The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
COPT X—6770 IN THE ST. LOUIS OCTOBER COURT TERM, R. S. JACOBS BANKING COMPANY, a corporation Appellant, 0 F APPEALS 1930. No. 20895. Appeal from C i r c u i t Court, City of S t . Louis. v. Hon. Erwin G. Ossing, Judge. FEDERAL RESERVE BANK OF ST. LOUIS, a c o r p o r a t i o n , OPINION FILED Respondent. December 2 . 1930 This a c t i o n was "brought "by the R. S. Jacobs Banking Company of G r e e n f i e l d , Missouri, a g a i n s t the Federal Reserve Bank of S t . Louis, to recover the sum of $3,758.43, and i n t e r e s t , to cover l o s s e s s u f f e r e d by the p l a i n t i f f bank on account of the f a i l u r e of the Holland Banking Company of S p r i n g f i e l d , Missouri. A t r i a l by a j u r y was waived, and the case was t r i e d by the court s i t t i n g as a j u r y and r e s u l t e d i n a judgment f o r defendant and p l a i n t i f f has appealed. When o r i g i n a l l y f i l e d , the case was removed to the Federal Court, and the evidence was t h e r e heard, a f t e r which the case was removed to the S t a t e Court. Upon t r i a l below, i n the C i r c u i t Court, the case was submitted on a s t i p u l a t i o n and a t r a n s c r i p t of the testimony given i n the Federal Court. Each side f i l e d a w r i t t e n r e - quest asking t h e court to make s p e c i a l f i n d i n g s of f a c t i n w r i t i n g s e p a r a t e l y from i t s conclusions of law. The p e t i t i o n i s in seven counts, but inasmuch as the 9/1 - 2 - X-6770 pleadings do not become p a r t i c u l a r l y m a t e r i a l upon appeal, we Trill s t a t e i n substance what the p e t i t i o n a l l e g e s . I t i s a l l e g e d i n the f i r s t count t h a t on February 8, vv.* 1921, the defendant n o t i f i e d the p l a i n t i f f t h a t a l l checks, d r a f t s , notes and b i l l s drawn upon the p l a i n t i f f , or upon the Bade County Bank of G r e e n f i e l d , Missouri, and the Bank of Areola, of Areola, Missouri, received by the defendant f o r c o l l e c t i o n , would be sent by the defendant to the p l a i n t i f f f o r c o l l e c t i o n and r e t u r n s , and designated the p l a i n t i f f as the d e f e n d a n t ' s agent f o r the c o l l e c t i o n of these checks, d r a f t s n o t e s and b i l l s ; t h a t t h e r e a f t e r , and p r i o r to January 14, 1924, the defendant i n s t r u c t e d the p l a i n t i f f t h a t the proceeds of the c o l l e c t i o n of such checks, d r a f t s , notes and b i l l s should be forwarded by mail by the p l a i n t i f f to the Holland Bank i n the form of p l a i n t i f f ' s d r a f t upon the s a i d Holland Bank, paya b l e to the order of the Holland Bank; that during s a i d time, and on and p r i o r to January 14, 1924, the p l a i n t i f f maintained a cash balance with the d e f e n d a n t ' s s a i d correspondent and a g e n t , Holland Bank, f o r the purpose of paying such items of c o l l e c t i o n as should be n e c e s s a r i l y remitted by the p l a i n t i f f under s a i d arrangement; t h a t on January 12, 1924, the p l a i n t i f f received from the defendant f o r c o l l e c t i o n i t s cash l e t t e r of January 11, 1924, containing checks, d r a f t s and b i l l s aggregating $1,803,45; t h a t on s a i d date the p l a i n t i f f drew i t s d r a f t i n s a i d sum on the Holland Bank, payable to s a i d Holland Bank, and mailed s a i d d r a f t to s a i d Holland Bank i n payment of s a i d cash - 3 . X-6770 l e t t e r i n an addressed and stamped envelope f u r n i s h e d "by the defendant f o r t h a t purpose, as p l a i n t i f f had "been d i r e c t e d by defendant to do; t h a t the amount of s a i d cash l e t t e r was thereby p a i d by the p l a i n t i f f to d e f e n d a n t ' s s a i d agent and correspondent, Holland Bank; t h a t the p l a i n t i f f thereupon n o t i f i e d the defendant of such payment by a s e l f - a d d r e s s e d p o s t a l card f u r n i s h e d by the defendant f o r t h a t purpose; t h a t the p l a i n t i f f ' s o b l i g a t i o n regarding the payment of such cash l e t t e r was f u l l y and seasonably discharged by so mailing s a i d d r a f t and n o t i f y i n g t h e ' d e f e n d a n t of such payment, under s a i d i n s t r u c t i o n s by the defendant; t h a t the p l a i n t i f f had on d e p o s i t with said Holland Bank a cash balance s u f f i c i e n t to pay s a i d d r a f t of $1,803.45 to i t s p r i n c i p a l , the defendant h e r e i n ; t h a t t h e r e a f t e r on January 1924, the defendant made demand upon the p l a i n t i f f for the payment o f said cash l e t t e r of $1,803.45 p a i d ' b y p l a i n t i f f , as a f o r e s a i d , and the p l a i n t i f f r e f u s e d to pay the same f o r the reason t h a t p l a i n t i f f had f u l l y complied with the d e f e n d a n t ' s i n s t r u c t i o n s as to the payment t h e r e o f , and had f u l l y p a i d the same and discharged i t s duty to the defendant with regard t h e r e t o , by mailing i t s d r a f t to s a i d Holland Bank, as a f o r e s a i d ; t h a t t h e r e a f t e r , on February 4, 1924, the defendant n o t i f i e d the p l a i n t i f f t h a t i t was charging back a l l of the items included i n s a i d cash l e t t e r to the de— it'v it**'1 .""•ft fendant*s e n d o r s e r s ; t h a t the defendant did so charge back s a i d items to i t s e n d o r s e r s , and the s e v e r a l items contained i n s a i d cash l e t t e r were, i n the u s u a l and ordinary course, charged back by the s e v e r a l endorsers and payees t o the makers t h e r e o f ; - 4 - X-6770 t h a t s a i d items were wrongfully so charged hack by the defendant; t h a t by reason of the wrongful act of defendant i n charging hack: s a i d items to i t s endorsers, as a f o r e s a i d , the makers and drawers of s a i d iterns, who were and are customers of the p l a i n t i f f , were compelled to pay s a i d items a second time* t h a t s a i d makers and drawers could not understand why they were so compelled to pay* as a f o r e s a i d , and complained " b i t t e r l y thereof* and t h a t the wrongful a c t of the defendant i n charging "back s a i d items was c a l c u l a t e d to shake the confidence of the p l a i n t i f f 1 s customers i n the solvency of the p l a i n t i f f , and was wrongfully done "by the defendant f o r such purpose, in order to wrongfully f o r c e and coerce the p l a i n t i f f to pay s a i d cash l e t t e r of $1,803.45 a second time; t h a t the defendant a l s o f o r s a i d purpose r e p o r t e d p l a i n t i f f 1 s a l l e g e d f a i l u r e to pay s a i d items to the Finance Commissioner of Missouri, and t h a t "by reason of s a i d wrongful a c t of the defendant, the p l a i n t i f f was t h e r e a f t e r , on or about the 13th day of February, 1924, by duress and i n order to save i t s r e p u t a t i o n and c r e d i t , coerced i n t o sending to the defendant said sum the second time i n order t o prevent the defendant from charging back s a i d items, and did on the s a i d date again pay the defendant s a i d sum; t h a t on January 14, 1924, the s a i d Holland Bank was closed by order of the S t a t e Banking Department of Missouri, and taken over f o r l i q u i d a t i o n by the Commissioner of Finance of s a i d s t a t e ; t h a t although s a i d remittance and d r a f t made by the p l a i n t i f f to s a i d Holland Bank was r e ceived by s a i d Holland Bank b e f o r e the same was closed by the S t a t e Banking Department of Missouri, s a i d item was never charged to the p l a i n t i f f ' s account i n s a i d Holland Bank; t h a t the p l a i n t i f f never learned of t h e insolvency or the closing of s a i d Holland Bank u n t i l a f t e r January 15, 1924; t h a t i n order to minimize i t s damages and recover what i t could and p r o t e c t both i t s e l f and the defendant i n a s i t u a t i o n which was l i k e l y to r e s u l t i n l i t i g a t i o n concerning the l i a b i l i t y of the defendant to the p l a i n t i f f f o r s a i d wrongful a c t s , the p l a i n t i f f f i l e d i t s claim with the Commissioner of Finance i n charge of said Holland Bank with the amount of p l a i n t i f f ' s balance i n s a i d bank, and t h e r e a f t e r received a f o r t y p e r cent dividend on s a i d claim, and thereby received the sum of $721.38 on the amount which was on hand to pay i t s d r a f t of $1,803.45, which i s the t o t a l amount that can be r e a l i z e d from the e s t a t e of s a i d Holland Bank, and t h a t the balance of s a i d item, to-wit $1,082.07, has n o t been paid by the defendant or any other person in i t s b e h a l f , and i s s t i l l due and unpaid, by reason whereof the p l a i n t i f f asked judgment f o r s a i d sum of $1,082.07, with i n t e r e s t , and c o s t s . The other counts i n the p e t i t i o n a r e of s i m i l a r n a t u r e The answer to the f i r s t count a l l e g e s t h a t under the a u t h o r i t y of the a c t c r e a t i n g the Federal Reserve Board, the Federal Reserve Board issued and promulgated an order r e q u i r i n g a l l Federal Reserve Banks, i n c l u d i n g defendant, to operate a c l e a r i n g house f o r i t s member and non-member c l e a r i n g banks, and promulgated c e r t a i n r e g u l a t i o n s , which r e g u l a t i o n s were i n f u l l f o r c e and e f f e c t a t a l l times, and v a r i o u s p a r t s of these - 6 - X-6770 r e g u l a t i o n s were s e t f o r t h i n the answer, The answer a l s o r e f e r s to a c i r c u l a r , known as Circ u l a r Uio. 6, S e r i e s of 1922, a l l e g e d to have been issued "by the Federal Reserve Board to a l l Federal Reserve Banks and nonmember c l e a r i n g "banks. The answer denies the agency of the p l a i n t i f f f o r the usfendant. The answer a l s o pleads an agreement on the p a r t of the p l a i n t i f f , dated J u l y 21, 1916, to c o l l e c t items sent by the defendant to the p l a i n t i f f on the p l a i n t i f f , the Dade County Bank, and the Bank of Areola. I t i s then a l l e g e d t h a t t h e p l a i n t i f f r e m i t t e d d i r e c t to the defendant a t S t . Louis i n S t . Louis exchange, hut t h a t the p l a i n t i f f d e s i r i n g to use S p r i n g f i e l d exchange, e n t e r e d i n t o the arrangement with the Bank of Commerce of S p r i n g f i e l d and then the Holland Bank of S p r i n g f i e l d , "by which the p l a i n t i f f r e m i t t e d to s a i d S p r i n g f i e l d "banks, and secured an arrangement with s a i d S p r i n g f i e l d "banks f o r the t r a n s f e r of the funds to the defendant a t S t . Louis, which arrangement i s a l l e g e d to have been i n f o r c e i n January, 1924. The answer admits the items were charged back, but denies t h a t such a c t of charging the same back was wrongful, and denies t h a t the payment of the amount of s a i d cash l e t t e r by the p l a i n t i f f , on February 14, 1924, was made by duress and coercion, and a l l e g e s t h a t s a i d payment was v o l u n t a r i l y made. The answer a l s o pleads an estoppel a g a i n s t the - 7 - X-6770 p l a i n t i f f "because of the f i l i n g of the claim a g a i n s t the Holland Bank and the securing of a f o r t y per cent dividend on such claim. We t h i n k i t i s unnecessary to r e f e r f u r t h e r t o the p l e a d i n g s a t t h i s time. P l a i n t i f f seeks to recover of defendant on the theory t h a t the Holland Bank of S p r i n g f i e l d , Missouri, was the agent of defendant, and t h e r e f o r e defendant i s l i a b l e for t h e a c t s or negligence of i t s agent. A few p r e l i m i n a r y f a c t s are n e c e s s - a r y to a proper d i s c u s s i o n and determination of t h i s case. Under an agreement i n w r i t i n g dated J u l y 21, 1916, p l a i n t i f f and defendant had an arrangement whereby defendant sent f o r c o l l e c t i o n , checks drawn on the p l a i n t i f f and other banks i n t h a t t e r r i t o r y , and the proceeds were to he immediately r e m i t t e d i n a v a i l a b l e S t . Louis exchange, p r i o r to 1920, the defendant had begun to get i n , by way of remittance f o r c o l l e c t i o n , items s e n t to country banks i n s t e a d of exchange immediately a v a i l a b l e on St. Louis# From some time i n February, 1918, to some date i n 1920, p l a i n t i f f r e m i t t e d to defendant to cover c o l l e c t i o n items, checks on i t s e l f , by a d r a f t drawn on the Bank of Commerce i n S p r i n g f i e l d , Missouri. This method of exchange was u n d e s i r a b l e to defendant because i t took two days to c o l l e c t a f t e r i t was r e c e i v e d . This i n t e r f e r e d with the time schedules e s t a b l i s h e d by the defendant f o r the giving of c r e d i t to the banks which had forwarded these items to defendant for collection. P l a i n t i f f maintained a d e p o s i t account with the Bank of Commerce i n S p r i n g f i e l d from 1917 up to - 8 - X-6770 February 7, 1921, on which l a t t e r date the Bank of Commerce merged with the Holland 3arising Company, a l s o of S p r i n g f i e l d . The P l a i n t i f f a l s o maintained a general d e p o s i t account with the Holland Banking Company f o r a number of y e a r s , and maint a i n e d such an account p r i o r t o the merger of the two Danks. In June, 1920, on account of the numerous complaints of defendant about S p r i n g f i e l d exchange being sent to i t , p l a i n t i f f stopped sending S p r i n g f i e l d exchange to defendant on account of c o l l e c t i o n s , but i n s t e a d s e n t i n s e t t l e m e n t of c o l l e c t i o n items exchangeon S t . Louis. Other banks i n t h a t t e r r i t o r y had been r e m i t t i n g t o defendant f o r c o l l e c t i o n , items i n S p r i n g f i e l d exchange which were u n s a t i s f a c t o r y to defendant. The S p r i n g f i e l d banks were a l s o complaining t h a t the d e f e n d a n t ' s i n s i s t e n c e upon S t . Louis exchange or i t s e q u i v a l e n t was l o s i n g accounts f o r them, because the customer banks f e l t t h a t they had to c a r r y l a r g e r accounts i n S t . Louis. In the year 1920, t h e r e was a l a r g e amount of correspondence, and a number of conferences were h e l d between r e p r e s e n t a t i v e s of the Federal Reserve Bank and other country banks i n t h a t t e r r i t o r y , i n cluding p l a i n t i f f , and plans were discussed f o r avoiding the d i f f i c u l t i e s and u n s a t i s f a c t o r y methods t h a t had t h e r e t o f o r e existed. D e f e n d a n t ' s r e p r e s e n t a t i v e s discussed with the S p r i n g f i e l d bank various plans under riiich a country bank could use a S p r i n g f i e l d correspondent through whom to f u r n i s h defendant with exchange on S t . Louis, to the e f f e c t t h a t checks intended t o be c o l l e c t e d by the country banks would be sent d i r e c t to the country banks' S p r i n g f i e l d correspondents, X-6770 - 9 - the l a t t e r r e m i t t i n g immediately to defendant f o r the aggregate of the checks r e c e i v e d , and charging the account of the country "bank with the amount r e m i t t e d , and a t the same time i t would forward to the country banks the check so p a i d . The country "bank would then charge the checks a g a i n s t the r e s p e c t i v e drawe r ' s balances. There were other plans discussed, the defend- a n t ' s contention being t h a t i t did not want to go d i r e c t l y to the correspondents of the S p r i n g f i e l d banks, because such a course would i n j u r e the S p r i n g f i e l d banks. The record i n t h i s case i s a lengthy one, and i t i s impossible to s e t out a l l the evidence introduced without u n n e c e s s a r i l y burdening t h i s opinion. But we deem i t proper and necessary a t t h i s p o i n t to s e t out the following findings of f a c t s as made by the t r i a l c o u r t : "The Court f i n d s the f a c t s , s p e c i a l l y , to be as follows "1. In the year, 1915, a w r i t t e n agreement ( s e t f o r t h i n the pleadings) was e n t e r e d i n t o between p l a i n t i f f and defendant, pursuant to which p l a i n t i f f r e ceived by mail from defendant c o l l e c t i o n l e t t e r s enclosing checks drawn on the p l a i n t i f f and two neighboring banks to be c o l l e c t e d by p l a i n t i f f and r e m i t t e d to defendant i n immediately a v a i l a b l e exchange. There was no subsequent agreement made d i r e c t l y between the p l a i n t i f f and defendant. In the f i r s t h a l f of 1930, there was considerable tendency shown by p l a i n t i f f , (and by o t h e r country banks) to remit f o r c o l l e c t i o n s i n S p r i n g f i e l d , Missouri, exchange, which exchange was not immediately a v a i l a b l e f o r the reason t h a t i t took two days to c o l l e c t from S t . Louis, and defendant i n s i s t e d on S t . Louis exchange or exchange immediately cashable. "2. S p r i n g f i e l d banks complained t h a t d e f e n d a n t ' s i n s i s t e n c e upon immediately a v a i l a b l e S t . Louis exchange was l o s i n g them accounts. Defendant disclaimed any i n t e n t i o n to i n j u r e S p r i n g f i e l d banks, and v a r i o u s plans to rneet the d i f f i c u l t y were discussed between defendant and S p r i n g f i e l d Bank of Commerce. The l a t t e r i - 10 - X-6770 requested, defendant not to approach country c o r r e s pondents of Bank of Commerce, but to permit i t to do so and i t would make arrangements s a t i s f a c t o r y "both to country "banks and to defendant. "3. P l a i n t i f f maintained a general deposit a c count with Bank of Commerce f o r some f o u r years p r e ceding February 7, 1921, on which date Bank of Commerce merged with Holland Banking Company, a l s o of Springs f i e l d . P r i o r to merger, p l a i n t i f f maintained a g e n e r a l deposit account with Holland Banking Company; and a f t e r merger of the two banks, p l a i n t i f f continued uni n t e r r u p t e d l y to maintain a general d e p o s i t account with the consolidated Holland Banking Company. "4. Among other p l a n s discussed between Springf i e l d banks and defendant, i n the endeavor to avoid exchange u n a v a i l a b l e in St. Louis, without i n j u r y to S p r i n g f i e l d banks, was one f o r t e l e g r a p h i c t r a n s f e r . "On May 15, 1920, defendant wrote Holland Banking Company t h a t the following plan had been suggested: The Holland Banking Company to have i t s country correspondence remit d i r e c t to Holland Banking Company i n s t e a d of d i r e c t to defendant: Holland Banking Company to t r a n s f e r funds to defendant by wire upon . r e c e i p t of remittances from country correspondents: the wire t r a n s f e r t o be followed by l e t t e r giving d e t a i l s of remittance and amount t r a n s f e r r e d t o be h e l d i n suspense as a deduction from outstanding items, awaiting r e c e i p t of d e t a i l e d advice. "The Holland Banking Company did not approve the plan suggested, and never had to do with any plan f o r t e l e g r a p h i c t r a n s f e r u n t i l a f t e r i t s merger with the Bank of Commerce. "5. The Bank of Commerce did not e n t e r i n t o any p l a n f o r t e l e g r a p h i c t r a n s f e r u n t i l on or about J a n uary 11, 1921, On t h i s date defendant addressed l e t t e r t o Bank of Commerce to e f f e c t t h a t defendant -7as advised t h a t Bank of Commerce was prepared to adopta p l a n i n connection with remittances from some of i t s country correspondents, under which r e m i t t a n c e s might be mailed to addressee f o r t e l e g r a p h i c t r a n s f e r to defendant; t h a t under the ope r a t i on of t h i s p l a n defendant would f u r n i s h a d d r e s s e e ' s correspondents w i t h forms f o r t h e i r use i n r e m i t t i n g t o addressee by d r a f t on addressee, and would supply addressee with forms to be mailed to defendant, showing the d e t a i l s of remittances r e c e i v e d . I t was requested t h a t addressee t r a n s f e r to defendant d a i l y , by wire, the t o t a l amount of remittances received f o r d e f e n d a n t ' s u s e , 403 403 - 11 - X-6770 i n c l u d i n g i n telegram statement t h a t deposit was to be made with defendant. 'Account remittances r e ceived. 1 D e t a i l s of remittances showing date and t o t a l of cash l e t t e r s , hank making remittances and t o t a l r e m i t t a n c e s wero to he mailed to defendant, following telegram, and should defendant presumed, i n most cases, he received hy defendant the day a f t e r r e c e i p t of d e p o s i t made hy a d d r e s s e e ' s correspondents p u r suant to a d d r e s s e e ' s t e l e g r a p h i c d i r e c t i o n . Defendant was p l a c i n g order f o r forms needed, and when comp l e t e d they would he forwarded promptly with i n s t r u c t i o n s to a d d r e s s e e ' s country correspondents. I f d e t a i l s not c l e a r to addressee, advices awaited. "6. Thereupon the Bank of Commerce appears to have taken up the matter with i t s country corresponde n t s . The Bank of Commerce sent out a c i r c u l a r l e t t e r to p l a i n t i f f , under date of January 13, 1921, s t a t i n g t h a t Bank of Commerce had e f f e c t e d arrangement with defendant whereby d r a f t s by country banks on Bank of Commerce, i n payment of c o l l e c t i o n l e t t e r s , would be immediately a v a i l a b l e i n S t . Louis. The defendant would send a l l c o l l e c t i o n items d i r e c t to p l a i n t i f f f o r remittance to Bank of Commerce, and the Bank of Commerce would handle the r e s t of the t r a n s a c t i o n f o r p l a i n t i f f e n t i r e l y . To t h i s p l a i n t i f f agreed, and on January 17, 1921, Bank of Commerce wrote defendant, giving a l i s t of country banks ( p l a i n t i f f among them) to which i n f u t u r e c o l l e c t i o n items sent them should be sent d i r e c t , with addressed envelope i n which they would r e t u r n to Bank of Commerce i n payment t h e r e f o r , the Bank of Commerce wiring defendant each day to cover same. "7. Beginning with January 28, 1921, the plan of t e l e g r a p h i c t r a n s f e r was i n operation between Bank of Commerce, p l a i n t i f f and defendant. The a r r a n g e ment was taken over on the merger with the Bank of Commerce by the consolidated Holland Banking Company. Mr. Randall who had been the cashier of the Bank of Commerce became the c a s h i e r of the Holland Banking Company and the plan as begun with the Bank of Commerce was c a r r i e d on without i n t e r r u p t i o n . "8. The o p e r a t i o n of the plan was a s follows: "(a) Defendant had a p r i n t e d cash l e t t e r form, which s t a t e d , a f t e r t h e blank f o r a d d r e s s , t h a t defendant enclosed f o r c o l l e c t i o n and remittance i n immedia t e l y a v a i l a b l e funds; t h a t prompt r e p o r t was requeste d, giving d a t e and t o t a l of t h i s l e t t e r ; t h a t a l l unpaid items .should be immediately returned g i v i n g reasons - 12 - X-6770 for non-payment; t h a t non-payment of a l l items over $500.00 should be telegraphed defendant, giving r e a sons f o r non-payment, and quoting name of preceding tank e n d o r s e r . "A blank space followed to be f i l l e d i n with typew r i t t e n l i s t of items s e n t . I n s t r u c t i o n s as to p r o t e s t were p r i n t e d a t the f o o t . "(b) Defendant had a l s o p r i n t e d a p o s t a l card form, addressed to i t s e l f , s t a t i n g t h a t w r i t e r had r e ceived cash l e t t e r , and had remitted proceeds to Holland Banking Company f o r t e l e g r a p h i c t r a n s f e r t o defendant. The date of cash l e t t e r was then given, i t s amount, the items s u b t r a c t e d f o r non-payment with reasons f o r nonpayment. "Beneath the blank f o r s i g n a t u r e i t was s t a t e d t h a t the p o s t a l card was absolute advice of payment of a l l items i n the cash l e t t e r mentioned, except those h e r e i n l i s t e d as unpaid. "(c) Defendant had a l s o p r i n t e d envelopes, stamped and addressed to Holland Banking Company. "(d) Defendant a l s o had p r i n t e d a l e t t e r form, f o r use by the country correspondents of Holland Banking Company i n making r e m i t t a n c e s . This form was addressed to Holland Banking Company and s t a t e d t h a t w r i t e r enclosed d r a f t on Holland Banking Company f o r $ f o r t e l e g r a p h i c t r a n s f e r to Federal Reserve Bank of S t . Louis, i n payment of t h e i r cash l e t t e r of , These l e t t e r forms were f u r n i s h e d i n considerable number to Holland Banking Company. "(e) Defendant had a l s o p r i n t e d and f u r n i s h e d to Holland Banking Company f o r use by the l a t t e r i n exp l a i n i n g more f u l l y to defendant the t e l e g r a p h i c t r a n s f e r , a l e t t e r form, addressed to defendant, wherein w r i t e r advised defendant t h a t he had i n s t r u c t e d [one of h i s S t . Louis correspondence) to t r a n s f e r to defendant on t h a t day $ covering r e mittances received aa l i s t e d below. Then followed t h r e e v e r t i c a l columns, headed r e s p e c t i v e l y a t the top, 1 payment your l e t t e r , 1 and 1 received from, 1 and the t h i r d ( f o r amounts) with no heading. "With each cash l e t t e r (a) mailed to p l a i n t i f f , defendant would enclose the checks to be c o l l e c t e d ; a p o s t a l card form (b); and a stamped envelope ( c ) . When p l a i n t i f f c o l l e c t e d the checks, p l a i n t i f f made out a remittance l e t t e r form ( d ) , drew a d r a f t on i t s — 13 -» X—6770 general d e p o s i t account, on the Holland Banking Company, to order of l a t t e r , f o r amount shown by r e mittance l e t t e r , and mailed d r a f t and remittance l e t t e r , i n t h e stamped and adaressed envelope to Holland Banking Company. P l a i n t i f f a t the same time, made out and mailed to defendant the p o s t a l card form ( b ) . "Upon r e c e i p t and payment of the d r a f t , Holland Banking Company w i r e d ! t s S t . Louis correspondent to pay defendant and mailed to defendant the explanatory l e t t e r of advice ( c ) . "At the time of making out i t s d r a f t on the Holland Banking Company, i n favor of the Holand Banking Company, the p l a i n t i f f entered i t s d r a f t i n i t s d r a f t r e g i s t e r and charged the amount thereof a g a i n s t the account of the Holland Banking Company upon p l a i n t i f f ' s books. "9. U n t i l a f t e r t h i s controversy had a r i s e n , there was no communication between p l a i n t i f f and defendant r e s p e c t i n g the foregoing system of t e l e g r a p h i c t r a n s f e r a p a r t from the sending and the u s e of the forms s e t f o r t h above. "10. During the time between the merger and the f a i l u r e of the Holland Banking Company s l i g h t l y more than one-half of the d r a f t s , drawn by p l a i n t i f f on i t s general d e p o s i t account with the Holland Banking Comr pany, were i n favor of the l e t t e r , f o r t e l e g r a p h i c t r a n s f e r t o pay cash l e t t e r s sent by defendant; and the remainder of s a i d d r a f t s were drawn f o r o t h e r purposes. "11. On January 12, 1924, p l a i n t i f f received a cash l e t t e r from defendant t o t a l i n g $1,803.45. P l a i n t i f f c o l l e c t e d the same, drew a d r a f t to order of Holland Banking Company, made out a remittance l e t t e r , and mailed d r a f t and l e t t e r to Holland Banking Company and p o s t a l card advice to defendant, a l l i n the usual way as above d e s c r i b e d . This d r a f t reached Holland Banking Company (Sunday i n t e r v e n i n g ) on Monday morning January 14, 1924. "On January 14, 1924, p l a i n t i f f r e c e i v e d two cash l e t t e r s from defendant; one f o r $496.78 and one f o r $40.73. P l a i n t i f f c o l l e c t e d these, and made out the usual d r a f t s and remittance l e t t e r s , and mailed them to Holland Banking Company, a l l i n the manner h e r e i n above d e s c r i b e d . These two d r a f t s reached Holland Banking Company's o f f i c e on the morning of January 15, - 14 - X-6770 1924. "On January 15, 1924, p l a i n t i f f received too cash l e t t e r s from defendant; one f o r $1,833.90 and the other f o r $2,089.19. These p l a i n t i f f c o l l e c t e d , made out the d r a f t s t h e r e f o r , mailed these d r a f t s with remittance l e t t e r s to Holland Banking Company, a l l i n the manner described above. These two d r a f t s reached the o f f i c e of the Holland Banking Company on January 16, 1924. "12. While these two l a s t mentioned d r a f t s , f o r $1,833.90 and $2,089.19 r e s p e c t i v e l y , were w r i t t e n out, with the customary remittance l e t t e r s , and entered on the books of p l a i n t i f f b e f o r e p l a i n t i f f ' s o f f i c e r s i n charge of i t s books learned of the closing of the Holland Banking Company, the evidence i s persuasive t h a t these two d r a f t s were not deposited i n the mail u n t i l a f t e r p l a i n t i f f ' s s a i d o f f i c e r s had learned of such closing; and the Court so f i n d s . "13. The Holland Banking Company was open on Monday, January 14, 1924, closed on t h a t day a t the u s u a l time, and never t h e r e a f t e r re-opened f o r b u s i n e s s . I t was taken i n charge by the S t a t e Finance Department e a r l y on the morning of January 15, 1924, and was t h e r e a f t e r l i q u i d a t e d by s a i d department. "14. A l l of the f i v e d r a f t s s p e c i f i e d above, and i n volved i n t h i s controversy were r e t u r n e d i n t a c t to p l a i n t i f f by the S t a t e Finance Department. In one of the f i v e d r a f t s mentioned was ever i n any way marked, or stamped, by the Holland Banking Company, or i n any wise e n t e r e d upon i t s books or p a i d . "The balances i n favor of p l a i n t i f f i n i t s general deposit account with the Holland Banking Company, were a t a l l times l a r g e r than the amount of s a i d d r a f t s . When the Holland Banking Company closed, s a i d Banking Company had i n cash and cash items approximately $275,000.00 and had over $50,000.00 i n v a r i o u s banks to i t s c r e d i t . The a s s e t s of the Holland Banking Company have proved i n s u f f i c i e n t up to t h i s time to pay more than f o r t y p e r cent to i t s "depositors. "15. A f t e r the closing of the Eoland Banking Company correspondence ensued between defendant and p l a i n t i f f r e s p e c t i n g the f i v e cash l e t t e r s i n controv e r s y . In the course of t h i s correspondence the p l a i n t i f f claimed that the Holland Banking Company was the agent of the defendant f o r the r e c e i p t and t r a n s mission of the funds sent t o Holland Banking Company by p l a i n t i f f . The defendant urged t h a t the s i t u a t i o n was - 15 - X-6770 analogous to t h a t which would have a r i s e n i f the p l a i n t i f f had s e n t to defendant d r a f t s on the Holland Banking Company, which the l a t t e r f a i l e d to honor or pay. "On February 4, 1924, the defendant charged back the items covered by the d r a f t s i n controversy to i t s end o r s e r s , n o t i f y i n g them of the f a c t • Both p l a i n t i f f and defendant appear to have taken the matter up with the S t a t e Finance Department. Both p a r t i e s r e f e r r e d the matt e r t o t h e i r r e s p e c t i v e a t t o r n e y s . F i n a l l y on February 13, 1924, the p l a i n t i f f sent i t s d r a f t on S t . Louis to defendant i n payment of the disputed items. In the l e t t e r s e n t a t the same time, p l a i n t i f f d i r e c t e d defendant to reverse the charges t h e r e t o f o r e made a g a i n s t , and to c r e d i t back the items t o , defendant v s endorsers. This was thereupon done by defendant and the c r e d i t s were made and n o t i f i e d by defendant to i t s various endorsers. P l a i n t i f f then canc e l l e d the d r a f t s i n controversy r e t u r n e d to i t by the S t a t e Finance Department. ,r 16. The Court f i n d s t h a t s a i d payment of February 13, 1924, was not made under p r o t e s t ; and, i n view of the burden of proof r e s t i n g in t h a t regard on p l a i n t i f f , the Court f u r t h e r f i n d s t h a t s a i d payment can not be s a i d to have been coerced or induced by duress a p p l i e d by the defendant. The Court f i n d s that under the c i r cumstances surrounding the s i t u a t i o n the p l a i n t i f f concluded t h a t i t was wiser and more advantageous to p l a i n t i f f to make the payment, and t h a t i t was volunt a r i l y made. "17. The Court f u r t h e r f i n d s t h a t i n the communicat i o n s between the p l a i n t i f f and defendant, a f t e r the closing of the Holland Banking Company and b e f o r e the payment of February 13, 1924, there was no r e p r e s e n t a t i o n of f a c t made by defendant to p l a i n t i f f , to the e f f e c t t h a t the Holland Banking Company was not an agent of the defendant; and t h a t the p l a i n t i f f i s not e n t i t l e d to claim t h a t i t was misled by any such r e p r e s e n t a t i o n p r i o r to the making of the payment of February 13, 1924. "18. The Court f u r t h e r f i n d s t h a t p l a i n t i f f i s estopped from reclaiming the payment of February 13, 1924, or any p o r t i o n t h e r e o f , by i t s l e t t e r of February 13, 1924, sent with such payment, and the subsequent a c t i o n of defendant thereunder. "The Court i s not persuaded t h a t the p l a i n t i f f did not know, or by the e x e r c i s e of reasonable d i l i g e n c e and i n q u i r y , could not have learned, the s u b s t a n t i a l 408 - 16 - X-S770 and m a t e r i a l f a c t s r e s p e c t i n g the r e l a t i o n s h i p and c i r cumstances involved i n the s o - c a l l e d t e l e g r a p h i c t r a n s f e r payment plan "between the p a r t i e s and the Holland Banking Company. The Court t h e r e f o r e f i n d s t h a t the p l a i n t i f f a t or "before the making of the payment of February 13, 1924, knew, or "by the e x e r c i s e of reasonable d i l i g e n c e and i n q u i r y could have l e a r n e d , the subs t a n t i a l and m a t e r i a l f a c t s with regard to the r e l a t i o n s h i p and circumstances involved in the s o - c a l l e d t e l e g r a p h i c t r a n s f e r payment p l a n "between the p a r t i e s and the Holland Banking Company; and the Court f i n d s t h a t the e s t o p p e l a r i s i n g out of i t s payment and l e t t e r of February 13, 1924, i s not d e f e a t e d by p l a i n t i f f ' s i g norance of the f a c t s involved a t the time of making such payment. "19. The Court f u r t h e r f i n d s t h a t t h e d e p o s i t i n g i n t h e p o s t o f f i c e of the d r a f t s drawn on and mailed to Holland Banking Company by p l a i n t i f f , did not c o n s t i t u t e payment of the c o l l e c t i o n items s e n t to p l a i n t i f f by defendant and covered by s a i d d r a f t s . "20. The Court f i n d s t h a t , p r i o r t o acceptance thereof by the Holland Banking Company, the d r a f t s drawn on and mailed to Holland Banking Company by p l a i n t i f f did not c o n s t i t u t e payment of the c o l l e c t i o n items sent to p l a i n t i f f by defendant and covered by s a i d d r a f t s . "21. The Court f i n d s t h a t , p r i o r to -Dayment thereof by the Holland Banking Company, the d r a f t s drawn on and mailed to Holland Banking Company by P l a i n t i f f did not c o n s t i t u t e payment of the c o l l e c t i o n items sent to p l a i n t i f f and covered by s a i d d r a f t s . "22. The Court f i n d s t h a t the f a i l u r e or r e f u s a l of the Holland Banking Company to accept the d r a f t f o r $1,803.45 was not the f a i l u r e or r e f u s a l of an agent of defendant. "23. The Court f i n d s that the f a i l u r e or r e f u s a l of the Holland Banking Company to accept the d r a f t s f o r $496.78, $40.73, $1,833.90, and $2,089.19, or any of them, was not the f a i l u r e or r e f u s a l of an agent of defendant. "23-t. The Court f i n d s t h a t the d r a f t s of $1,803.45, $496.78, $40.73, $1,833.90 and $2,089.19, or any of them were not payment of the c o l l e c t i o n items covered thereby, p r i o r to the acceptance or payment of s a i d d r a f t s by the Holland Banking Company. ~ 17 — X-6770 "24. The Court f i n d s t h a t the f a i l u r e or r e f u s a l of the Holland Banking Company to honor or pay the d r a f t s f o r $1,803.45, $495.78, $40.73, $1,833.90 and $2,089.19, was not the f a i l u r e or r e f u s a l of an agent of defendant. "25. The Court f u r t h e r f i n d s t h a t t h e p l a i n t i f f made and proved i t s claim a g a i n s t the l i q u i d a t o r s of the Holland Banking Company, f o r tlie whole balance of i t s gene r a l d e p o s i t , which included the amounts of the unentered d r a f t s here i n controversy, and t h a t there was subsequently p a i d on such claim a dividend of f o r t y p e r cent; but the p l a i n t i f f never n o t i f i e d the defendant t h a t any such claim was "being made or f i l e d as i n "behalf, or f o r the u s e , of defendant, nor did the claim as f i l e d p r o f e s s or appear to "be made i n "behalf of any other than p l a i n t i f f , and p r i o r to the c o l l e c t i o n of s a i d claim, p l a i n t i f f assigned s a i d claim to another "bank, i n r e t u r n f o r moneys advanced. "26. The Court f i n d s t h a t the following r e g u l a t i o n s had "been adopted and promulgated "by the Federal Reserve Board, f o r the governance of Federal Reserve Banks, with r e s p e c t to c o l l e c t i o n s and were i n f o r c e a t a l l times when the cash l e t t e r s and d r a f t s involved i n t h i s controversy were sent and r e c e i v e d . "Check Clearing and C o l l e c t i o n . "Section 16 of the Federal Reserve Act a u t h o r i z e s the Federal Reserve Board to r e q u i r e each Federal Reserve Bank to e x e r c i s e the f u n c t i o n of a c l e a r i n g house f o r i t s member "banks, and s e c t i o n 13 of the Federal Reserve Act, as amended "by the a c t approved June 21, 1917, a u t h o r i z e s each Federal Reserve Bank to receive from any non-member bank or t r u s t company, s o l e l y f o r the purposes of exchange, or of c o l l e c t i o n , d e p o s i t s of current funds i n lawful money, n a t i o n a l bank n o t e s , Federal Reserve notes, checks and d r a f t s payable upon p r e s e n t a t i o n , or maturing notes and b i l l s , provided such non-member bank or t r u s t coup any maintains with i t s Federal Reserve Bank a balance s u f f i c i e n t to o f f s e t the items i n t r a n s i t hold f o r i t s account by the Federal Reserve Bank. " I n pursuance of the a u t h o r i t y vested i n i t under these p r o v i s i o n s of law, the Federal Reserve Board, d e s i r i n g t o a f f o r d both to the p u b l i c and to the v a r i o u s banks of the country a d i r e c t , e x p e d i t i o u s , and economical system of check c o l l e c t i o n and settlement of b a l a n c e s , has arranged to have each Federal Reserve - 18 - X-6770 Bank e x e r c i s e the f u n c t i o n s of a c l e a r i n g house f o r such of i t s member "banks as d e s i r e to a v a i l themselves of i t s p r i v i l e g e s and. f o r such non-member s t a t e "banks and t r u s t companies as may maintain with the Federal Reserve Bank "balances s u f f i c i e n t to q u a l i f y them under t h e p r o v i s i o n s of s e c t i o n 13 to send items to Federal Reserve Banks f o r purposes of exchange or of c o l l e c t i o n . Such non-member s t a t e "banks and t r u s t companies w i l l h e r e i n a f t e r "be r e f e r r e d to i n t h i s r e g u l a t i o n as non-member c l e a r i n g "banks. "Each Federal Reserve Bank s h a l l e x e r c i s e the f u n c t i o n s of a c l e a r i n g house under the following g e n e r a l terms and c o n d i t i o n s . " ( l ) Bach Federal Reserve Bank w i l l receive a t par from i t s member "banks and from non-member c l e a r i n g "banks i n i t s d i s t r i c t , checks drawn on a l l member and non-member c l e a r i n g "banks and on a l l other non-member "banks which agree to remit a t par through the Federal Reserve Bank of t h e i r d i s t r i c t . " ( 2 ) Each Federal Reserve Bank w i l l receive a t p a r from o t h e r Federal Reserve Banks, and from a l l member and non-member c l e a r i n g banks, r e g a r d l e s s of t h e i r l o c a t i o n , f o r the c r e d i t of t h e i r accounts with t h e i r r e s p e c t i v e Federal Reserve Banks, checks drawn upon a l l member and non-member c l e a r i n g banks of i t s d i s t r i c t and upon a l l o t h e r non-member banks of i t s d i s t r i c t whose checks are c o l l e c t e d a t par by the Federal Reserve Bank. "(3) Immediate c r e d i t e n t r y upon r e c e i p t s u b j e c t to f i n a l payment w i l l be made f o r a l l such items upon the books of the Federal Reserve Bank a t f u l l f a c e value, but the proceeds w i l l not be counted as p a r t of the minimum reserve nor become a v a i l a b l e to meet checks drawn u n t i l such time as may be s p e c i f i e d i n the approp r i a t e time schedule r e f e r r e d to in subdivision 7. " (4) Checks received by a Federal Reserve Bank on i t s member or non-member c l e a r i n g banks w i l l be forwarded d i r e c t to such banks and w i l l not be charged to t h e i r accounts u n t i l s u f f i c i e n t time has elapsed w i t h i n which t o receive advice of payment, as shown by the a p p r o p r i a t e time schedule r e f e r r e d to i n subd i v i s i o n 7. "(5) Under t h i s p l a n each Federal Reserve Bank w i l l r e c e i v e a t par from i t s member and non-member c l e a r i n g banks checks on a l l member and non-member c l e a r i n g banks and on a l l other non-member banks whose - 19 « X-6770 checks can "be c o l l e c t e d a t par "by any Federal Reserve Bank. Member and non-member c l e a r i n g "banks w i l l "be r e q u i r e d "by the Federal Reserve Board to provide funds to cover a t p a r a l l checks received from or f o r the account of t h e i r Federal Reserve Banks • Provided, however, t h a t a member or non-member c l e a r i n g "bank may ship currency or specie from i t s own v a u l t s a t the expense of i t s Federal Reserve Bank to cover any d e f i c i e n c y which may a r i s e because of and only i n the case of i n a b i l i t y to provide items to o f f s e t checks received from or f o r the account of i t s Federal Reserve Bank* w that; (6) Section 19 of the Federal Reserve Act provides H The r e q u i r e d "balance c a r r i e d "by a member "bank with a Federal Reserve Bank may, under the r e g u l a t i o n s and subj e c t to such p e n a l t i e s as may "be p r e s c r i b e d "by the Federal Reserve Board, be checked a g a i n s t and withdrawn by such member bank f o r the purpose of meeting e x i s t i n g l i a b i l i t i e s : Provided, however, that no bank s h a l l a t any time make new loans or s h a l l pay any dividends u n l e s s and u n t i l the t o t a l balance r e q u i r e d by law i s f u l l y r e s t o r e d . "Items can not be counted as a p a r t of the minimum r e s e r v e balance to be c a r r i e d by a member bank with i t s Federal Reserve Bank u n t i l such time as may be s p e c i f i e d i n the a p p r o p r i a t e time schedule r e f e r r e d to i n s u b d i v i s i o n 7. Therefore, should a member bank draw a g a i n s t items b e f o r e such time, the d r a f t would be charged a g a i n s t i t s r e s e r v e balance i f such balance were s u f f i c i e n t i n amount to pay i t ; but any r e s u l t i n g impairment of reserve balances would be s u b j e c t to a l l the p e n a l t i e s provided by the Act. 11 Inasmuch as i t i s e s s e n t i a l t h a t the law i n r e s p e c t to the maintenance by member banks of the r e q u i r e d minimum r e s e r v e balance s h a l l be s t r i c t l y complied w i t h , the Federal Reserve Board, under a u t h o r i t y vested i n i t by s e c t i o n 19 of the Act, has p r e s c r i b e d as the b a s i c p e n a l t y f o r any d e f i c i e n c y in reserve a sum equivalent to an i n t e r e s t charge on the amount of the d e f i c i e n c y of 2 per cent per annum above the n i n e t y - d a y discount r a t e of the Federal Reserve Bank of the d i s t r i c t i n which the member bank i s l o c a t e d , and has announced t h a t i t w i l l p r e s c r i b e f o r any Federal Reserve d i s t r i c t , upon the a p p l i c a t i o n of the Federal Reserve Bank of t h a t d i s t r i c t , as an a d d i t i o n a l p r o g r e s s i v e p e n a l t y f o r any subsequent d e f i c i e n c y by the same member bank during the same calendar year a sum equivalent to an i n t e r e s t charge on the amount of the subsequent d e f i c i e n c y a t a — 20 — X-6770 r a t e i n c r e a s i n g one-half of 1 per cent f o r each such subsequent d e f i c i e n c y . " ( 7 ) Each Federal Reserve Bank w i l l determine "by a n a l y s i s the amounts of u n c o l l e c t e d funds appearing on i t s books to the c r e d i t of each member bank. Such ana l y s i s w i l l show the t r u e s t a t u s of the r e s e r v e h e l d by the Federal Reserve Bank f o r each member bank and w i l l enable i t to apply the p e n a l t y f o r impairment of r e s e r v e . "Each Federal Reserve Bank w i l l p u b l i s h time schedules showing the time a t which any item sent to i t w i l l be counted as r e s e r v e and become a v a i l a b l e to meet any checks drawn. "(8) In handling items f o r member and non-member c l e a r i n g banks, a Federal Reserve Bank w i l l a c t a s agent only. The board w i l l r e q u i r e t h a t each member and non-member c l e a r i n g bank a u t h o r i z e i t s Federal Reserve Bank to send checks, f o r c o l l e c t i o n to banks on which checks are drawn, and, except f o r n e g l i g e n c e , such Federal Reserve Bank w i l l assume no l i a b i l i t y . Any f u r t h e r requirements t h a t the board may deem necessary w i l l be s e t f o r t h by the Federal Reserve Banks i n t h e i r l e t t e r s of i n s t r u c t i o n to t h e i r member and non-member c l e a r i n g banks. Each Federal Reserve Bank w i l l a l s o promulgate r u l e s and r e g u l a t i o n s governing the d e t a i l s of i t s operations as a c l e a r i n g house, such r u l e s and r e g u l a t i o n s to be binding upon a l l member and non-member banks which a r e c l e a r i n g through the Federal Reserve Bank. "27. The Court f u r t h e r f i n d s t h a t the Federal Reserve Bank of S t . Louis, with the consent and approval of the Federal Reserve Board, did on the 30th day of December, 1922, adopt, promulgate and send out to a l l member banks and to a l l non-member c l e a r i n g banks within i t s d i s t r i c t , and to a l l other Federal Reserve Banks, Circular Ho. 5, s t a t i n g the c o n d i t i o n s under which checks sent to s a i d Federal Reserve Bank of S t . Louis f o r c o l l e c t i o n would be handled; and t h a t s a i d Circular Ho. 6 remained unchanged up to and during the p e r i o d of the f a c t s mentioned and complained of i n p l a i n t i f f ' s petition. " C i r c u l a r Mo. 6, S e r i e s of 1922, i s as follows; "Federal Reserve Bank of S t . Louis "Operation of Check Collection System " S t . Louis, Mo., December 30, 1922. "To the Member Banks of D i s t r i c t Ho. 8: - 21 - X-6770 "On the following pages of t h i s c i r c u l a r w i l l be found, i n s t r u c t i o n s and. r e g u l a t i o n s governing the deposit and c o l l e c t i o n of checks through the Federal Reserve Bank of S t . Louis and i t s t r a n c h e s . " I t i s requested t h a t a l l member banks f a m i l i a r i z e t h e i r s t a f f s with the i n s t r u c t i o n s and r e g u l a t i o n s h e r e i n , i n order that they may obtain the g r e a t e s t b e n e f i t of the f a c i l i t i e s provided f o r t h e i r u s e . "Additional copies of t h i s c i r c u l a r w i l l be f u r n i s h e d on r e q u e s t . "Respectfully, "D. C. Biggs, "Governor. "Cash Items Received "The Federal Reserve Bank of S t . Louis and i t s branches w i l l r e c e i v e for c o l l e c t i o n and c r e d i t a t p a r such checks payable i n the United S t a t e s a s can be c o l l e c t e d a t p a r , as per l i s t published semi-annually by the Federal Reserve Board and amended by the monthly supplements t h e r e t o , and checks and warrants drawn on the t r e a s u r e r of the United S t a t e s . "Exceptions to t h i s g e n e r a l r u l e a r e as follows: " ( l ) Checks which have been p r o t e s t e d and are reforwarded f o r payment. "(2) Checks drawn by the sending bank on i t s account with a correspondent l o c a t e d elsewhere than i n the c i t y i n which the r e c e i v i n g Federal Reserve Bank or branch i s l o c a t e d , u n l e s s s p e c i a l a r r a n g e ments have been made to charge such d r a f t s immediately to the drawee bank's r e s e r v e account. "(3) attached. Checks with pa ss books or other documents "Items of the kinds mentioned in the l i s t of exceptions noted, as well as any other items which banks are not a u t h o r i z e d by t h i s c i r c u l a r to l i s t as cash items w i l l be charged to the account of any bank l i s t i n g them a s cash, and entered f o r c o l l e c t i o n and proceeds c r e d i t e d only when a c t u a l l y paid.. "Checks and Warrants on the Treasurer of the United S t a t e s . r- 22 w X-6770 11 Checks and warrants drawn on the t r e a s u r e r of the United S t a t e s w i l l "be received f o r immediate c r e d i t s u b j e c t to examination and f i n a l payment by the Treasurer. "The t r e a s u r e r of the United S t a t e s r e s e r v e s the u s u a l r i g h t of the drawee t o examine, when received, a l l Government warrants and checks and to r e f u s e payment thereon, and the Federal Reserve Bank of S t . Louis and i t s "branches r i l l handle such items i n accordance with the p r o v i s i o n s of Treasury Department, Circular Ho. 176, as amended and supplemented May 15, 1922. "The t r e a s u r e r w i l l r e t u r n immediately any warrant or check, payment of which i s r e f u s e d on account of forged s i g n a t u r e of drawer, i n s u f f i c i e n t funds, s t o p page of payment, or any m a t e r i a l d e f e c t discovered upon f i r s t examination. Such items w i l l "be charged "back and r e t u r n e d to the d e p o s i t i n g tank f o r immediate c r e d i t . "In the event t h a t any warrant or check which has been p a i d by the t r e a s u r e r i s subsequently found to bear a forged endorsement, or to have been r a i s e d , or to bear any .other m a t e r i a l a l t e r a t i o n or d e f e c t which was not discoverable upon f i r s t examination, a photographic copy of the warrant or check m i l be sent to the d e p o s i t i n g bank, but i t s account w i l l not be charged pending adjustment. " I n the cases of warrants or checks b e a r i n g a forged s i g n a t u r e of the drawer, not discovered upon f i r s t examination by the t r e a s u r e r , and in other cases where the t r e a s u r e r ' s r i g h t to reclaim i s i n q u e s t i o n , the warrants or checks w i l l not be charged to the account of the d e p o s i t i n g bank but w i l l be r e t u r n e d to i t as c o l l e c t i o n items f o r adjustment. " P r e p a r a t i o n of Cash L e t t e r s . " I n l i s t i n g checks on cash l e t t e r s the name and l o c a t i o n of the drawee should appear opposite each amount. The numerical system of the American Bankers A s s o c i a t i o n may be used to advantage i n t h i s connection. "In order t h a t checks may be economically and e x p e d i t i o u s l y handled and the quickest a v a i l a b i l i t y given, i t i s necessary t h a t depositing banks s o r t t h e i r checks according to the d i v i s i o n s of the time schedule, forwarding s e p a r a t e l e t t e r s f o r — " ! Checks s u b j e c t to immediate c r e d i t . 1 " 1 Checks s u b j e c t to one day d e f e r r e d c r e d i t . 1 - 23 - X-6770 "'Checks s u b j e c t t o two days deferred, c r e d i t . ' " 1 Checks s u b j e c t to t h r e e days d e f e r r e d c r e d i t , ' e t c . " L e t t e r s containing checks of v a r i o u s a v a i l a b i l i t i e s w i l l be d e f e r r e d f o r the time necessary to c o l l e c t "those l o n g e s t outstanding i n accordance with the time schedule. More than one l e t t e r may "be enclosed i n one envelope, b u t as cash l e t t e r s w i l l be accounted f o r s e p a r a t e l y , d e p o s i t i n g banks a r e requested not to show r e c a p i t u l a t i o n of the v a r i o u s t o t a l s . "All cash l e t t e r s f o r d e f e r r e d c r e d i t w i l l be acknowledged by the Federal Reserve Bank of S t . Louis and i t s branches. The acknowledgment w i l l be i n form s i m i l a r t o the i l l u s t r a t i o n below and w i l l show the date on which proceeds w i l l be a v a i l a b l e . "Federal Reserve Bank: of S t . Louis "October 30, 1922. "Advice " F i r s t National Bank "Blanktown, S t a t e "Receipt i s acknowledged of j o u r cash l e t t e r dated 10—28—22. "Total $1220.00 which w i l l be a v a i l able and c r e d i t e d to your Reserve Amount "Account on Hov. 3, 1922. $1220.00 "Subject to f i n a l payment. "Hours a t which Checks w i l l be r e c e i v e d . "Checks may be deposited with the Federal Reserve Bank of S t . Louis and i t s branches f o r handling on the c u r r e n t day u n t i l 2 p.m. d a i l y , except Saturday. On Saturday checks w i l l be received by the Federal Reserve Bank of S t . Louis and i t s branches a t Memphis u n t i l 12 o ' c l o c k noon and by i t s branches a t L i t t l e Rock and L o u i s v i l l e u n t i l 1 p.m. "Checks received l a t e r than the p r e s c r i b e d hours w i l l not e n t e r i n t o the current day's work, but w i l l be handled i n a l l r e s p e c t s as i f received on the succeeding b u s i n e s s day w i t h i n the hours named. "Uniform I n s t r u c t i o n s . "All checks received or forwarded by the Federal Reserve Banks and branches w i l l be handled s u b j e c t to t%e following uniform i n s t r u c t i o n s : "1. Do not p r o t e s t items of $10.00 or l e s s . j 4_f5 24 — X-5770 "2. P r o t e s t items of $10.01 or over except those t e a r i n g on t h e i r face t h i s stamp 'ITo Pro 4 - 4 ' or a s i m i l a r symbol containing the A. B. A. number of a preceding bank endorser, "3. Telegraph non-payment of a l l items $500,00 and over, giving reason f o r non-payment and quoting the name of the preceding hank endorser. "Checks w i l l "be handled only i n accordance with these uniform i n s t r u c t i o n s and any other or s p e c i a l i n s t r u c t i o n s Trill he d i s r e g a r d e d . I f d e p o s i t i n g hanks wish any checks handled otherwise than under the ahove i n s t r u c t i o n s , i t w i l l be necessary to forward such checks f o r c o l l e c t i o n and c r e d i t when p a i d , i n which case the Federal Reserve Bank of S t . Louis, and i t s branches n i l l follow the i n s t r u c t i o n s contained i n the l e t t e r of t r a n s m i t t a l from the forwarding bank. "The Federal Reserve Bank of S t . Louis and i t s branches w i l l absorb t e l e g r a p h i c costs i n connection with wiring advice of non-payment of items of $500.00 or over. A l l other t e l e g r a p h i c costs i n connection with obtaining and advising payment or non-payment, or any o t h e r information or i n s t r u c t i o n s a t the request of the d e p o s i t i n g member bank, w i l l be charged to the r e q u e s t i n g member bank. "Endorsements. "All checks forwarded to the Federal Reserve Banks and branches must bear the u n q u a l i f i e d endorsement of the forwarding bank, d i r e c t i n g payment to be made to any bank or banker, or to the order of t h e Federal Reserve Bank or branch addressed, c a r r y i n g a guarantee of a l l p r i o r endorsements and bearing the date and American Bankers A s s o c i a t i o n t r a n s i t number of t h e endorsing bank. "In the i n t e r e s t of good banking, the i n d i r e c t r o u t ing of checks '.'ill be discouraged and member banks w i l l not be p e r m i t t e d to deposit with the Federal Reserve Bank of S t . Louis or i t s branches, or send d i r e c t to other Federal Reserve Banks or branches f o r t h e i r account, any checks payable i n other Federal Reserve d i s t r i c t s , which bear the endorsement of banks l o c a t e d i n o t h e r Federal Reserve d i s t r i c t s , in cases where i t i s evident t h a t such checks have been routed i n d i r e c t l y . "When Proceeds of Checks Trill be a v a i l a b l e . "Proceeds of checks deposited with the Federal - 25 ~ X-6770 He serve Bank of S t . Louis or one of i t s "branches w i l l "be a v a i l a b l e f o r c r e d i t to the accounts of d e p o s i t i n g banks a f t e r the lapse of the time noted i n the c u r r e n t time schedule. "In order to obtain immediate c r e d i t f o r checks s u b j e c t to immediate a v a i l a b i l i t y , they must be i n the hands of the Federal Reserve Bank of S t . Louis or i t s branches, by 10 a.m. d a i l y , except Saturday. On Saturday checks s u b j e c t to immediate a v a i l a b i l i t y , they must be i n the hands of the Federal Reserve Bank of S t . Louis by 8:30 a.m. and i n the hands of i t s branches a t L i t t l e Rock, L o u i s v i l l e and Memphis by 9:30 a.m. Credit f o r checks s u b j e c t to immediate a v a i l a b i l i t y received a f t e r t h e hours mentioned w i l l be d e f e r r e d one business day. "The p r o v i s i o n s of the preceding paragraph w i l l not apply to d r a f t s on the Federal Reserve Bank of S t . Louis or i t s branches deposited a t the o f f i c e on which they are drawn. Such items w i l l be received f o r immediate c r e d i t up to the closing time as s p e c i f i e d on Page 3 of t h i s c i r c u l a r under the caption 'Hours a t which Checks w i l l be Received. 1 "Direct Routing. "Member banks w i l l be permitted under c e r t a i n cond i t i o n s and r e g u l a t i o n s , to route checks payable i n other Federal Reserve d i s t r i c t s d i r e c t t o the Federal Reserve banks and branches of the d i s t r i c t s i n which the items a r e payable, f o r the account of the Federal Reserve Bank of S t . Louis or i t s branches, provided, permission to do so i s f i r s t obtained from the Federal Reserve Bank of S t . Louis. Member banks d e s i r i n g to a v a i l themselves of t h i s p r i v i l e g e w i l l w r i t e the Federal Reserve Bank of S t . Louis f o r permission ( i f permission has not a l r e a d y been obtained) and, i f g r a n t e d , they w i l l be advised i n a l e t t e r g i v i n g f u l l i n f o r m a t i o n and complete i n s t r u c t i o n s . "The Federal Reserve Bank of S t . Louis r e s e r v e s the r i g h t to r e q u i r e d i r e c t routing to other Federal Reserve Banks and branches, when, i n i t s judgment, the number or amount of checks handled by banks may warr a n t such a c t i o n on i t s p a r t . "Conditions under which Checks w i l l be Handled. "Every bank sending checks or other cash items t o the Federal Reserve Bank of St. Louis or i t s branches, or to another Federal Reserve Bank d i r e c t , 41 *y 1 - X-6770 26 - f o r t h e i r account, w i l l "be understood to have agreed to the terms and conditions of t h i s c i r c u l a r and to have agreed t h a t i n r e c e i v i n g such items the Federal Reserve hanks w i l l a c t only as the c o l l e c t i n g agent of the sending ba:.ik; t h a t the Federal Reserve "banks w i l l he responsible only f o r due d i l i g e n c e and care i n forwarding or p r e s e n t i n g such items; t h a t the Federal Reserve "banks are a u t h o r i z e d to p r e s e n t or send such items f o r payment i n cash or "bank d r a f t , d i r e c t to the "bank on which they a r e drawn, or i n t h e i r d i s c r e t i o n to forward them to another agent with a u t h o r i t y to p r e s e n t or send them f o r payment i n cash or "bank d r a f t , d i r e c t to the "bank on which they a r e drawn; and t h a t the Federal Reserve "banks a r e a u t h o r i z e d to charge "back the amount of any items (whether or not the items themselves can be r e t u r n e d ) f o r which payment e i t h e r i n cash or i n the proceeds of bank d r a f t has not a c t u a l l y been r e c e i v e d . " This i s an action a t law, and i f the f i n d i n g s of f a c t made by the t r i a l court are supported by s u b s t a n t i a l evidence, t h i s court w i l l not i n t e r f e r e on appeal. This i s a w e l l - e s t a b l i s h e d r u l e of law and procedure i n t h i s s t a t e , as i a shown by r e f e r e n c e to the following a u t h o r i t i e s ; Walther v. Mull, 233 Mo. 104, 134 s . !?. 993; Green v Whaley, 271 Mo. 636, 197 S. ¥ . 355; Holt v . S t . Louis-San Francisco R. Co. (Mo.), 245 S. ¥ . 1054; Abrams v . Unknown Heirs of Rice, 317 Mo. 216, 295 S. W. 83. And i n determining whether there i s such s u b s t a n t i a l evidence, every reasonable i n f e r e n c e i n behalf of the s u c c e s s f u l p a r t y , which can be derived from the evidence heard, must be indulged f o r h i s benefit. (Eowyer v. Bradford, 162 Mo. App. 138, 144 S. W. 145.) Aside from any question of agency i n t h i s case, we t h i n k the judgment of the t r i a l court vras f o r the r i g h t p a r t y , because p l a i n t i f f i s estopped from a s s e r t i n g i t s r i g h t to r e cover t h i s money because the record i n t h i s case j u s t i f i e s the - 27 ~ X-6770 conclusion t h a t p l a i n t i f f knew or should have known a l l the f a c t s with r e s p e c t to the r e l a t i o n t h a t e x i s t e d "between defendant and the Holland Bank a t the time p l a i n t i f f and i t s o f f i c e r s a u t h o r i z e d the payment of t h i s money to the defendant. P r i o r to the date of these payments to defendant, no request was made "by the p l a i n t i f f to see any of the defendant 1 s f i l e s or correspondence with r e s p e c t to the r e l a t i o n s h i p e x i s t i n g "between defendant and the Holland Bank The p l a i n t i f f and i t s o f f i c e r s were f a m i l i a r with the o p e r a t i o n of the arrangement and with the forms used i n i t s operation, and p l a i n t i f f had i n i t s own f i l e s the correspondence e s t a b l i s h i n g the arrangement• When p l a i n t i f f p a i d the money to defendant, i t s o f - f i c e r s t e s t i f i e d i t was done "because they were a f r a i d a run would "be made upon the p l a i n t i f f bank; t h a t there were rumors i n the neighborhood and community t o the e f f e c t t h a t p l a i n t i f f had f a i l e d to pay defendant what i t owed, and to avoid these rumors they p a i d p l a i n t i f f the sum i n controversy. duress, This was not a payment under Hor was i t a payment without knowledge of the f a c t s . In order to recover back money so p a i d , i t must appear not only t h a t the demand was i l l e g a l , but p l a i n t i f f must show duress, and t h e r e can be no duress u n l e s s the p r e s u r e or c o n t r a i n t was such as to v i r t u a l l y take away the f r e e agency of the p l a i n t i f f • Defendant p r a c t i c e d no f r a u d upon p l a i n t i f f . Whether t h e Holland Bank was the agent of defendant or not matters l i t t l e i n t h i s case, i n our opinion, f o r p l a i n t i f f paid the money demanded by defendant v o l u n t a r i l y , or i - 28 - X-6770 under such circumstances as not to amount to d u r e s s , and t h e r e f o r e other questions r a i s e d on t h i s appeal "become of l i t t l e importance. I t follows, t h e r e f o r e * t h a t the judgment should he affirmed* Haid, P. J , , and Beckerj J . , contiur; S. G. Hipper JU'TrB. STATE OF MISSOURI - S e t : I , Hazel B. English, Clerk of the S t . Louis Court of Appeals, do hereby c e r t i f y t h a t the foregoing i s a true copy of the opinion d e l i v e r e d by t h i s court in the foregoing e n t i t l e d cause on the 2nd day of December . 19 30, as f u l l y as the same appears on f i l e i n my o f f i c e . I IT TESTIMONY WHE.HS0F, I have hereunto s e t my hand and A f f i x e d the s e a l of s a i d Court, a t o f f i c e , i n the City, of Sti Louis this 3rd 430 day of December 1930. HAZEL B. ENGLISH Clerk.
@FedFRASER