BANKS AND BANKING--HOLDER OF DRAFT PAID FOR BY CHECK ON ISSUING BANK AS PREFERRED CLAIM UPON DRAWER'S INSOLVENCY

Authors

Abstract

A depositor presented his own check to his bank and received in exchange a New York draft drawn by the bank payable to a third person. The drawer bank was closed and the draft was dishonored. The depositor redeemed the draft and sought to establish a preferred claim against the bank's assets. In Fulton v. Baker-Toledo Co. the court held that a trust existed in favor of the depositor, under an Ohio statute which declares that when a check drawn by a depositor is presented to his bank for "collection and payment," and such check is charged against the depositor's account and in payment thereof a draft is drawn on another bank, the assets of the drawer of the draft shall be impressed with a trust for the payment of such draft. This decision established the depositor's preferred claim. The depositor thereafter amended his petition so as to claim interest on the item. Held, the depositor is not entitled to interest on his preferred claim. Fulton v. B. R. Baker-Toledo Co., (Ohio Sup. Ct. 1934, Adv. Op. No. 24209).

Recommended Citation

BANKS AND BANKING--HOLDER OF DRAFT PAID FOR BY CHECK ON ISSUING BANK AS PREFERRED CLAIM UPON DRAWER'S INSOLVENCY, 32 Mich. L. Rev. 1161 (1934).
Available at: https://repository.law.umich.edu/mlr/vol32/iss8/13