Page:Federal Reporter, 1st Series, Volume 3.djvu/266

 FIEST NAT. BK. OF CHIOAGO ». EEW COUNTY BE. 259 �estate of said Mastin Bank, including the amoant of said checks, which claim was allowed in January, 1879, and they have since received from the assignee a dividend of 12 per cent. Such proof was not made at his suggestion, or with the knowledge of plaintiff. �14. Hutchinson, where defendant's bank is located, is more than 200 miles from Kansas City, where the Mastin Bank ■was located, Upon these facts the question is whether de- fendant, when it coUected the money on the checks, became the dcbtor of the plaintiff or of the Mastin Bank. It is in- sisted on the part of plaintiff that the checks were the prop- erty of plaintiff, and that due notice of ita ownership -was communicated to the defendant by the restrictive indorse- ments thereon; and that the defendant has shown no right to retain their proceeds, or to apply the same on its claim against the Mastin Bank. �On the part of defendant it isinsisted that plaintiff cannot recover because there is no privity between plaintiff and de- fendant. In the case of Bank of Metropolis v. New England Bank, 1 How. 234, it was held that if negotiable paper, not at maturity, be indorsed and delivered to a bank merely for collection, and be sent by such bank to another bank for col- lection, without notice that it does not belong to the former, the latter may retain the paper and its proceeds to satisfy a claim for a general balance against the former, if that balance has been allowed to arise and remain on the faith of receiving pay- ment from such collections, pursuant to a long usage between the two banks. In that case it appeared that the paper in question was indorsed by the New England Bank, of Boston, to the Commonwealth Bank, of Boston, for collection merely, and the latter bank sent it for collection to the Bank of the Metrop- olis, in the city of Washington. The indorsement to the Com- monwealth Bank did not show that the title was retained by the New England Bank. : The Bank of the Metropolis having collected the paper and applied the proceeds to the payment of a claim held by it against the Commonwealth Bank, which, in the meantime, had become insolvent, s'ought to show, in justification, that for, a series of years it had been in the ����