Farmers Dep. N. Bank v. Penn Bank

Opinion,

Me. Justice Paxson:

It is not denied that at the time of the failure of the Penn Bank and its assignment to Henry Warner for the benefit of creditors, the Farmers Deposit Bank (defendant below) was the lawful holder of the check of the said Penn Bank for $88,000, and that it was such holder at the time of the trial below. In a suit brought by the assignee of the Penn Bank against the said Farmers Deposit Bank to recover a balance of $23,218.59, admittedly due the Penn Bank at the time of its failure, the Farmers Deposit Bank attempted to use the check of $88,000 as a set-off. The court below instructed the jury that the latter bank could not so use it. This is the one error of the case and it runs all through it.

The theory of this ruling was that the check belonged to the Germania Savings Bank, and a large amount of time was wasted in trying this unimportant fact. Of what possible concern was it to the Penn Bank whether the defendant held it for collection or for value ? It had no defence to the check in the hands of either bank. If there had been a defence as to the Germania then the Penn Bank might have called upon the defendant to show that it had paid value. But as the case stood — with no defence as to either bank — it had no standing to inquire into the relations between the defendant and tlie Germania, any more than if the check had been presented at its counter and payment demanded before its insolvency.

If we concede that the defendant was a mere collecting bank, so far as this check was concerned, it does not alter the case. As such its title was sufficient to maintain a suit in its own name. This is settled law: Brown v. Clark, 14 Pa. 469; Ward v. Tyler, 52 Pa. 393. If it could maintain a suit on this check in its own name, it is difficult to see any good reason why it could not set the check off in a suit against it by the assignee of the Penn Bank. The rights of the assignee rise no higher than those of his assignor. Neither the Penn Bank nor its assignee has any concern with the question of the ownership of the check, unless a defence be shown as against the Germania, or that the defendant became the holder after the assignment. As no defence was set up against the check in the hands of anyone, and as it is an undisputed fact that the defendant became the lawful holder thereof several days before the assignment, we are all of opinion that the set-off should have been allowed.

All of the assignments of error are sustained.

Judgment reversed, and a venire facias de novo awarded.