The plaintiff drew an out of town draft and deposited it with the A bank for collection. The A bank sent the draft to its correspondent, B bank, to collect and make return when actually paid. The B bank collected the amount of the draft and, according to a custom between the two institutions, credited the account of the A bank and sent them a notice of collection. On the very day this notice was received the B bank closed its doors. A statute provided that items deposited for collection should be credited subject to final payment in cash or solvent credits. In a suit by the plaintiff against his insurance company, the question submitted was whether the A bank was liable to the plaintiff on the draft. Held, under the statute, the final payment had not been made, and would not be considered as made until a draft, had a draft been sent in payment, could have been collected in the ordinary course of business. Bay State Milling Co. v. Hartford Accident & Indemnity Co., 193 Minn. 517, 259 N. W. 4 (1935).
BANKS AND BANKING - COLLECTIONS -"CASH OR SOLVENT CREDITS",
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol34/iss1/12