Marine Bank v. Fulton Bank

IN the spring of 1861, the Fulton Bank, of New York, sent for collection to the Marine Bank, Chicago, two notes, one of Cooley & Co., for $2000, and one of Hunt & Co., for $1037; both due May 1-4, in that year. The currency at Chicago had become at that time somewhat deranged, and consisted exclusively of bills of the Illinois banks. The Marine Bank, just afterwards, addressed a circular to its correspondents, informing them that, in the disturbed state of the currency, it would be impossible to continue remittances with the usual regularity, and that until further notice it would be compelled to place all funds received in payment of collections to the credit of its correspondents in such currency as was received in Chicago,-bills of the Illinois Stock Banks,-to be drawn for only in like bills.

On the 1st May, the cashier of the Fulton Bank thus addressed the cashier of the Marine Bank:

'Please hold the avails of the collections I have sent you, subject to my order, and advise amount credited.'

The two notes were collected by the Marine Bank, in Illinois currency, at that time ''from five to ten per cent. below par''. Immediately after the notes were collected, the Chicago bank, in reply to an inquiry from the Fulton Bank how the account stood, advised the latter bank thus:

'May 1. You have credit as follows: Cooley & Co., $2000.'

'May 6. Your account has credit as follows: Hunt & Co., 1037.'On the 21st April, 1862, that is to say, about a year after the collection made, the New York bank made a demand of payment from the Chicago bank, which was refused, unless the former bank would accept Illinois currency, now sunk fifty per cent. below par.

The Marine Bank was a bank engaged, like other banks, in receiving deposits, lending money, buying and selling exchange, and the money collected on the two notes in question was not retained in any separate or specific form.

On suit brought in the Northern Circuit for Illinois by the Fulton Bank, the court charged that the said bank was entitled to recover the value of the Illinois currency at the time the money was received by the defendant, and judgment went accordingly. The question in this court was, whether this was right, and whether the court below ought not to have charged, as it was requested but refused to do, that the Fulton Bank was 'only entitled to recover of the defendant the value, in coin, of such currency so received by the defendant at the time of demand made by plaintiff for payment with interest, and from that date,'-the only instruction asked for by the defendant's counsel.

A question was also raised in this court as to the form of action below,-trespass on the case for having wrongfully received the depreciated paper; but this point had not been raised in the court below.

Mr. Fuller, for the Marine Bank, plaintiff in error, contended that this bank, in receiving the money and passing it to the credit of the Fulton Bank, was acting as the plaintiff's agent. If this was so, and it obeyed instructions and acted in good faith, it could not be held responsible for the depreciation of the currency while in its hands; a position for which the counsel relied on the American Leading Cases. The Marine Bank had of course mixed the currency it received with other like currency, and perhaps used a part or the whole in its ordinary banking business. In this, however, it did but follow the only course possible among banks. No depositor, correspondent, or customer, when dealing with a bank, ever expects that anything else will be done. This being the settled and only practicable course of business, the plaintiff understood that when the notes were collected and the proceeds placed to his credit, they would pass into the general funds of the bank, and be used till drawn for. This intermixture, having been made in the usual course of business, the counsel contended was proper, and did no wrong to the principal. The ordinary rules of law, with regard to confusion of goods, applied, and the proprietors had an interest in common in the entire fund, in proportion to their respective shares.

The counsel also called attention to the form of action,-case for negligence in receiving the depreciated paper. In such form of action nothing was before the court but the question, whether the Marine Bank was liable for having received the paper; and to that question the bank's circular was a complete reply. The question, whether the Chicago bank was liable for one rate or for another did not arise on the pleadings; judgment had been given below on a thing not at all in issue; and was, accordingly, to be reversed.

Mr. E. S. Smith, contra.

Mr. Justice MILLER delivered the opinion of the court.