Miller v. Farmers & Mechanics' Bank

Ax/vev, J., delivered the opinion of the Court. As between the plaintiffs and Josiah Lee & Co., there could be no question or difficulty in regard to the right of the former, to the proceeds of the two promissory notes collected by the defendant; for it is expressly admitted that the notes were the property of the plaintiffs, and were endorsed by them, without value, to Lee & Co., simply for collection. But as between the plaintiffs and the defendant, a different question arises, and one that depends upon the nature and character of the dealings and transactions between the defendant and Lee & Co.; the principle being that whenever a banker or broker has advanced money to his customer, he has a lien on all the securities in his hands for the amount of ³⁹⁸ bis general balance, unless such securities are held under some special agreement. ■ The endorsements of the notes by the plaintiffs to Lee & Co. were unqualified; and the possession by the’ latter of this negotiable paper, with such endorsements thereon, imported property in the holder; and, without notice to the contrary, the defendant had a perfect right to treat Lee & Co. as the bona fide owners of the notes, and were not bound to make inquiry as to whether they held them as agents or otherwise. The notes were each drawn at six months, and matured and became payable — the first on the 27th, and the second on the 29th-, of October, 1860.

They were transmitted by Lee & Co., who were bankers and brokers, in the city of Baltimore, to the defendant, at Westminster, in Carroll county, on the 8 th of October, 1860, specially endorsed to the latter, for collection. The notes were paid by the makers to the defendant at maturity, and the proceeds were immediately thereupon placed to the credit of Lee & Co., in an account current, which had been running between the defendant and Lee & Co. for several years. At the time of such payment, and credit in account, the defendant had no knowledge that the notes were not, in fact, the property of its correspondent, Lee & Co.; and the first knowledge received by the defendant to the contrary was communicated to it by Lee & Co., through letters dated the 15th of November, 1860, directing the notes or the proceeds thereof, if paid, to be delivered to the plaintiffs. Lee & Co. failed, and closed their house on the 30th of October, 1860, some fifteen days before knowledge came to the defendant that the notes belonged to the plaintiffs, and not to Lee & Co., according to their prima facie import.

The balance on account against Lee & Co., and in favor of the defendant, was at the time of such failure, considerably more than the amount of the notes; and the balance still due the defendant on that account is $1,136.62, with interest. It was in evidence that the course of dealing between the defendant and Lee & Co., had been that the former sent to ³⁹⁹ the latter cheeks and negotiable paper for collection, and sometimes money; and that Lee & Co. sent to the defendant all the paper which they had for collection in Carroll county. That the balances in account were not drawn for on either side, but were from time to time allowed to remain, to be adjusted by means of collections and remittances. That Lee & Co., from time to time, redeemed some of defendant’s circulation, and sent it to the latter when it was credited in the account, there being but one promiscuous account kept between the parties.

That after the receipt of the notes for collection, there were amounts larger than the aggregate sum received on the notes, charged in the account against Lee & Co., and which form a part of the debits upon which the balance was ascertained to be still due and owing to the defendant. Upon this state of the case the plaintiffs, by tlieir first prayer, which was refused by a divided Court, prayed that the jury be instructed that if they should find that the plaintiffs were the owners of the notes, and that they endorsed them in blank to Lee & Co., for collection, without value, and that the notes were specially endorsed by Lee & Co. to the defendant for collection, and were paid at maturity to the defendant, then the plaintiffs were entitled to recover, unless it should be further found that the defendant, after receipt of the notes, gave some new credit, or extended some existing credit, or made some new advances to Lee & Co., upon the faith of the notes. And by tlieir fourth prayer, which was also refused by a