Bull v. First National Bank

This case comes before this court on a certificate of division of opinion between the circuit and district judges holding the circuit court of the United States for the district of Minnesota. The action was upon two drafts, or bills of exchange, (as they are termed in the record,) each for $500, drawn by the First National Bank of Kasson, in Minnesota, upon the Ninth National Bank, in New York City, and payable to the order of A. La Due, of which the following are copies:

'$500. THE FIRST NATIONAL BANK, KASSON, MINN., October 15, 1881.

'Pay to the order of Mr. A. La Due five hundred dollars in current funds.

'No. 18,956. E. E. FAIRCHILD, Cashier.

'To Ninth National Bank, New York City.

'[Indorsed:] Pay to the order of M. Edison, Esq.

A. LA DUE.

'M. EDISON.'

'$500. THE FIRST NATIONAL BANK, KASSON, MINN., October 15, 1881.

'Pay to the order of Mr. A. La Due five hundred dollars in current funds.

'No. 18,754. E. E. FAIRCHILD, Cashier.

'To Ninth National Bank, New York City.

'[Indorsed:] Pay to the order of M. Edison, Esq.

A. LA DUE.

'M. EDISON.' The drafts or bills of exchange were immediately after their execution transferred by indorsement of the payee to one M. Edison, at Kasson, Minnesota. Edison was at the time largely indebted, and on the following day he absconded from Kasson, carrying the drafts with him. These drafts he retained in his possession until March 24, 1882, when, at Quincy, in Illinois, he sold and indorsed them for a valuable consideration to the plaintiffs, who had no notice of any set-off to them. The plaintiffs then forwarded them to New York city, where, on the twenty-seventh of March, they were presented for payment to the drawee, the Ninth National Bank of New York, and payment was refused by it. The drafts were then protested for non-payment, and notice thereof given to the drawer and indorsers. In the mean time the First National Bank of Kasson, the drawer of the drafts, had become the owner of certain demands against Edison, which, under the statute of Minnesota, could be legally set-off against its liability on the drafts in the hands of Edison, and also in the hands of the plaintiffs, unless they were protected against such set-off as innocent purchasers of the paper before maturity, and without notice of the set-off. At the time the drafts were drawn, and at thetime of their presentation for payment, the Ninth National Bank of New York had in its hands money of the drawer sufficient to pay them.

The action was tried by the court without the intervention of a jury by stipulation of parties, and the facts stated above are embodied in its findings. Upon these facts the following question of law arose, viz.: Whether the said drafts, or bills of exchange, were to be regarded as overdue and dishonored paper at the time they were presented by the plaintiffs to the drawee for payment, and payment refused, so as to admit the set-off. Upon this question the judges were divided in opinion, and, upon motion of plaintiffs, it was certified to this court for decision. The circuit judge who presided at the circuit, being of opinion that the question should be answered in the affirmative, ordered judgment for the defendant. To review this judgment, upon the certificate of division of opinion, the case is brought here on writ of error.

''Wm. McFadon'', for plaintiffs in error.

C. C. Willson, for defendant in error.

[Argument of Counsel from pages 107-109 intentionally omitted]

Mr. Justice FIELD, after stating the case, delivered the opinion of the court as follows: