Philler v. Abner A. Jewett & Co.

Opinion by

Mb. Justice Williams,

The defendants are the makers of a promissory note which was discounted for them in due course of business by the Spring Garden National Bank. This bank was one of the associated banks of Philadelphia that had united to organize the clearing house as a convenient and expeditious instrument for making daily settlements with each other. To facilitate the transaction of the business for which it was created the associated banks placed in the hands of the clearing house committee a considerable fund to be used in paying daily balances due from debtor banks. This was contributed in cash or good securities at an agreed rate fixed by reference to the capital stock of each bank. The Spring Garden National Bank deposited securities instead of money; and these securities were pledged under sec. 4 of article 17 of- the regulations for the clearing house adopted by the associated banks, first for the payment of daily balances; and next as security “for other indebtedness due to members of the association.” The Spring Garden National Bank needed and had received aid in maintaining its credit much beyond the sum it had secured by its deposit to provide for daily balances. This aid was extended by the issue of clearing house certificates in its behalf for quite a large sum; and to provide for their payment the bank had deposited other securities with the clearing house committee. After the bank failed the cur-, rent daily balance was paid out of the proceeds of the securities deposited for that purpose and there was, in the language found in the regulation, in art. 17, sec. 4, “ a surplus remaining.” The additional securities deposited to cover the certificates proved insufficient for that purpose leaving a balance of debt unprovided for amounting to about seventy thousand dollars. The plaintiffs claim to hold the surplus from the first batch of securities to meet, pro tanto, the deficit in the last. This is clearly within the contract under which the securities were deposited, and within the intention of the parties. The defendants have a claim against the Spring Garden Bank which they would be entitled to set off upon the note if the bank was still the holder; but it is not. It parted with the note before its maturity and for full value. It could not reclaim it from the clearing house without the payment of its entire indebtedness to that institution, and the defendants stand in no better position than the bank. Their set-off cannot be made available unless the bank is the owner. But as we have seen the title to the instrument passed from the bank to the plaintiffs, who are bona fide holders, and their right to recover upon it is clear. The learned judge of the court below was right therefore in giving to the jury a binding instruction on this subject, and the judgment is now affirmed.

GEO. PHILLER ET AL., CLEARING HOUSE COMMITTEE, V. ISAAC KEELER, APPELLANT.

Opinion by

Mr. Justice Williams,

March 4,1895 :

This case involves the same question that has just been decided in Philler v. Jewett et al. For the reasons given in the opinion filed in that case the assignments of error are not sustained.

The judgment is affirmed.