Central Railroad vs. First National Bank of Lynchburg, Virginia

Supreme Court of Georgia1884-09-16

73 Ga. 383

Summary · law.co

Holding. The judgment of the court below was affirmed, holding that the railroad was liable to return the collected draft proceeds to the First National Bank because the qualified indorsement conveyed only a collection authority to the Citizens' Bank and title remained with the First National Bank.

The First National Bank of Lynchburg brought an action against the Central Railroad to recover money from a draft that the railroad had collected. The draft was indorsed with qualified language directing that payment be made to an agent of the Citizens' Bank of Georgia for collection purposes only, on behalf of the First National Bank. The railroad collected the funds but refused to pay them over, claiming it was owed money by the Citizens' Bank and had credited that bank's account with the collected amount. The Citizens' Bank had failed before the railroad collected the draft.

The court held that the qualified indorsement constituted only a warrant of attorney for collection and did not transfer ownership of the draft or its proceeds to the Citizens' Bank. The First National Bank retained title and ownership throughout. Because the railroad received money belonging to another, privity existed between the parties sufficient to maintain an action for money had and received. The railroad had no right to retain the collected funds as security against any debt the Citizens' Bank owed to it.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether a qualified indorsement transfers title to a draft or merely authorizes collection as an agent
Whether privity exists between a collecting party and the paper's true owner to maintain an action for money had and received
Whether a collecting bank may retain collected funds as security for an unrelated debt owed by the collecting agent

Procedural posture

The First National Bank brought an action for money had and received in the court below against the Central Railroad, which appealed the judgment rendered against it.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Blandford, Justice.

The defendant in error brought its action for money had and received, against the plaintiff in error, alleging that plaintiff in error had received from one Mayer & Glauber a sum of money due on a draft of which the following is a copy:

“$276.85. Lynchburg, Virginia, February 17, 1881.

Sixty days after date, pay to the order of Allen W. Tally, cashier, two hundred and seventy-six dollars and eighty-five cents, with current rate of exchange on New York, value received, and charge the same to account of Hunter & Marshall.

To S. Mayer & Glauber, )

Albany, Georgia.” )

On the back of the draft were the following indorsements : First:

“PayW. H. Patterson, cashier, or order, for collection for account of First National Bank, Lynchburg, Va. (Sgd.) Allen W. Tally, cashier.”

Second:

“ Pay to John A. Davis, agent, or order, for account of Citizens’ Bank of Georgia, Atlanta, Ga. (Sgd.) W. H. Patterson, cashier.’

The evidence showed that the plaintiff in error had collected tkis draft; upon demand being made on plaintiff in error for the payment of the money thus collected by the attorney for defendant in error, payment was refused; the railroad claimed that the Citizens’ Bank was indebted to it, and that they had given that bank credit for the amount thus collected. It was further shown that the Citizens’ Bank had failed before the money had been collected by the Central Railroad and Banking Company.

• The court below held that the Central Railroad and Banking Company was liable to the defendant in error, and this ruling is assigned as error.

The qualified indorsements on the back of this draft by the cashier of The First National Bank of Lynchburg, whereby he directs payment to be made to W. H. Patter son, cashier of the Citizens’ Bank, or order, for collection for account of First National Bank, Lynchburg, Ya., was nothing more nor less than a warrant of attorney authorizing the indorsee to collect the amount due on the draft for the indorser. It conveyed no title to the paper, but was notice to all persons subsequently dealing with this paper that defendant in error had not parted with the title or intended to transfer the ownership of the proceeds to another. The legal import and effect of the indorsementwas to notify the plaintiff in error that the defendant in error was the owner of the draft, and that the Citizens’ Bank was merely its agent for collection; that a qualified title for this purpose only, and no other,.was in the Citizens’ Bank. Morse on Banks, 52; Swift vs. Tyson, 16 Peters, 1; 1 Howard, 234; 3 Penn St., 348; 22 Md., 148; 1 Wall., 166; 102 U. S., 658; 1 Bond, 389; 11 R.I., 119; 51 Iowa, 15.

But it is insisted that there was no privity between these parties respecting this transaction, so as to authorize ■ this action. When the plaintiff in error received from Mayer & Glauber the money due on. the draft, they received something which belonged to the defendants in error; it was their money, and this act put them in privity for’ the purpose of this action. Where one person is in possession of money which of right and in equity belongs to another, this action may be maintained for its recovery-The law implies a promise on the part of any person who-has received the money of another to pay that person on. demand. The reception of money by one and the demand by the other makes all the privity that is necessary to maintain this action.

And we are clear that plaintiff in .error had no right to-retain the proceeds of this draft as payment .of or security for any balance which the Citizens’ Bank might be due it..

Judgment affirmed.

Davis was agent of the railroad company.