Claimants, who were bankers of Budapest, desiring to procure
credit with a New York banking firm (the bankrupts herein) with
which they had a checking account, procured to be deposited with it
(1), a cashier's check of a New York bank payable to the bankrupt's
order, "favor" of claimants, and (2), a check of another New York
banker drawn on its account with the bankrupt and payable to
the
Page 275 U. S. 255
bankrupt's order accompanied by a letter stating that it was
"for account of" the claimants. The bankrupts immediately credited
both checks to the claimants, but they were not collected until
after the bankruptcy petition had been filed on the following
day.
Held, following
Equitable Trust Co. v. Rochlin,
ante p.
275 U. S. 248,
that the effect of the words "favor" and "for account of" was not
to make the bankrupts agents for collection, but was to indicate
the account to be credited; that ownership of the checks passed to
the bankrupts, and that claimants were only general creditors. P.
275 U. S.
256.
10 F.2d 935 reversed in part and affirmed in part.
Certiorari, 271 U.S. 654, to a judgment of the circuit court of
appeals, which affirmed in part and reversed in part, a judgment of
the district court dismissing a petition for reclamation of funds
traced into the hands of a trustee in bankruptcy.
MR. JUSTICE STONE delivered the opinion of the Court.
This case, here on petition and cross-petition for certiorari to
review a judgment of the circuit court of appeals, involves the
same bankruptcy and questions similar to those considered in No.
34,
Equitable Trust Co. of New York v. Rochling, ante, p.
275 U. S. 248.
Petitioners in No. 48, respondents in No. 49, later referred to as
"claimants," are bankers of Budapest, who had a checking account
with Knauth, Nachod & Kuhne, the bankrupts. On June 15, 1923,
they procured a credit with the bankrupts through the deposit with
the latter by the National City Bank of New York of its cashier's
check, payable to the bankrupts' order, "favor N. Latzko & A.
Popper, Budapest." On the same day, Goldman, Sachs
Page 275 U. S. 256
& Co., bankers in New York, delivered to the bankrupts their
check, drawn on the Bank of America in New York and payable to the
bankrupts, accompanied by a letter stating that the check was "for
account of Latzkopper, Budapest." The bankrupts immediately
credited both checks to the claimants, but they were not collected
until after the bankruptcy petition had been filed on the following
day. The proceeds of collection are traced into the hands of the
trustee in bankruptcy, and the present proceedings were brought for
their reclamation in the District Court for Southern New York. The
petition was dismissed. The Circuit Court of Appeals for the Second
Circuit reversed the order of the district court as to the National
City Bank check and affirmed it as to that of Goldman, Sachs &
Co.,
In re Gubelman, 10 F.2d 926, holding that the words
in the former, "favor N. Latzko and A. Popper, Budapest," appearing
on the face of the check, were restrictive, and made the bankrupts
agents for collection, but holding as to the latter that the words
appearing in the letter accompanying the delivery of the check
served only to indicate the account to be credited.
Two circumstances are said by claimants to distinguish this case
from No. 34,
Equitable Trust Co. v. Rochling et al., ante,
p.
275 U. S. 248. The
first is the fact that the check involved in the claimants'
petition was not a cashier's check, but the check of a bank drawn
upon its own bank of deposit. The distinction seems to us to
require no difference in result where, as here, the check was
treated by the bankrupts as current funds and at once placed to the
credit of the claimants. It is suggested also that, although it was
the practice of the bankrupts to credit checks to claimants as soon
as deposited, it does not affirmatively appear that claimants asked
or expected them to be credited in advance of collection or that
the items were listed as immediately entitled to interest. But
the
Page 275 U. S. 257
mere absence of such proof cannot limit the effect of the
dominant facts before us that the establishment of the credit was
the objective of the claimants, and that that objective was
attained when the credit was given.
Douglas v. Federal Reserve
Bank, 271 U. S. 489;
Burton v. United States, 196 U. S. 283. We
cannot assume, in the absence of proof, that claimants, whose
controlling purpose was to secure a credit with Knauth, Nachod
& Kuhne, were unwilling to accept the credit, when given,
because it anticipated the collection of the paper by 24 hours.
There is then no basis for the distinctions attempted, and this
case is controlled by our decision in No. 34. Considering the
checks in the light most favorable to claimants, as though the
language relied on appeared on the face of both checks, claimants
are nevertheless only general creditors of the bankrupts, and their
petition was rightly denied by the district court. The judgment of
the district court is affirmed, and that of the circuit court of
appeals is affirmed in part and
Reversed in part.
