First National Bank v. McMillan Bros.

Wade, J.

(After stating the foregoing facts.) 1. “When money is placed in a bank on general deposit, the title to the money immediately passes to the bank, and the relation of debtor and creditor is created between the bank and the depositor. The moment the deposit is made, the credit of the banker is substituted for the money.” McGregor v. Battle, 128 Ga. 577 (58 S. E. 28, 13 L. R. A. (N. S.) 185). The same rule applies to checks or drafts deposited by a customer, if when deposited -they are regarded by both parties-as equivalent to so much cash. The transaction amounts to a purchase of the check or draft by the bank, and the bank becomes responsible to the depositor for the amount thereof. It must appear, however, that the check or draft was received as a deposit to be treated as cash, and that this was the intention of both parties.

2. If the check or draft is deposited for collection, then it is clear that the bank does not take title, but merely undertakes to act as agent for collection; the title to the check or draft remains in the depositor, and the relation between the parties is that of principal and agent, and not of debtor and creditor. Fourth National Bank v. Mayer, 89 Ga. 108 (14 S. E. 891); Freeman v. Exchange Bank, 87 Ga. 45 (13 S. E. 160); Bailie v. Augusta Savings Bank, 95 Ga. 277 (21 S. E. 717, 51 Am. St. R. 74). Morris v. Eufaula Nat. Bank, 122 Ala. 580 (25 So. 499, 82 Am. St. Rep. 95). If the parties intend to treat such paper as cash, title passes at once upon receipt of the deposit by the banker, but if the intention is that the bank shall not be 'responsible except as an agent for collection, title remains in the depositor throughout The difficulty in determining the relation between the parties lies in the determination of their mutual intention, and this must of necessity depend upon the individual facts of each case; so that the question is one rather of fact than of law. Balbach v. Frelinghuysen, 15 Fed. 675; City of Somerville v. Beal, 49 Fed. 790.

3. Ordinarily, when checks or drafts are deposited in a bank, the presumption is that they are deposited for collection merely, and not as cash; but where a check or draft is drawn in favor of a bank holding it, or with which it is deposited, the contrary presumption is authorized. Gettysburg National Bank v. Kuhns, 62 Pa. St. 88. It appears to be well settled that merely. crediting a depositor with the amount of a check, whether this be done in his pass-book or upon the books of the bank, is by no means conclusive evidence that the paper was received as cash or otherwise than for collection. A credit so made in anticipation of collection will be deemed merely provisional, and the bank may cancel the credit or charge back the paper to the customer’s account, if it is not'paid by the maker or drawer. National Gold Bank v. McDonald, 51 Cal. 64 (21 Am. R. 697); In re State Bank, 56 Minn., 119 (57 N. W. 336, 45 Am. St. R. 454), and numerous other authorities. Upon the other hand, if the parties intend that title to the paper shall pass (from whatever evidence or circumstances this may appear), the mere fact that it is agreed or understood that the bank will have the right to charge the amount of the paper back to the depositor in case it prove to be uncollectible will not change the relation of debtor and creditor. Brusegaard v. Ueland, 72 Minn., 283 (75 N. W. 228); Ayers v. Farmers etc. Bank, 79 Mo. 421 (49 Am. R. 235). It has been held in some cases that the fact that one had the privilege of drawing against a check deposited in bank by him, even before it was collected, was inconsistent with any transaction which did not vest in the bank the title to the paper. That fact is undoubtedly strong evidence of the mutual intention that the bank should become wholly responsible for the check or draft, though it has been held in some jurisdictions that the contrary may still be shown by evidence or implied from other facts.

It seems to be well settled that a bank takes title to the proceeds of a check or draft deposited with it for collection, immediately upon crediting the depositor with the amount of the proceeds. The bank occupies the position of an agent for collection until the proceeds are actually received and credited, whereupon it takes title thereto, and the relation of creditor and debtor results instead of that of principal and agent. By the weight of authorities this appears to be true because it is a universal custom of bankers so to credit the proceeds of a paper deposited for collection, and because, in the absence of an agreement to the contrary, the parties' would be presumed to have contracted with a view to this 'custom.

5: It has been held by our Supreme Court that where a common carrier receives goods consigned to the order of the shipper, with direction to notify a designated person at the place of delivery, and issues to the consignor a bill of lading, which the consignor attaches to a draft for the price of the goods, drawn by him on the person to be notified, and he delivers the draft and the bill of lading, indorsed in blank, to his bank, to be placed to his credit on his general account, and the amount of the deposit is actually credited to the general account after consignor and depositor, who has the right to check against the deposit and does in fact actually draw against it, the bank acquires title to the. goods represented by the bill of lading, and its title can be asserted against the lien of a subsequent attachment creditor of the consignor. Alexander v. First National Bank, 140 Ga. 266 (78 S. E. 1071); National Bank of Webb City v. Everett, 136 Ga. 372 (71 S. E. 660); Fourth National Bank v. Mayer, 89 Ga. 108 (14 S. E. 891). It will be noted that in each of these cases cited, the fact that the depositor had the right, under the agreement between himself and the bank, to cheek against a deposit of this character and did in fact draw or check against the deposit, and that the check or draft was honored by the bank, appears largely to determine the relation between the depositor and the bank, and thereby determine the title to the check or to the proceeds arising therefrom.

It will be observed that in the testimony in behalf of the claimant in the present case it is not in so many words statéd that Strong & Son had the right to check against the draft deposited to their credit in the First National Bank, but the cashier of that bank testified absolutely and unequivocally that the title to the draft passed to the bank at the time of the deposit; that the bank purchased the draft with the bill of lading attached thereto, and ever since owned and still owned both the draft and the bill of lading.' Also, the accounts introduced in evidence showed that numerous drafts, including- this draft, were deposited 'by Strong & Son with-the First National Bank during the months of March and April, 1913, and that throughout the same period they drew checks against their general account with-this bank, aggregating a large amount and apparently drawn against the various drafts deposited, so 'that the bank’s accounts appear to- supply definitely evidence that the draft in question was not-only deposited to the general credit of Strong & Son, but was checked against by them. As said above," even without affirmative proof, there is a presumption that a draft deposited with a bank is deposited for collection, but where the draft is drawn in favor of the bank itself, the presumption is that it was deposited absolutely with the bank and that title thereto passed to the bank. The fact that the bank cashier testified that the amount of the draft, if not collected, would be charged back to Strong & Son would not itself change the relation between the parties.

The plaintiff’s recovery appears to have been based on proof of certain circumstances which tended in some degree to show the relation between the First National Bank and Strong & Son to be that of principal and agent, rather than that of creditor and debtor; but these circumstances, slight at best, must yield to absolute and undisputed testimony of the cashier of 'the First National Bank (to say nothing of the presumption created by the fact that the draft was drawn in favor of the bank) that this bank was the actual owner of the draft with the bill of lading attached thereto, and hence of the proceeds arising therefrom; especially since the bank’s accounts which were introduced supply evidence that the draft was subject to check and was actually checked against by Strong & Son; thus bringing the case precisely under the decisions in Fourth National Bank v. Mayer, National Bank of Webb City v. Everett, and Alexander v. First National Bank, supra. See also Elberton Grocery Co. v. First Nat. Bank, 3 Ga. App. 413 (59 S. E. 1129); Akers v. Jefferson County Savings Bank, 120 Ga. 1066 (48 S. E. 424). Undoubtedly, therefore, the title to the draft passed to the First National Bank at the time it was deposited with that bank to the credit of Strong & Son on their general account, and hence the funds in the Bank of Acworth, arising from the draft, were not subject to garnishment, and the judge of the superior court consequently erred in overruling the certiorari.

It is unnecessary to discuss the question whether a nonsuit should have been awarded, as other evidence was introduced after the refusal to grant a nonsuit, and the case was finally determined on the entire evidence, which is all under consideration in this case.

Judgment reversed.

Roan, J., absent.