Checks drawn on the M bank of another city were deposited by the holders in the D bank pursuant to an agreement that "in receiving and handling items for deposit or collection . . . this bank acts only as depositor's collecting agent and assumes no responsibility beyond the exercise of due care. . . . It may decline to honor or pay checks drawn against conditional credits." The checks were unqualifiedly indorsed. The D bank credited each depositor's account and forwarded the checks to M bank which charged the accounts of the drawers and sent its draft to D bank in payment. The draft was dishonored because of M bank's failure before the depositors had drawn upon the credit received. In a suit by the receiver of M bank for money which D bank owed it, D bank pleaded the amount of the draft as a set-off. The court, in allowing the set-off, held that the title to the checks passed to D bank at the time of deposit. Bosworth v. Continental Ill. Bank & Trust Co., (C. C. A. 7th, 1933) 65 F. (2d) 632.
BANKS AND BANKING -- RELATION OF BANK TO DEPOSITOR OF CHECKS UNQUALIFIEDLY INDORSED -- SET-OFF AGAINST A FAILING CORRESPONDENT BANK,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol32/iss7/10