the .payee and the drawee, whose contract commences with and arises out of the acceptance. Story on bills of ex. sec. 13,113, 114, 115,116, 117, 118, 238, note 1,287; Chitly ou bills, p. 280, 281; 10th Am, Ed.
    2d. The refusal of the drawee to accept, give no right of action to the payee against the drawee, because there is no privity of contract between them (ih.) Even a promise by tbe drawee to the drawer to .accept, and a subsequent refusal, would give no right of action to the payee against the' drawer, for flic same reason ; besides, a promise to accept is a more chose in action on which the promise only can maintain an action. Worcester Bank vs, Wells et al. 8 Mclcalf 107; Johnson vs. Collins 1 East. 104.
    3(1. Tbe bona fide holder of a bill of exchange takes the bill free of all equities between antecedent parties of which he had no notice. Story on bills of ex. Sect !4,15, 187, 188,189; Story on promissory notes sect. 175—notes. At the time Smith endorsed the bill to the clork of PoweiJ, Wilson & Co., he was indebted to that firm, and the bill was taken in payment of such indebted, ness, without notice of any equities between antecedent parties. They were therefore bona fide holders, and entitled to demand payment.
    4th. The doctrine that courts of law will recognize and protect the equitable rights of an assignor of a chose in action, is not applicable to billpof exchange and other negotiable instruments, and is also confined to cases where the entire chose in action has boon assigned.
    Mandcrville vs. Welch 5 Wheat. 277.
    5th. The principle advanced by the appellant, that the drawing of a bill of exchange is an assignment of the amount for which it was drawn to the payee, so as to create a privity between him and the drawee, is contrary to all the rules applicable to such instruments, and is negatived by some of the very authorities cited by the appellant.
    Mandcrville vs. Welch 5 Wheat. 277; St. John vs. Homans 8 Mo. R. 385, 386.
   Judge Napton

delivered the opinion of the court.

It was settled at an early day in this State, that debts due by negotiable paper could be subject to the process of attachment, and this has been regarded as the law ever since. The inconvenience of this ’doctrine, especially in the absence of any legislative provision by which the holders of the paper subsequent to the title of the defendant in the •suit can be brought into the litigation, is sufficiently -obvious, and was adverted to in some of the latter cases.

In Hill and McGunnegle vs. Scott and Rule, it was determined, that •the plaintiff must show affirmatively, that the bill was not transferred by the defendant previous to the service upon the garnishee, but it was mot decided what effect a transfer subsequent io the attachment would ■have upon the proceeding.

It seems, however, to have been the opinion of one of the judges, perhaps of all, that such a subsequent transfer would not affect the liability of the garnishee, and that the only course left to the subsequent •endorsee would be, either to interplead, or, if ignorant of the proceedings, to bring his action for money had and received against the plaintiff in the attachment.

The question upon which the present case turns is evidently new. In •none of the cases heretofore before the court, was there any instance of the creditor attaching the drawee of a bill of exchange before acceptance. In the settlement of this question, we are left to the general principles of the law merchant, modified only by our statutes which give this process of attachment.

A bill of exchange is an order upon the drawee, to pay a certain sum of money to the holder. Before the drawee accepts the bill, he is a stranger to the contract, and is not liable, (unless under particular circumstances) to any of the parties. If he has funds of the drawer in ■his hands, or has otherwise bound himself to meet the drafts, he is liable to the drawer for failing to accept. The drawer may sue him for re-'exchange and damages, but there is no privity between him and the ■payee or holder. The latter can maintain no action against the drawee. Chitty. Story.

But it is said, and no doubt correctly, that a bill of exchange, when the drawee has funds of the drawer in his hands i's a transfer by the drawer of this fund to the payee ; that this transfer creates in the payee, if not a legal, at least an equitable interest in this fund; and that courts of law and equity will protect the interests of this payee in the chose in action thus created. It is said that when the drawee is notified of the rights of the holder, he becomes liable, in some shape, to such holder, if his assent to consider himself so liable may be fairly inferred from the previous dealings of the parties. To this doctrine I see no objection. It was first intimated, with certain qualifications, in Manderville vs. Welch, (5 Wheat.) and has since been acted upon in various cases cited, by the counsel.

None of the cases, however, relate to the acceptance of negotiable paper. They are cases of transfers of book accounts, promissory notes, or some other kind of property, where the assignee of the fund or property gives notice of his interest, and the possessor expressly or impliedly assents to the transfer, and assumes expressly or impliedly a liability to the assignee. All the cases cited admit that there must be an assent, express or implied. But where is the implication of assent under the facts in the present case ? The bank had not accepted the draft, when she was garnisheed. She had by her previous course of dealing in relation to these drafts, impliedly agreed to accept all drafts of the kind—hut when, and for whose benefit ? Certainly when properly presented, and for the benefit of the holders at the time of presentment.At the time she was garnisheed, she was not the debtor of Colburn and Smith. She was apprised that they were the holders of a government draft, which she was bound to accept when presented—but she was-bound to accept in favor of the holder who presented it. This is all the implication that the previous dealings of the parties was calculated to create—in fact, the conduct of the bank, at the time the bill was presented by Lewis, was an obvious indication of intention to pay the bill to the holders at the time of presentment. The bill was payable at sight. Some of the consequences of holding the bank a debtor to all holders of drafts never presented or accepted, may not be unworthy of consideration. The United States, it would seem from the testimony, has occasion to keep large amounts of funds in this bank, by what authority I shall not stop to inquire. Her officers or agents are authorised to draw upon this fund to meet her liabilities at various places, and to various persons. If the creditors of these holders of government drafts can arrest this fund in the vaults of the bank, before she has accepted the drafts, the inconveniences to the bank might be readily foreseen. Her ordinary business might be suspended, and her officers chiefly employed in making out answers to attachments like the present, and in defending herself in a scramble between debtors and creditors with whom she has no concern. Her capacity for the commercial purposes, which it is presumed her charter was intended to subserve, would be paralized.

It is conceded that the bank may be garnisheed, but can she be considered as the debtor of all persons holding drafts on her, unaccepted ? it will be recollected also, that this was a draft drawn by a paymaster of the U. States in his official capacity. A creditor of the goverment could not attach this debt, and can creditors of her assignee attach it?

Judge Ryland concurring, the judgment is affirmed.

Judge Birch

dissenting.

Janny & Co. sued the surviving partner of Colburn and Smith, and garnisheed the bank. It was proven upon the trial below, that prior to, and at the period of the garnisheement, Colburn and Smith were the legal holders and owners of a government bill of exchange for three thousand dollars, regularly drawn upon the bank, which had government funds to meet it, and that it was the universal usage or course of business in the bank to pay all such bills when properly presented. In this ease, it rightfully enough refused to pay the one in question, when presented by a person into whoso hands it had fallen after the murder of Colburn, because it was not properly endorsed to him. The bank, however, made and retained a memorandum of the draft, and before any other disposition was made of it, the plaintiffs below, (appellants here) commenced their suit against Smith, and summoned the bank as garnishee.

It is deemed unnecessary to look further after the bill than to add, in justice to the bank, that it promptly paid the whole of it, when subsequently endorsed by Smith, after his return from Santa Fe, instead of retaining, as it might have done, a sum sufficient to cover the contingent liability to whicli it had been intermediately subjected.

I have met with no adjudications exactly in point, and the case is one upon which, estimated in all its bearings, the wisest and most reflecting may readily disagree. I am of opinion, however, that the limitation of the principle of assignment, which is' relied upon as in the ease of Manderville vs. Welch, 5 Wheat 277, is inapplicable, and should not be entertained under circumstances like the present. Although not informed of the precise nature of the contract which existed between the government and the bank, the custom which is testified to is so accordant with the fitness of things, as to warrant the conclusion that it had bound itself to accept and pay all such demands when properly presented. In the very language of the court in the case alluded to, this is deemed to have been a case in which “ an obligation to accept may be fairly implied from the course of trade, or the course of business between the parties, as a part of their contract.” It is at all events. too absurd, for supposition that it had the legal option of paying or refusing a draft which did not come up to the exact amount from time to-time deposited. Such an option would have been not only inconsistent with the object of disbursing to the creditors of the government the funds it deposited, but its distant paymasters could never have drawn a valid bill, because never knowing the-precise sum embraced in it.. The hank, then, not having the just or moral option alluded to, the mere non-acceptance ” of the bill in question, although exempting it from the special liabilities of “ acceptor,” in no. respect changed- its liability for an ultimate proper application of the money which, it thereby had notice was assigned, or set over, to Colburn and Smith..

Looking at it in this light, I cannot doubt the- right of either of theiicreditors,. to instanti, or at any time before its legal transfer to another,, to pursue, such a fund by the usual process of attachment, nor that it was the duty of the hank, after, it was- garnisheed, to have held enough of it to answer die ultimate judgment of the court, which I think should, have been in favor of the plaintiffs. Whatever legal or equitable interest Smith had in the fund was properly open to his creditors, 5 and the plaintiff having relied upon the open legal diligence, upon which our jurisprudence looks with deserved and deserving favor, he bank should; have disregarded any subsequent private arrangement which was entered into, however apparently “ regular upon its faee, ” which was incompatible with- the intervening rights acquired by virtue of the garnisheement.

In reaching this, conclusion, I have aot been unmindful of what has-been said in reference to the commercial character of such instruments, and the consequent right and consequent risks of those who subsequently purchase them without notice of- the intermediate proceedings! alluded to. No such question properly arises in this case—the subsequent endorsee having taken the bill merely for collection and disbursement—but were it otherwise, I am inclined to the opinion that the safest and soundest rule for the due protection of all parties, whether conventional or legal, is the one intimated in this dissent,.  