charge, but the convenience of commission or court is not the measure of justice.

We are unable to find any error in the conclusions of the trial judges, and their order is, therefore,

Affirmed.

HANOVER NATIONAL BANK OF NEW YORK v. SUDDATH, RECEIVER OF AMERICAN NATIONAL BANK OF ABILENE.

ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND

CIRCUIT.

No. 12. Argued April 20, 1909.-Decided November 29, 1909.

When a bank refuses to do the particular thing requested with securities delivered to it for that purpose only, it is its duty to return the securities and no general lien in its favor attaches to them. The fact that a bank has in its possession securities which were sent to it for a particular purpose and which it is its duty to return to the sender, does not justify its retaining them for any other purpose under a banker's agreement giving it a general lien on all securities deposited by the sender.

A banker's agreement giving a general lien on securities deposited by its correspondent will not be construed so as to give it a broad meaning beyond its evident scope and in conflict with the precepts of duty, good faith and confidence necessary for commercial transactions; nor will a printed form prepared by the banker be so extended by the construction of any ambiguous language.

In this case it was held that the retention by a bank of securities for a purpose different from that for which they were sent by its correspondent could not be predicated on the consent of the latter, and that inaction of the correspondent could not be construed as consent.

149 Fed. Rep. 127, affirmed.

THE facts are stated in the opinion.

215 U. S.

Argument for Defendant in Error.

Mr. Percy S. Dudley for plaintiff in error:

Plaintiff in error had the right to retain the notes under the express terms of the collateral agreement. Auten v. Bank, 174 U. S. 125, 145; Hiscock v. Varick Bank, 206 U. S. 28, and cases cited. As to scope of words "or otherwise" see Farr v. Nichols, 132 N. Y. 327. As bailee of the notes the Hanover Bank had a lien on them. Benjamin on Sales, § 2, Am. note. As to construction of the agreement, see Gillet v. Bank, 160 N. Y. 549; Sattler v. Hallock, 160 N. Y. 291, 297; Church v. Hubbart, 2 Cranch, 233; Hutchinson v. Manhattan Co., 150 N. Y. 250; 21 Am. & Eng. Ency. Law, 2d ed., 1016. Plaintiff in error had the right to retain the notes by virtue of its bankers' lien. 1 Daniel's Neg. Inst., 5th ed., 342; 1 Morse on Banks, 4th ed., § 324; Reynes v. Dumont, 130 U. S. 354, 390; Biebinger v. Continental Bank, 99 U. S. 143; Bank of Montreal v. White, 154 U. S. 660; Petrie v. Myers, 54 How. Pr. 513, distinguished, and see Armstrong v. Chemical Bank, 41 Fed. Rep. 234; Continental Bank v. Weems, 60 Texas, 489.

The receiver of the Abilene Bank took the assets subject to the claim of the Hanover Bank and obligation existing when he took possession. Scott v. Armstrong, 146 U. S. 499; Rankin v. City Nat. Bank, 208 U. S. 541.

The Hanover Bank had the consent of the Abilene Bank to retain the notes. Mailing the letters was a delivery and had the Abilene Bank mailed cash it would have been subject to lien of Hanover Bank although not delivered until after the failure; it is so also as to these notes. McDonald v. Chemical Nat. Bank, 174 U. S. 610; Ruggles v. Am. Cent. Ins. Co., 114 N. Y. 415.

Mr. Edward B. Whitney, with whom Mr. Francis F. Oldham was on the brief, for defendant in error:

The Hanover Bank had no general lien on the notes involved. Brandao v. Barnett, 12 Cl. & Fin. 787; Story on Agency, 381; 1 Morse on Banks, 4th ed., 597; Bank of Met.

v. N. E. Bank, 1 How. 234, 239; Leese v. Martin, L. R. 17 Eq. 224, 235; Reynes v. Dumont, 130 U. S. 354. These and other cases all hold that where securities are sent for a specific purpose the recipient cannot hold them for any other purpose but must return them. 1 Jones on Liens, 2d ed., 244; Lucas v. Dorrien, 7 Taunt. 278; Petrie v. Myers, 54 How. Pr. 513; Bank of Montreal v. White, 154 U. S. 660. The bank becomes a trustee to apply the securities as directed by the sender. Libby v. Hopkins, 104 U. S. 309.

The Hanover Bank had no lien on the notes under the agreement and there was no other agreement or consent under which that bank could hold them. There was no proposal or acceptance as to the collateral loan and payment of overdraft. 9 Cyc. 293; Meyrell v. Surtees, 25 L. J. Ch. 257, 262; Scott v. Armstrong, 146 U. S. 511.

MR. JUSTICE WHITE delivered the opinion of the court.

The predecessor of the present receiver of the American National Bank of Abilene, Texas, sued, in April, 1905, to recover from the Hanover National Bank of New York four promissory notes or their value.

We shall refer to the corporations as the Abilene Bank and the Hanover Bank.

At the trial, under instruction, there was verdict for the Hanover Bank, and the judgment thereon was reversed. Van Zandt v. Hanover Nat. Bank, 149 Fed. Rep. 127. In conformity to the opinion of the Circuit Court of Appeals, on the new trial a verdict was directed in favor of the receiver, and to reverse the affirmance of that judgment (Hanover Nat. Bank v. Suddath, 153 Fed. Rep. 1021) this writ of error is prosecuted.

The facts are these: Prior to November, 1903, the Abilene Bank was a correspondent of the Hanover Bank, and had an account with the latter. The credit of this account was principally made up by the proceeds arising from the rediscount

ing by the Hanover Bank of commercial paper for account of the Abilene Bank. On November 27, 1903, the Abilene Bank signed an agreement concerning the right of the Hanover Bank, under conditions stated, to attribute to the payment of debts due it by the Abilene Bank securities in its hands belonging to the Abilene Bank. In January, 1905, the Hanover Bank was contingently responsible for commercial paper, aggregating probably sixteen or seventeen thousand dollars, which it had rediscounted for the Abilene Bank, and upon which the latter bank was ultimately liable.

On January 9, 1905, the Abilene Bank transmitted by mail to the Hanover Bank a note of the Hayden Grocery Company for $2,000, drawn to the order of the Abilene Bank and by it indorsed, the letter stating that the note was sent for discount and credit. On the next day-the tenth-the Abilene Bank also transmitted by mail a note drawn by R. H. Logan and W. R. Logan to its order, and by it indorsed likewise, with a statement that it was sent for discount and credit. On the twelfth of the same month the Abilene Bank again transmitted to the Hanover Bank for discount and credit two other notes, one drawn by L. W. Hollis for $3,500, and indorsed, as were the previous notes and a note of C. B. and W. F. Scarborough, for $1,500 likewise so indorsed, the letter of transmittal yet again stating that they were sent for discount and credit.

The Hayden Grocery Company and the Logan notes, forwarded on the ninth and tenth of January, reached the Hanover Bank on the fourteenth; and on that day it telegraphed to the Abilene Bank, declining to discount the notes, and by a second telegram said: "Referring to previous dispatch transfer or ship currency," which, according to the counsel for the Hanover Bank, meant to call upon the Abilene Bank either to transfer a credit from some other bank or ship currency direct. It is not shown that any reply, either by telegram or letter, was made to the messages thus sent on the fourteenth. The notes forwarded on the twelfth reached the Hanover Bank on the sixteenth, and the latter at once teleVOL. CCXV-8

graphed, "Not satisfactory," and confirmed the telegram by a letter, saying: "We are not discounting inclosures for you, but hold same as collateral to your indebtedness to us." The Abilene Bank did not reply by telegram but on the same day wrote to the Hanover Bank as follows:

"We have just received your wire. The rediscounts we sent you were mostly renewals and in every instance 'good as gold.'

"Since the drop in cotton, collections are at a standstill, and our clients expect us to stay with them, and we are obliged to ask the same indulgence from our correspondents. "Should you prefer, we will send our B/P with collaterals attached.

"We trust you will accord us the leniency asked for."

On the morning of January 17, 1905, there stood on the books of the Hanover Bank to the credit of the Abilene Bank the sum of $616.15. On that day a check on the Hanover Bank, dated January 11, 1905, drawn by the Abilene Bank for the sum of $3,825.45, payable to the New York Life Insurance Company, as also some small checks, passed through the clearing house. Upon attention being directed to the overdraft which thereby resulted a telegram was sent to the Abilene Bank, referring to the previous letters and telegrams, and asking that bank what it had done. No reply having been received before the close of business on that day, the vice-president of the Hanover Bank, after examining the written agreement to which we have previously alluded, allowed the overdraft to stand, and to cover the same made an entry of a loan of $3,500 to the Abilene Bank, which was placed to the credit of that bank, and after absorbing the overdraft, left to its credit the sum of $63.74. On the same day the Hanover Bank wrote to the Abilene Bank, saying: "As your account showed overdrawn to-day over $3,000, have made you a temporary loan of $3,500 against collateral in our hands." On the next day (January 18) the Abilene Bank closed its doors.