officers of the Penn Bank, which showed that when the failure occurred, after giving the Exchange Bank credit for the $1,500 sight draft, the balance due the said Exchange Bank was $205.43. The first notice the Exchange Bank received, other than what appears upon the face of the draft and letter, if any there appears, that Carroll had any interest in the draft, was by the following telegram, received by the defendant the next day, May 27th. It was dated on the same day:

"Mail D. W. C. Carroll, Pittsburgh, proceeds of draft on Riverside Iron Works to-day.

"ISAAC W. VAN VOORHES,

"Solicitor Penn Bank."

This the Exchange Bank refused to do. It appears that these mutual dealings between the two banks continued for about four years. It is shown in the bill of exceptions that D. W. C. Carroll was in fact the owner of the draft, and that he had sent it through the Penn Bank for collection; although of this fact the officers of the Exchange Bank were ignorant, unless they were notified of the fact by the draft, indorsement, and letter transmitting it. On the twenty-fifth day of June, 1886, in the circuit court of Ohio County, the said D. W. C. Carroll brought an action of assumpsit to recover of the Exchange Bank the amount of said draft and interest, and in the record the above-stated facts appear. On the eleventh day of January, 1887, the case having been submitted to the court in lieu of a jury, the court rendered judgment in favor of the plaintiff, against the defendant, for $1,735.25, with interest from that date, and costs. To this judgment the defendant obtained a writ of error.

On the facts, Did the court err in rendering judgment for the plaintiff?

In Bank of Metropolis v. New England Bank, 1 How. 234, the supreme court of the United States held that when there have been for several years mutual and extensive dealings between two banks, and an account current kept between them, in which they mutually credited each other with the proceeds of all paper remitted for collection, when received, and charged all costs of protest, postage, etc.,-accounts regularly transmitted from the one to the other, and settled upon these principles, and upon the face of the paper transmitted it always appeared to be the property of the respective banks, and to be remitted by each of them upon its own account,there is a lien for a general balance of account upon the paper

thus transmitted, no matter who may be its real owner. Taney, C. J., in delivering the opinion of the court in this case, said: "If the notes remitted had been the property of the Commonwealth Bank [that is, the transmitting bank], there would be no doubt of the right to retain; because it has long been settled that whenever a banker has advanced money to another, he has a lien on all the paper securities which are in his hands for the amount of his general balances, unless such securities were delivered to him under a particular agreement. The paper in question was, however, the property of the New England Bank, and was indorsed and delivered to the Commonwealth Bank for collection, without any consideration, and as its agent, in the ordinary course of business; it being usual, and, indeed, necessary, so to indorse it, in order to enable the agent to receive the money. Yet the possession of the paper was prima facie evidence that it was the property of the last-mentioned bank; and without notice to the contrary, the plaintiff in error had a right so to treat it, and was under no obligation to inquire whether it was held as agent or as owner; and if an advance of money had been made on this paper to the Commonwealth Bank, the right to retain for that amount would hardly be disputed. We do not perceive any difference in principle between an advance of money, and a balance suffered to remain upon the faith of these mutual dealings. In the one case as well as the other, credit is given upon the paper deposited, or expected to be transmitted, in the usual course of the transactions between the parties. There does not, indeed, appear to have been any express agreement that these balances should not be immediately drawn for, but it may be implied from the manner in which the business was conducted; and if the accounts show that it was their practice and understanding to allow them to stand, and await the collection of the paper remitted, the rights of the parties are the same as if there had been a positive and express agreement; and such mutual indulgence on these balances would be a valid consideration, and, like the actual advance of money, give the plaintiff in error a right to retain the amount due on closing the account. It is evident a loss must be sustained, either by the plaintiff or defendant in error, by the failure of the Commonwealth Bank. We see no ground for maintaining that there is any superior equity or the side of the New England Bank. It contributed to give to the corporation which has proved insolvent credit with the

plaintiff in error by the notes and bills which it placed in its hands to be sent to Washington for collection, indorsed in such a form as to make them prima facie the property of the Commonwealth Bank, and enabled it to deal with them as if it were the real owner. The Bank of the Metropolis, on the contrary, is in no degree responsible for the confidence which the defendant in error reposed in its agent; and when this misplaced confidence has occasioned the loss in question, it would be unjust to throw it upon the bank, which has been guilty of no fault or want of caution, and which was induced to give the credit by the manner in which the defendant in error placed its property in the hands of an agent unworthy of the trust." The judgment of the court below was reversed, and the case remanded for a new trial. Judgment was again had in favor of the New England Bank, and the case was again brought up on writ of error (6 How. 212); and the court held that the following instructions to the jury would have carried out the opinion of the supreme court: "If, upon the whole evidence before them, the jury should find that the Bank of the Metropolis, at the time of the mutual dealings between them, had notice that the Commonwealth Bank had no interest in the bills or notes in question, and that it transmitted them for collection merely as agent, then the Bank of the Metropolis was not entitled to retain, against the New England Bank, for the general balance of the account with the Commonwealth Bank." 2. "And if the Bank of the Metropolis had not notice that the Commonwealth Bank was merely an agent, but regarded and treated it as the owner of the paper transmitted, yet the Bank of the Metropolis is not entitled, against the real owner, unless credit was given to the Commonwealth Bank, or balances suffered to remain in its hands, to be met by the negotiable paper transmitted, or expected to be transmitted, in the usual course of the dealings between the two banks." 3. "But if the jury find that, in the dealings mentioned in the testimony, the Bank of the Metropolis regarded and treated the Commonwealth Bank as the owner of the negotiable note which it transmitted for collection, and had no notice to the contrary, and upon the credit of such remittances, made or anticipated in the usual course of dealings between them, balances were from time to time suffered to remain in the hands of the Commonwealth Bank, to be met by the proceeds of such negotiable paper, then the Bank of the Metropolis is entitled to retain against the New England Bank

for the balance of account due from the Commonwealth Bank." Among other things, as the bill of exceptions shows, the plaintiff asked the court to instruct the jury "that the said last-mentioned notes were transmitted to the said Bank of the Metropolis in letters notifying the defendants that they were transmitted for collection in the form commonly used by said banks in transmitting negotiable paper for collection, and with no other instruction as to who was the real owner of such negotiable paper, then it is competent for the jury to infer from the facts aforesaid that the defendant had notice that the said paper was transmitted by the Commonwealth Bank as agent, and not as the owner thereof; and if the jury shall so find, then the plaintiff is entitled to recover, notwithstanding the jury shall find that the said Commonwealth Bank and the Bank of the Metropolis treated each other as the true owners of the paper so remitted, and notwithstanding they further find that balances were from time to time suffered to remain in the hands of each other, to be met by the proceeds of negotiable paper deposited, or expected to be transmitted, in the usual course of dealing between them, and notwithstanding the course of dealing stated in the instruction heretofore given at the instance of the defendants." To this instruction the defendant objected; but the instruction was given against the objection, and the defendants excepted, and on this exception the second writ of error was granted. Taney, C. J., again announced the opinion of the court, in which he formulated the instruction I have copied as containing what was decided in the former case; and he said that the instructions given OD the second trial were complex; and further said: "We restat the former opinion of this court in this form because we presume it must have been misunderstood by the circuit court. And as it was not followed in the proceedings under the mandate, the judgment must be reversed, and the cause remanded, with directions to award a venire facias de novo."

The counsel for defendant in error refers to the case of Wilson v. Smith, 3 How. 763, and says: "It is a case which, in the absence of a knowledge of other decisions of the court, would have been supposed by every one to establish the rule as we are contending for it. There the paper was indorsed in blank, had been deposited for collection with an agent, and had been sent by the agent to a subagent, by whom it was collected. The owner of the draft was allowed to recover the amount of it from the subagent, notwithstanding the fact that

the agent was indebted to the subagent when the draft was received. The effort made in that case to distinguish it from the case of Bank of the Metropolis v. New England Bank, 1 How. 234, seems to be at least open to criticism." Let Taney, C. J., who delivered both the opinions cited, speak for himself, as he did for the whole court. On page 769 he said: "So far, therefore, as the question of privity is concerned, the case before us is precisely the same with that of Bank of the Metropolis v. New England Bank, 1 How. 234. In that case, the bills upon which the money had been recovered by the plaintiff in error were the property of the New England Bank, and had been placed by it in the hands of the Commonwealth Bank for collection, and were transmitted to the Bank of the Metropolis in Washington, where the bills were payable; and, upon referring to the case, it will be seen that the court entertained no doubt of the right of the New England Bank to maintain the action for money had and received against the Bank of the Metropolis, and the difficulty in the way of its recovery in the action was not a want of privity, but arose from the right of the Bank of the Metropolis to retain, under the circumstances stated in the case, for its general balance against the Commonwealth Bank. In that case, as in the present, the agent transmitting the paper appeared, by the indorsements on it, to be the real owner, and the party to whom it was transmitted had no notice to the contrary, and the money received was credited to the Commonwealth Bank. We think the rule very clearly established that whenever, by express agreement between the parties, a subagent is to be employed by the agent to receive money for the principal, or where the authority to do so may fairly be implied from the usual course of trade or the nature of the transaction, the principal may treat the subagent as his agent, and when he has received the money, may recover it in an action for money had and received." The proof in this case showed "that the draft or bill of exchange upon which the money was collected and received by the defendant was the property of the plaintiff; that it had been by them placed in the hands of their agent, David W. St. John, at Augusta, Georgia, for collection, and by him (St. John) forwarded to the defendant, St. John's agent, at Savannah, Georgia, for acceptance and collection; that it was accepted and paid to the defendant, by whom the proceeds were received, and credited to the account of St. John,