ROGERS, Circuit Judge. [1] This is an appeal from an order dismissing a reclamation claim of copartners doing business as international bankers and maintaining a banking house in the city of Budapest, Hungary, under the firm name of N. Latzko & A. Popper, and on appeals in such a proceeding this court reviews both findings of fact and conclusions of law.

On June 15, 1923, an involuntary petition in bankruptcy was filed in the United States District Court for the Southern District of New York, praying that the firm of Knauth, Nachod & Kuhne be adjudged bankrupt and they are hereinafter referred to as the bankrupts. A temporary receiver was appointed and qualified, and the receivership was extended for each individual member of the copartnership, and the receiver entered into possession of the property of the alleged bankrupts.

The bankrupts were engaged in business as international bankers and maintained a banking house in the city of New York. They acted as the New York correspondents of the Budapest banking house of N. Latzko & A. Popper, the petitioners. The nature of the dealings between the two banking houses involved the transmission of funds by the Budapest house to the New York house, or the delivery by the Budapest house to the New York house of evidences of debt which were collected by the latter and placed to the credit of the former, from which account payments were made from time to time by the New York house upon order or request of the Budapest house.

There was no express agreement that evidences of debt, so forwarded to the bankrupts, were to be credited upon their receipt and before, collection as a deposit of cash. Neither was there an express agreement that upon the receipt of such evidences of debt by the New York house the Budapest house should have the right to draw against the fund prior to its collection. But there was no agreement that the Budapest firm could not draw against such evidences of debt before their collection. They simply did not as a matter of fact do it. The allegations in the petition make this clear and are found in the margin. 1

1 “Fifth-That petitioners had no agreement with said K., N. & K. (the bankrupts) to treat evidences of debt deposited with said K., N. & K. for collection or otherwise, as a deposit of cash, nor that an immediate credit should be given by said K., N. & K. to petitioners upon the receipt of such evidences of debt.

"Sixth-That petitioners did not treat evi

In the determination of the questions which are involved it is important to keep in mind the date on which the trustee of a bankrupt's estate becomes vested with the title to the estate. Section 70a of the Bankruptcy Act (Comp. St. § 9654) provides that "the trustee of the estate of a bankrupt, upon his appointment and qualification shall in turn be vested by operation of law' with the title of the bankrupt, as of the date he was adjudged a bankrupt; (5) Property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him.

And Remington on Bankruptcy (3d Ed.) vol. 3, § 1191, states that the above section of the Bankruptcy Act vests all the property in the trustee, which, prior to the filing of the petition, the bankrupt could by any means have transferred, or which might have been levied upon and sold under judicial process against him.

In Everett v. Judson, 228 U. S. 474, 479, 33 S. Ct. 568, 569 (57 L. Ed. 927, 46 L. R. A. [N. S.] 154), the court said: "We think that the purpose of the law was to fix the line of cleavage with reference to the condition of the bankrupt estate as of the time at which the petition was filed and that the property which vests in the trustee at the time of adjudication is that which the bankrupt owned at the time of the filing of the petition." And this doctrine is reasserted in White v. Stump, 266 U. S. 310, 313, 45 S. Ct. 103, 104 (69 L. Ed. 301). In the case last cited, referring to the date when the petition is filed, the court said: "The bankrupt's right to control and dispose of the estate terminates as of that time, save only as to 'property which is exempt.""

The petition for reclamation in this case alleged that the involuntary petition in bankruptcy was filed on June 15, 1923, at 10:30 p. m., with the District Judge, and that on the same day the temporary receiver was appointed, and that on June 16th he duly qualified, filed his official bond, and entered into possession of the property of the alleged bankrupts. It then alleged that on June 16,

dences of debt deposited with said K., N. & K. for collection or otherwise, as a deposit of cash, nor as an immediate credit open to petitioners by said K., N. & K. upon the receipt of any evidences of debt, nor did petitioners draw upon said K., N. & K. against the deposit or deposits of such evidence of debt before the collection of moneys due upon said evidences of debt by said K., N. & K."

1923, at 9:30 a. m., the involuntary petition in bankruptcy was duly filed in the offico of the clerk of the District Court. The receiver filed an answer to the petition, in which he denied various allegations contained therein, but he did not deny the allegation that the petition in bankruptcy was filed in the clerk's office on June 16, 1923, at 9:30

a. m.

At the hearing on the reclamation petition before the special master, the attorneys for the claimant and those for the trustee for the bankrupts stipulated certain matters, and "agreed that throughout the petition the reference to 'the day said petition in bankruptcy was filed against said K., N. & K.,' or any similar allegation, shall mean only 'June 15, 1923' (this refers particularly to paragraphs eighth, ninth, tenth, eleventh, and thirteenth)."

The paragraphs thus referred to are those which contain the allegations as to the time when the three checks herein involved were delivered, credited, and collected, and that when the petitioners caused the checks to be delivered to the bankrupts for collection and deposited to the petitioners' account they did not know of the bankrupts' insolvency, and also that when they caused the checks to be delivered to the bankrupts they had a credit balance with the said bankrupts amounting to several thousand dollars, and were not then and have not been at any time since indebted to the bankrupts or to the receiver. [2, 3] This stipulation as to the meaning of "the day said petition in bankruptcy was filed" cannot have the effect of a determination binding upon this court upon the question of the time when the petition was legally filed, so as to determine the rights of the parties as affected thereby. Neither do we understand that the parties meant anything more than that the court should understand that the allegations, in so far as they refer to the occurrence of an act on the day when the petition was filed, referred to June 15, 1923. And we hold that the petition was filed, not on June 15th, when it was presented, at 10:30 p. m., to the District Judge, but on June 16, at 9:30 a. m., when it was filed in the clerk's office.

[4] The word "filed" has not been defined by Congress. It has, however, a well-defined meaning. It signifies the delivery into the actual custody of the proper officer, designated by the statute, and whose duty it is to keep the records of the court. It carries with it the idea of permanent preservation of the thing as a public record. A paper is not 10 F. (2d)-59

filed by presenting it to the judge. He has no office in which papers are filed and permanently preserved. A paper in a case is not filed until it is deposited with the clerk of the court, for the purpose of making it a part of the records of the case. See United States v. Lombardo, 241 U. S. 73, 76, 36 S. Ct. 508, 60 L. Ed. 897; Laser Grain Co. v. United States, 250 F. 826, 831, 163 C. C. A. 140; Emmons v. Marbelite Plaster Co. (C. C.) 193 F. 181; In re Von Borcke (D. C.) 94 F. 352.

In the case under consideration the claim is based upon three checks: (1) A cashier's check of the Irving Bank-Columbia Trust Company, dated June 14, 1923, for $3,000. (2) A cashier's check of the National City Bank of New York, dated June 15, 1923, for $1,294. (3) A check of Goldman, Sachs & Co., dated June 15, 1923, drawn on the Bank of America, for $15,000. We shall consider them in the order named. [5] The $3,000 Check. This check may be found in the margin. 2 The check did not indicate on its face that it was for the account of the petitioners. But the bankrupts on June 14th, the day the check was dated, and the day on which the bankrupts received it, gave to the Irving Bank-Columbia Trust Company a receipt in which they stated the check was received "for account of N. Latzko & A. Popper, Budapest." The special master held this indicated that the bankrupts undertook to collect the check as an agent for Latzko & Popper. He held that the proceeds, when collected, would have been the property of the Budapest house, were it not for the allegation in the petition that the petitioners caused the Irving Bank-Columbia Trust Company, who drew the check, to deposit it for the account of the petitioners with the bankrupts. He thought, therefore, that when the check was so deposited and credited and collected, all prior to the filing of the petition in bankruptcy, the bankrupts had become debtors to the petitioners, and the proceeds of the check amounted to a debt due from the bankrupts to them.

This check was credited by the bankrupts to the claimants' account on June 14, 1923,

the day before the petition in bankruptcy was presented, and on the same day that the bankrupts credited the check to the claimants' account they indorsed the check to the American Exchange National Bank, and that bank on the same day credited the bankrupts with the amount of the check. The check was collected by the American Exchange National Bank through the New York Clearing House on June 15, 1923. This was the day the petition in bankruptcy was presented to the District Judge, though prior to the filing of the petition.

The District Judge, in his opinion confirming the special master's report, states that this check was collected the day the petition in bankruptcy was filed, and then goes on to say: "The proceeds of the first check clearly became part of the assets of the bankrupts prior to the hour when the petition was filed. I can see no reason for invoking the rule that the law will take no account of the fractions of a day to defeat the bankrupts' title. It would be as tenable to hold that two lis pendens filed at different hours on the same day imposed an identical lien. The claimant cannot prevail as to the first check, and the master's report as to it should be confirmed."

[6,7] We fully agree that there is no reason for invoking the rule that the law will take no account of the fractions of a day to defeat the bankrupts' title. It is true that for some purposes fractions of a day are not recognized in law. Louisville v. Portsmouth Savings Bank, 104 U. S. 469, 26 L. Ed. 775; McGill v. United States Bank, 12 Wheat. 511, 6 L. Ed. 711. But the rule that a day is an indivisible period of time is a mere legal fiction, which is subject to numerous exceptions; and one of them is that the courts will disregard the fiction as where it is necessary to protect a completed act or save a vested right, or to determine the conflicting rights of rival claimants when they depend upon priority in fact. Johnson v. Smith, 2 Burr. 950; Cincinnati First Nat. Bank v. Burkhardt, 100 U. S. 686, 25 L. Ed. 766; Westbrook Mfg. Co. v. Grant, 60 Me. 88, 11 Am. Rep. 181; Hoyt v. San Francisco, etc., R. Co., 87 Cal. 610, 25 P. 160, 1066; Jackson Brewing Co. v. Wagner, 117 La. 875, 42 So. 356; Johnson v. Pennington, 15 N. J. Law, 188; Brainard v. Bushnell, 11 Conn. 16; Neale v. Utz, 75 Va. 480.

But we do not agree with the District Judge, as respects this check, that it was actually paid on the morning of June 15th, and prior to the filing on the same day, but

at a later hour, of the petition in bankruptcy. That petition, for reasons already stated, was not "filed" on June 15th, when it was presented to the District Judge, but on June 16th, when it was deposited in the clerk's office. Inasmuch as prior to that time the amount of the check had been credited to the petitioners in their account with the bankrupts, and to the bankrupts in their account with the American Exchange National Bank, the amount of the check had been actually collected. The bankrupts accordingly had become debtors to the petitioners prior to the filing of the petition in bankruptcy, and the amount of the check was a part of the estate which, on June 16, 1923, passed to the receiver of the estate of the bankrupts.

But there is another reason for reaching the same conclusion. The deposit of this check with the bankrupts, who were conducting a banking business, although made by the Irving Bank-Columbia Trust Company, was made by it as the agent of the petitioners, and deposited under their instructions. It was therefore in effect as though deposited by the petitioners themselves. If it had been in fact deposited by them, to be credited in their account, and the bankrupts indorsed it and credited it in their account, the bankrupts, when so crediting it, would have made themselves at that time debtors in that amount to the petitioners, as no agreement is shown that the petitioners had no right to draw on checks deposited to their credit in their regular checking account until collection was actually made.

In Foley v. Hill, 2 Cl. & Fin. 28, in the House of Lords, the effect of a deposit in a bank was fully discussed by Lords Cottenham, Brougham, and Lyndhurst. They concurred in the opinion that the relation between a banker and customer, who pays money into a bank, or to whose credit money is placed there, is the ordinary relation of debtor and creditor. And in Bank of the Republic v. Millard, 10 Wall. 152, 155 (19 L. Ed. 897), the Supreme Court, in 1869, declared:

"It is no longer an open question in this court, since the decision in the cases of Marine Bank v. Fulton Bank, 2 Wall. 252 [17 L. Ed. 785], and of Thompson v. Riggs, 5 Wall. 663 [18 L. Ed. 704], that the relation of banker and customer, in their pecuniary dealings, is that of debtor and creditor."

In St. Louis & S. F. Ry. Co. v. Johnston, 27 F. 243, A., who had an account in B. Bank in New York, deposited in the bank a sight draft drawn by him on a corporation in Bos

ton. The bank credited him with the amount of the draft as a cash deposit. The bank was insolvent at the time, but it forwarded the draft to its collection agent at Boston and it was paid after the bank had failed and closed its doors. Judge Wallace, sitting in the Circuit Court for the Southern District of New York, held that the draft was not the property of A. when paid by the drawee, and that he was not entitled to recover the amount thereof from the receiver. He said:

"When a sight bill is deposited with a bank by a customer at the same time with money or currency, and a credit is given him by the bank for the paper, just as a like credit is given for the rest of the deposit, the act evinces unequivocally the intention of the bank to treat the bill and the money or currency, without discrimination, as a deposit of cash, and to assume towards the depositor the relation of a debtor, instead of a bailec of the paper."

In Burton v. United States, 196 U. S. 283, 25 S. Ct. 243, 49 L. Ed. 482, certain checks on a bank in St. Louis were sent from that city to the payee, in Washington. The payee, on receiving them, indorsed them and deposited them in a bank in Washington, and they were immediately credited in the payee's account. The checks were afterwards paid in due course by the St. Louis bank. The court held that the Washington bank acquired the title to the checks when the deposit was made and credited in the depositor's ac

count. The court said:

"There was no oral or special agreement made between the defendant and the bank

at the time when any one of the checks was deposited and credit given for the amount thereof. The defendant had an account with the bank, took each check when it arrived, went to the bank, indorsed the check which was payable to his order, and the bank took the check, placed the amount thereof to the credit of the defendant's account, and nothing further was said in regard to the matter. In other words, it was the ordinary case of the transfer or sale of the check by the defendant and the purchase of it by the bank, and upon its delivery to the bank, under the circumstances stated, the title to the check passed to the bank and it became the owner thereof. It was in no sense the agent of the defendant for the purpose of collecting the amount of the check from the trust company upon which it was drawn. From the time of the delivery of the check by the defendant to the bank it became the owner of the check; it could have

torn it up or thrown it in the fire or made any other use or disposition of it which it chose, and no right of defendant would have been infringed. The testimony of Mr. Brice, the cashier of the Riggs National Bank, as to the custom of the bank when a check was not paid, of charging it up against the depositor's account, did not in the least vary the legal effect of the transaction; it was simply a method pursued by the bank of exacting payment from the indorser of the check, and nothing more. There was nothing whatever in the evidence showing any agrecment or understanding as to the effect of the transaction between the parties-the defendant and the bank-making it other than such as the law would imply from the facts already stated. The forwarding of the check 'for collection,' as stated by Mr. Brice, was not a collection for defendant by the bank as his agent. It was sent forward to be paid, and the Riggs Bank [the bank of deposit] was its owner when sent."

The trial judge in the Burton Case had instructed that the effect of the deposit of the checks in the Washington bank depended upon the understanding and intent of the bank and the depositor; that if the intent and understanding was that the bank should become the purchaser of the check and be the absolute owner thereof, then the payment to the Washington bank amounted in law to a payment to that bank and not to the depositor; but if the intent and understanding of the bank and the depositor was that the Washington bank should act as the agent of the depositor, then the payment in St. Louis was in law a payment to the depositor. The Supreme Court held this was error, and that there was no foundation for submitting to the jury the question as to what the understanding of the parties was at the time the deposit was made; and this it held because the uncontradicted evidence showed that there was no agreement or understanding of any kind, other than such as the law made from the transaction detailed. [8] This court, in Re Ruskay, 5 F.(2d) 143, 149, stated that where a check or draft is indorsed and deposited in a bank, and is accepted as cash, it at once becomes the property of the bank, and the bank becomes the debtor of the depositor in the amount of the check so deposited, with the superadded obligation that the money is to be paid when demanded by check. In the absence of special agreement to the contrary, or some notice to the contrary given to the depositor prior to

The New York Court of Appeals in Cragie v. Hadley, 99 N. Y. 133, 1 N. E. 537, 52 Am. Rep. 9, laid down the law as follows: "The general doctrine that upon a deposit being made by a customer, in a bank, in the ordinary course of business, of money, or of drafts or checks received and credited as money, the title to the money, or to the drafts or checks, is immediately vested in and becomes the property of the bank, is not open to question. The transaction, in legal effect is a transfer of the money, or drafts, or checks, as the case may be, by the customer to the bank, upon an implied contract on the part of the latter to repay the amount of the deposit upon the checks of the depositor. The bank acquires title to the money, drafts, or checks, on an implied agreement to pay an equivalent consideration when called upon by the depositor in the usual course of business."

[9] The general rule is undoubted that checks deposited in a bank for collection remain the property of the depositor. Clark Sparks & Sons Mule, etc., Co. v. Americus National Bank, 230 F. 738; Richardson v. New Orleans Coffee Co., 102 F. 785, 42 C. C. A. 619, 52 L. R. A. 67; Philadelphia v. Eckels (C. C.) 98 F. 485; Fifth National Bank v. Armstrong (C. C.) 40 F. 46; Blair v. Hill, 165 N. Y. 672, 59 N. E. 1119; Perth Amboy Gas Light Co. v. Middlesex County Bank, 60 N. J. Eq. 84, 45 A. 704; South Park Fidelity, etc., Co. v. Chicago Great Western R. Co., 75 Minn. 186, 77 N. W. 796.

In 7 C. J. 599, the law is stated as fol

lows:

3

titled to the proceeds of the $3,000 check. [10] The $1,294 Check. This check may be found in the margin. The petitioners alleged in their petition that on June 15, 1923, they caused the National City Bank of New York to deliver to the bankrupts this check, to be collected for the account of the petitioners, and that it was to be so collected appears on the face of the check itself; for the words, "favor N. Latzko & A. Popper, Budapest," seem to us, on the whole, not to differ in effect from "collect for N. Latzko & A. Popper, Budapest." A check so drawn cannot be said to be freely negotiable. Any payee to whom it was indorsed would take the proceeds, when collected, not for himself, but for N. Latzko & A. Popper.

The bankrupts received the check on June 15, and on the same day they indorsed it in the manner disclosed in the margin. An examination of the check and the indorsement thereon disclosed to the American Exchango National Bank that it did not thereby acquire title to the check, and that the proceeds did not belong to it or to the indorsers, but to N. Latzko & A. Popper. The nature of the transaction was not affected by the fact that credited it on June 15, in the account of the the bankrupts, when they received the check, petitioners, or that the subsequent indorsee,

the American Exchange National Bank, when they received the check on June 15, at onco credited it in the account of the bankrupts. The bank did not receive the proceeds until June 16, and, when they received it, it was not as their money, and not as the money of tho bankrupts, but as the money of N. Latzko & A. Popper, the petitioners herein. The right of the petitioners to the proceeds of the check is not to be defeated by the fact that the bankrupts credited it in the petitioners' account before it was collected, or by the fact that the American Exchange Bank credited it in the indorsers' account. They might do

8 "No. F. T. 261365. New York, June 15, 1923. "Cashier's Check.

"The National City Bank of New York: Pay to the order of Knauth, Nachod & Kuhne, New Budapest, one thousand two hundred ninetyYork, $1,294.00, favor N. Latzko & A. Popper, four and 00/100 dollars. Payable only through New York Clearing House.

4 "Pay to or order.

"N. G. Lenfestey, Cashier. "J. W. Allale, Asst. Cashier." American Exchange National Bank, June 15, 1923.

"Knauth, Nachod & Kuhne,

"New York, N. Y. 1-548"