notice to the drawee it binds the fund in his hand. But where the order is drawn either on a general or particular fund, for a part only, it does not amount to an assignment of that part, or give a lien as against the drawee, unless he consent to the appropriation by an acceptance of the draft; or an obligation to accept may be fairly implied," etc.

And it is not necessary that the order itself disclose that it is for the full amount; that may be shown by evidence.16 Some cases of this type, of course, overlap the type first suggested above, in which the order is not a good commercial bill of exchange, because it is drawn on a particular fund.1

(2) Where some documentary evidence of the debt due the drawer from the drawee accompanies the order there is strong likelihood that an assignment was intended. In Robbins v. Bacon,18 for example, a copy of the account between the parties was attached to the instrument.19 The indorsement of a deposit ticket to the payee of a check has been held to have the same effect.20 But the mere exhibition of the deposit slip seems not to have such a result.21

(3) If the facts show that the payee took the order in payment (as distinguished from the normal conditional payment) or, perhaps, as security for a debt owing him by the drawer, there is a more ready disposition to treat the transaction as an assignment.22 This seems to be a sensible conclusion, for the situation

16 Throop Grain Cleaner Co. v. Smith, 110 N. Y. 83, 17 N. E. 671 (1888); Varley v. Sims, 100 Minn. 331, 111 N. W. 269 (1907).

17 See, for example, Lee v. Robinson, 15 R. I. 369, 5 Atl. 290 (1886); M'Menomy v. Ferrers, 3 Johns. (N. Y.) 71 (1808).

18 3 Me. 346 (1825).

19 See also Moore v. Davis, 57 Mich. 251, 23 N. W. 800 (1885); Provident Nat. Bank v. Hartnett, 45 Tex. Civ. App. 273, 100 S. W. 1024 (1907); Venturi v. Silvio, 197 Ala. 607, 73 So. 45 (1916).

20 Hove v. Stanhope Bank, 138 Ia. 39, 115 N. W. 476 (1908).

21 Peters v. Hardin, 168 S. W. 1035 (Tex. Civ. App., 1912). The trial court in this case had concluded that there was no assignment. The Court of Appeals upheld the conclusion but said: "Had the finding in the case before us been in appellee's favor on the issue of assignment vel non, we would be very much inclined to hold that the evidence warranted such a conclusion, but, after a careful consideration of the facts as presented in the record, we feel unable to say as a matter of law, that the evidence requires a finding in direct opposition to that made by the trial court."

22 McWilliams v. Webb & Son, 32 Ia. 577 (1871); Merchants' and Miners'

would surely be unusual in which a creditor would take as payment of an existing indebtedness a mere order by the debtor on another, since the only recourse which the payee-creditor would have, in the absence of acceptance by the drawee, would be the personal responsibility of the drawer whose debt the instrument given is understood to pay. As to this Mr. Justice Ruger, in Throop Grain Cleaner Co. v. Smith, said:

"It would be quite absurd to suppose that Allis & Co. [the drawer] intended by the transaction to sell only their obligation upon the drafts as the makers thereof, or that the Farrell Company [payee] supposed they were buying one written obligation of Allis & Co. to apply upon another for the same debt." 23

24

(4) Circumstances showing that the taker of the order parted with his property on the faith of the order rather than upon the general credit of the drawer-purchaser indicate that it was the intention that the payee-seller was to have an interest in the fund in the hands of the drawee, in other words, that an assignment was intended. An interesting and leading case of this sort is Fourth St. National Bank v. Yardley. In that case it appears that the Keystone Bank, in Philadelphia, being embarrassed by a lack of ready cash to pay an indebtedness to the clearing house, applied to the plaintiff bank, another Philadelphia institution, for $25,000 in gold certificates. The proposal of the applicant was to give its own check on its account with its New York correspondent in the sum of $25,000; and a memorandum showing that it had upwards of the amount in question on deposit in the New York bank was exhibited to the plaintiff. Relying on the representations of the applicant and its statements as supported by the memorandum, the plaintiff delivered to the Keystone Bank the certificates requested, and the latter in turn handed the plainBank v. Barnes, 18 Mont. 335, 45 Pac. 218 (1896) (taken as security); Throop Grain Cleaner Co. v. Smith, 110 N. Y. 83, 17 N. E. 671 (1888); Howell v. Mfg. Co., 116 N. C. 806, 22 S. E. 5 (1895); N. Y. Life Ins. Co. v. Patterson & Wallace, 35 Tex. Civ. App. 447, 80 S. W. 1058 (1904); Wolfe v. Hart, 40 Nov. Sc. 17 (1885) (semble); Dixie Lumber Co. v. Young, 203 Ala. 115, 82 So. 129 (1919) (security); Dunlap v. Bank, 50 Cal. App. 476, 195 Pac. 688 (1921).

23 110 N. Y. at 91, 17 N. E. at 674. The correspondence further fortified this view of the transaction.

24 165 U. S. 634 (1896).

tiff its check for $25,000. Payment of this check having been refused in New York and the Keystone Bank having gone into the hands of a receiver, the plaintiff claimed to be a priority creditor on the ground that the transaction with the insolvent institution amounted to an equitable assignment of the funds, to the extent of the check, in the New York bank. It was decided that the facts made out a case of assignment. After pointing out that the transaction between the Keystone Bank and the plaintiff bank was so unusual that not only was an explanation of its need by the Keystone Bank in order but also that the plaintiff would not be expected to accede to the request without full security, Mr. Justice White said:

"It follows that the same reason which imperatively required the Keystone Bank to disclose the cause for its request, also rendered it absolutely essential, in order to obtain the loan, that it indicate a specific source or means of payment outside of and beyond its mere general credit. In other words, that it should tender ample security for the loan which it requested. The deduction arises that, as it cannot be reasonably conceived that the loan would have been made without the reference to and assignment of the particular fund from which alone the hope of immediate payment was to be reasonably expected, the parties must have and did intend to create a particular appropriation, charge or lien on the property upon the faith of which they both dealt." > 25

In other cases circumstances have been found to warrant a similar view,26 as where the bill is taken by the payee, and money advanced, on the understanding that proceeds of a shipment to the drawee would be applied to payment thereof,27 or where re

25 At p. 651. It is clear that the Court considered the transaction between the banks an extraordinary one, and that under the circumstances it was quite unthinkable that the plaintiff bank would advance the certificates without a distinct understanding that the fund in the New York bank should stand as security. See also First State Bank v. Stockmen's State Bank, 42 S. Dak. 585, 176 N. W. 646 (1920). Although the decision in the latter case was rested on a general theory of estoppel, the result might well have been based on the ground announced in the Yardley case.

Cf. Peters v. Hardin, 168 S. W. 1035 (Tex. Civ. App., 1912).

26 Muller v. Kling, 209 N. Y. 239, 103 N. E. 138 (1913); Bank v. Swift, 134 Tenn. 175, 183 S. W. 725 (1915).

27 Cowperthwaite v. Sheffield, 3 N. Y. 243 (1850); First Nat. Bank v. Rogers, etc., Co., 151 Minn. 243, 186 N. W. 575 (1922).

mittances have been made to the drawee for the purpose of having the order honored.28

29 it

In First National Bank v. Rogers-Amundson-Flynn Co.,2 was the understanding 30 between a stock buyer and the plaintiff bank with which he did his banking business that funds to take care of checks issued to farmers in payment of stock should be provided out of the proceeds of drafts drawn by the buyer upon the defendant, a dealer in live stock in St. Paul. In spite of notice of this arrangement, the defendant-drawee failed to honor the draft, but used the proceeds of the shipment to apply upon an indebtedness due it from the drawer. It was concluded that the defendant was bound to pay the plaintiff bank the amount called for by the draft. The court appears to have been distinctly of the opinion that there was an equitable assignment of the proceeds to the amount of the order. Apparently the court felt that its conclusions could rest also on another theory that,

31

"if one to whom goods are consigned for sale receives the consignment with notice that the consignor has made a draft on him on the credit of the goods, he is bound to accept the draft. He may not take and retain the consignment with such notice and repudiate the draft. The acceptance of the goods is deemed the equivalent of a promise to accept the draft.” 32

28 De Bernales v. Fuller, 14 East, 590, 2 Camp. 426 (1810); Seligman v. Wells, I Fed. 302 (S. D. N. Y., 1880); Harwood v. Tucker, 18 Ill. 544 (1857); Ballard v. Bank, 91 Kan. 91, 136 Pac. 935 (1913); Gruenther v. Bank, 90 Neb. 280, 133 N. W. 402 (1911); Dolph v. Cross, 153 Ia. 289, 133 N. W. 669 (1911); Hitt Fireworks Co. v. Bank, 114 Wash. 167, 195 Pac. 13 (1921). See also Whitewater Bank v. Bank, 224 Ill. App. 26 (1922).

29 151 Minn. 243, 186 N. W. 575 (1922).

30 There was no express agreement to this effect. It appeared that several times in the past the transaction had been so carried out, and it was concluded that there was an understanding.

31"In short, the evidence permits the inference that it was Rudisell's purpose to transfer enough of such proceeds to repay the money furnished him to buy the cattle; that he intended to give plaintiff an interest in the proceeds and made the draft to carry out his intention, receiving a valuable consideration from the plaintiff. As between them, under these circumstances there was an equitable assignment of $1,250 of such proceeds. . . . The fact that there were no funds in defendant's hands when the draft was drawn did not defeat the assignment." 151 Minn. at 246, 186 N. W. at 576.

32 151 Minn. at 248, 186 N. W. at 577. The court cites as authorities for this view: Nutting v. Sloan, 57 Ga. 392 (1876); Mercier v. Copelan, 73 Ga. 636

A somewhat similar situation was presented in Ballard v. Home National Bank,33 where another stock buyer was involved. This dealer had been accustomed to pay for stock with checks on the defendant bank, borrowing the money from the bank to cover the disbursements; and the proceeds of the stock sales were then used, apparently, to pay off these notes. This plan proving unsatisfactory, an arrangement was arrived at whereby the bank was to continue to allow the dealer to draw checks in payment of his purchases, which checks the bank would pay despite the past due debt owed it by the customer, provided that he "beat them in" by selling the stock purchased and putting the proceeds into the bank to provide a fund for their payment.34 The court held that the check holders had a cause of action against the bank for the amounts called for. But whether their rights rested upon an equitable assignment,35 or upon a contract between the drawer and the bank for the benefit of the plaintiffs,

36

(1884); McCausland v. Wheeler Savings Bank, 43 Ill. App. 381 (1891); Hall v. Bank, 133 Ill. 234, 24 N. E. 546 (1890); Fisher v. Bank, 37 Ill. App. 333 (1890); Lowery v. Steward, 25 N. Y. 239 (1862); Helm v. Meyer, 30 La. Ann. 943 (1878); I PARSONS, NOTES & BILLS, 291. It is then said: "These authorities sanction a recovery from the consignee on the theory that under such circumstances the proceeds of the sale of the consignment are received for the payee who has a cause of action for money had and received to his use. Strictly speaking, the consignee is not charged with liability on the draft, but on the contract implied from his acts." 151 Minn. at 248-249, 186 N. W. at 577.

On just what ground the court really meant to rest the plaintiff's right of recovery is decidedly difficult to determine. Cf. Ballard v. Bank, 195 S. W. 559 (Mo. App., 1917).

33 91 Kan. 91, 136 Pac. 935 (1913).

34 That such was the arrangement was settled by the verdict of the jury.

35 After reference to the general rule that a check is not an assignment, the court points out that "special circumstances, however, may give to the issuance of a check the character of a pro tanto assignment, thereby vesting in the holder a right of action upon it against the bank on which it is drawn. Fourth Street Bank v. Yardley, 165 U. S. 634." 91 Kan. at 96, 136 Pac. at 936. Cf. Re Interborough Consol. Corp., 288 Fed. 334 (2nd Circ., 1923).

36 But the court said: "The present actions are not brought simply on the promise of the bank to pay Stewart's checks issued in payment for stock. They are bought upon that promise, supplemented by the carrying out of the conditions on which it was based - the purchase of the stock, the issuance of the checks, the resale of the stock and the deposit of the proceeds to meet the checks in effect the receiving by the bank of the money appropriated by agreement to that purpose." 91 Kan. at 97, 136 Pac. at 937. See also Goeken v. Bank, 100 Kan. 177, 163 Pac. 636 (1917); Scoby v. Bank, 112 Kan. 135, 211 Pac. 110 (1922).