1. O'Brien v. Grant, 146 N. Y. 163.

2. Relation of Principal and Agent. — O'Brien . Grant, 146 N. Y. 163. This case arose upon the right of the clearing-house member to pay the checks on the bank represented, and reimburse itself out of collateral securities, notwithstanding the insolvency of the latter, in accordance with section 25 cf the constitution of the Clearing-House Association, providing that whenever exchanges shall have been made at the clearing house by previous arrangements between members of the association through one of their number, and banks in the city and vicinity who are not members, the receiving bank at the clearing house shall in no case discontinue the arrangement without giving previous notice, which notice shall not take effect until the exchanges of the morning following the receipt of such notice shall have been completed." Acting under this provision, the clearing-house bank paid the checks on the non-member presented through the clearing house the morning after the required notice had been given, and after the fact of insolvency of the non-member became notorious, and sought to apply collateral securities deposited by such non-member in its own reimbursement, the receiver of the insolvent bank, subsequently appointed, denying the right. For the plaintiffs," said Gray, J., delivering the opinion of the court," it is argued that, as between the Madison Square Bank and the Saint Nicholas Bank, the relation simply of principal and agent was created, and, therefore, upon the insolvency of the former becoming known, on the morning of the day when clearances of the previous day's checks were to be effected, that the latter bank was not entitled to pay checks drawn upon the former bank. But I think to view the relation as such is altogether incorrect and unwarranted by the facts. In a certain and limited sense the Saint Nicholas Bank, of course, would act as an agent in clearing and paying checks drawn upon the Madison Square Bank. That, however, was a mere feature of that larger contractual relation into which the two banks had entered with the Clearing-House Association, and which characterized their dealings. The agreement of January, 1891 [by which the Saint Nicholas Bank undertook to act as clearing-house agent for the Madison Square Bank], 6 C. of L.-9

was one to which there were three parties, each of which was moved to enter into it by a legitimate consideration."

3. Relations of Member Bank and Drawers of Checks on Non-member Bank. Grant v. MacNutt, 12 Misc. Rep. (N. Y. C. Pl.) 20. In this case the defendant drew her check for four hundred and fifty dollars on the Madison Square Bank, where she had an account, payable to her own order, and indorsed it, receiving the amount called for thereby from the Hoffman House, to the credit of whose account the check was deposited in the Seaboard National Bank, and paid to the latter the same day by the Saint Nicholas Bank as clearing-house agent for the Madison Square Bank. On the day following, the check was sent by the Saint Nicholas Bank to the Madison Square Bank for collection, but was not presented for payment, owing to the fact that the Madison Square Bank was on that day placed in the hands of the State Banking Department as insolvent. Notice of the fact that the check was unpaid was sent to the defendant by the Saint Nicholas Bank about three weeks thereafter, and upon her subsequent failure to pay the amount suit was brought to recover the amount, and a verdict for the plaintiff rendered, subject to a review of exceptions at the General Term. It appeared in evidence that upon the day when the check in suit was drawn the defendant's account with the Madison Square Bank had a credit balance of only $440.63, an amount insufficient to meet the check, and that the Madison Square Bank had suspended payment within the time allowable to a holder for presentment, according to the rules of commercial law. After disposing of the objection that prompt notice of dishonor had not been given to the defendant, by the statement that the facts of the case dispensed with the operation of the rule, the court said: "The only other point raised by the defendant and presented in support of the exception to the denial of the motion for dismissal of the complaint is that the Saint Nicholas Bank, by reason of the contract made with the Madison Square Bank to pay its depositors' checks when presented at the clearing house, practically stood in the shoes of the latter, and that the most which it could demand from the defendant upon this check would be the differVolume VI.

ence between her deposit with the Madison Square Bank and the amount paid. This position is not tenable. The evidence utterly fails to support the assumption that by the contract between the two banks the Saint Nicholas Bank assumed the relation held by the Madison Square Bank to its depositors, or had any claim to funds on deposit with the latter, otherwise than as holder of checks drawn against it, which checks in no way effected an assignment to the holder of the depositor's funds in bank."

1. No Special or Peculiar Obligations Toward Drawers of Checks on Non-member Bank. The mere fact that one bank undertakes to act as the agent of another in the clearing house does not change its relation to the checks on the latter presented to it through the clearing house from that of a simple holder for value, nor impose any special or peculiar obligations upon it toward the drawers of such checks or intervening parties. Grant v. MacNutt, 12 Misc. Rep. (N. Y. C. Pl.) 20.

Transfer by Stamp Indorsement, "Paid through Clearing House."— A bank, receiving through the clearing house checks on another bank which it has assumed to pay, becomes the legal holder of such checks, and an indorsement by stamp, "Paid through clearing house," with the name of the bank sending it to the clearing house, is sufficient to transfer title to the bank receiving it. Zinner v. National Bank, 54 Ill. App. 602.

2. Insolvency of Non-member - Application of Collaterals. O'Brien v. Grant, 146 N. Y. 163. In this case it appeared that the Madison Square Bank and the Saint Nicholas Bank entered into an agreement by which the latter, which was a member of the New York Clearing-House Association, agreed to act as agent of the former in handling its checks through the clearing house. By the constitution of said association it was provided that whenever exchanges were made through the clearing house pursuant to an arrangement between members through one of them, and banks not members, the receiving bank at the clearing house should in no case discontinue the arrangement without giving previous notice, which notice should not, however, take effect until the exchanges of the morning following the receipt thereof should have been completed. On August 8, 1893, the Saint Nicholas Bank desired to terminate its arrangement with the Madison Square Bank because of the failure of the latter in the matter of maintaining its fund of collateral security to the stipulated amount, and gave the notice required by the constitution of the Clearing-House Association, which was duly served upon the mem

bers thereof. At this time the Madison Square Bank was insolvent, though the fact did not become known to the officers of the Saint Nicholas Bank until the next day, the morning of the 9th, before exchanges were made. Notwithstanding this, however, the Saint Nicholas Bank paid all checks presented through the clearing house on the Madison Square Bank, where the drawers had funds to their credit sufficient to meet them. In an action by the receivers of the Madison Square Bank to recover the securities deposited with the Saint Nicholas Bank, in which the defense was the right of the latter to apply them in payment of the checks drawn on the former, and paid by the former, pursuant to the provision of the constitution of the clearing house, even after notice of the insolvency of the former was known, it was contended on the part of the plaintiffs that such provision was void for illegality, as in conflict with a provision of the State Corporation Law (§ 48, c. 687, Laws of 1892), forbidding the assignment or transfer of property by an insolvent banking corporation with the view of giving a creditor a preference. But the court held that the insolvency of the Madison Square Bank did not excuse the Saint Nicholas Bank from the performance of its obligations to the clearing-house banks, and that being so, it was entitled to hold and apply the securities in repayment of the amount so paid by it. "The plaintiffs say," said Gray, J., delivering the opinion of the court, "that the effect is to give an illegal preference under the statute; which, it is meant, would be accomplished by the payment of checks after the insolvency of the nonmember bank is known, and by the use by the clearing bank of the deposited securities in reimbursement thereof. To that I cannot agree." Then, after quoting the provision of the statute above referred to, said: This prevision has no application to such a case as this; where at the time when the arrangement was made with the Saint Nicholas Bank, the Madison Square Bank was solvent. It would be absurd to speak of the agreement of January, 1891 [when the Saint Nicholas Bank undertook to act as clearing-house agent for the Madison Square Bank], as having been made in contemplation of future insolvency, or with the intent to give a preference to any creditor of the Madison Square Bank. If there is any presumption respecting the business engagements of going concerns, it is that they will be fulfilled; and, when security is exacted, it is as a business precaution to compel exact and prompt performance, rather than a provision in contemplation of insolvency. If it were otherwise, business transactions which have

CLERGY.

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for their subject the accommodation of one corporation by another, in the loan of money or the extension of credit, would be seriously embarrassed, if not checked. The statute recognizes the right of a banking corporation to transfer promissory notes, or evidences of debt, received in the transaction of its ordinary business, to purchasers for a valuable consideration, and it may lawfully do so in pledge to secure its creditor when it is in a condition of solvency. The deposit of securities made by the Madison Square Bank with the Saint Nicholas Bank constituted a lawful pledge of its assets, to protect the former against any possible loss in undertaking to clear and pay all checks drawn upon the latter and sent through the clearing house. The invalidity of a transfer or assignment of property by a banking corporation under the banking law is where it has been made while in a condition of insolvency, or in contemplation of it, and with the intent of giving a preference. The intent must exist and be inferable to vitiate the transaction."

1. Clerical Assistance. A statute allowed the secretary of state two thousand dollars for clerical assistance. In construing the term clerical assistance," the court, in Beam v. Jennings, 96 N. Car. 82, said: "By clerical assistance is meant, not official assistance, but such as aids in the execution of official authority by the secretary himself; such as writing letters, making entries of record, copying grants, and the like service. The word elerical, as employed in the statute to designate a kind of help, has no very definite meaning is not a very apt word for the purpose intended but it is obvious the legislature did not intend to extend its meaning so as to imply official aid; if so, it would have desig

nated the person to render such aid as deputy, assistant, clerk, or by some such designation, with a term of office, and required the incumbent to take an oath of office. Nor did it intend that any person whom the secretary might employ to render such assistance should have authority to use the seal of the department of state, and certify copies of records, grants, and other important documents and papers deposited and kept in the secretary's office, under his name, written by such person or otherwise. It cannot be presumed or inferred that the legislature contemplated so loose and hazardous a practice. It would practically dispense with official sanction."

Clerical Service. In Post v. U. S., 27 Ct. of Cl., 254, it is said that the term "clerical service strictly means a service that involves writing. Clerical Errors. (See the title AMENDMENTS, I ENCYC. OF PL. AND PR., 458, for full treatment.) In Marsh v. Nichols, 128 U. S. 615, the court said: "A clerical error, as its designation imports, is an error of a clerk or a subordinate officer in transcribing or entering an official proceeding ordered by another."

2. Bouvier's Law Dict., quoted in People v. Fire Com'rs, 73 N. Y. 442, in which case it was held that the terra clerk, in a statute providing for the appointment and removal of clerks, did not include every employee and subordinate of the department.

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Book Entries. (See also the title DocuMENTARY EVIDENCE.) · In Sickles v. Mather, 20 Wend. (N. Y.) 72, it was held that an employee who attended to the sales no further than merely delivering goods manufactured, and keeping a memorandum of the delivery for a temporary purpose, was not a clerk within the meaning of the rule requiring proof of the original entries.

Volume VI.