The general proposition which lies' at the foundation of a discussion of the merits of this controversy found expression by the court of appeals in Dickerson v. Wason, 47 N. Y. 439, in the following language:
“Where persons in the business of banking and collecting send to their correspondents or agents, in the regular course of business of receiving and sending notes between them for collection for mutual account, business paper received from customers for collection, the agent or correspondent acquires no better title to it or its proceeds than was owned by the one transmitting it, unless there is a bona fide purchase of it for value, or advances made upon it in good faith, without notice of any defect in the title.”
The essential elements of this rule are presented by the proposition put by way of illustration in Corn Exch. Bank v. Farmers’ Nat. Bank, 116 N. Y. 443, 23 N. E. 923, as follows:
“When the owner of commercial paper delivered it for collection to Bank A., which forwards it for collection to Bank B., which in turn forwards it for collection to Bank C., to which it is paid, it has been held that if Bank C., instead of paying the money to Bank B., retains and applies it on a debt due from Bank B., the owner (Bank A. being insolvent) may recover of Bank C.”
And it is said that this is so because the paper, until paid, remains the property of the owner who indorses it for collection. Bank v. Hubbell, 117 N. Y. 384, 22 N. E. 1031; Railway Co. v. Johnston, 133 U. S. 566, 10 Sup. Ct. 390; Manufacturers’ Nat. Bank v. Continental Bank, 148 Mass. 553, 20 N. E. 193; First Nat. Bank of Crown Point v. First Nat. Bank of Richmond, 76 Ind. 561. When paid, the proceeds, by way of substitution, at once vest in the owner, and the person collecting it, or into whose hands the money comes, is liable to the holder for the veritable proceeds of the paper, or for the amount of such proceeds if they become mingled with the collector’s own money. Bank v. Armstrong, 148 U. S. 50, 13 Sup. Ct. 533, and cases cited supra. In some other jurisdictions it has been held to be within the implied authority of the collecting agent, when paper is to be collected at some place remote from that of the business of such agent, to employ a subagent in that locality to make collection on account of the owner; but in this state the rule is otherwise, and, in the absence of any understanding or agreement to the contrary, is to the effect that the collecting agent is deemed to employ such other collector on his own account. Thus, the collecting agent becomes chargeable to his principal for the conduct of the bank or individual to whom he transmits the paper for collection. Whenever the owner chooses to revoke the agency conferred, he may seek the paper or its proceeds in the hands of the correspondent of his chosen agent, or follow it into whosesoever hands it may have gone, unless it shall have passed into the possession of a bona fide holder for value, who received it from a party clothed with apparent title. People v. City Bank of Rochester, 96 N. Y. 32; Naser v. Bank, 116 N. Y. 492, 22 N. E. 1077. This right was, in the first instance, treated as an equitable one rather than one resting in contract, and the occasions for the assertion and enforcement of it doubtless arose from the insolvency of collecting agents, or from some other cause making it equally necessary to invoke the remedy. While the rights of the owner of commercial paper intrusted to an *1114agent for collection, merely, are of the character already asserted, yet, in order to secure all of its advantages, beyond question he-must indorse the paper for collection. Such an indorsement is restrictive, and notice to every subsequent custodian of the check that it remains the property of him who thus indorses it. Bank v. Hubbell, supra; Bank v. Armstrong, 148 U. S. 50, 13 Sup. Ct. 533. In this case the check was indorsed by the plaintiff: “For collection and credit of Bank of Clarke County. J. R. Nunn, Cashier.” It is said that the use of the word “credit” in the indorsement changes-the rule which would otherwise obtain. But this suggestion is disposed of by Bank v. Hubbell, supra. According to it, the general rule of law applicable to paper transmitted “for collection” applies-as well when the owner’s agent is given authority to collect and credit, down to the point where the moneys shall have actually come-into the hands of such agent. Then the agent is authorized to-credit the owner with the proceeds. Thus, it appears that, when the check came into the hands of the defendants, they were informed by the indorsement which the owner had placed upon the back of' it that Nicholson & Sons were simply the agents of the plaintiff, having authority to present the paper, demand payment of it, and, if paid, to credit the proceeds to the owner; and they are presumed to have known that the title to the check was still in the owner, and would continue in it down to the moment when it should be paid, and then the proceeds would be substituted in its place, the title thereto becoming at once vested in the original owner and holder of the check. Further, they must be presumed to have known that the owner could pass by the agent whom he had selected, and demand either the paper or the proceeds of the paper from the defendants, so long as either should continue to be in their possession, and that the effect of insolvency on the part of Nicholson & Sons would be to revoke their authority to act for the owner of the check. The logical result of the authorities upon this general subject, to some of which we have referred, seems to be that the only-duty which devolved upon Nicholson’s correspondent was to present and demand payment of the check, and, if paid, remit the proceeds; that such action not only constituted the full measure of the correspondent’s duty, but, further, that they had no right to do anything else. If the assertion of the right of a correspondent to deal differently with the paper of the owner thus coming to it for collection should be sustained, the result would certainly be in hostility to the established doctrine that the title to such paper continues-to be in the owner until paid, whereupon the title to the proceeds becomes vested in him, and so continues until he is able to reach it; and until the happening of such event he is clothed with the authority to revoke the agency, and recover the check or the avails in the hands of any correspondent. One of the incidents of this legal relation is the reasonable expectation that, if the collecting agent becomes insolvent while the paper or its proceeds is in the hands of the subagent, the owner may interrupt the paper or its-proceeds. Bank v. Armstrong, supra. This reasonable expectation, and the protection which it insures, might be defeated if the *1115subagent could provisionally advance the amount to the insolvent agent. In Warner v. Lee, 6 N. Y. 144, the court, referring to a case-where the correspondent had received from the agent of the owners a note for collection, said:
“Under these circumstances, if he had made advances upon account of it, he could not have held the note, nor its proceeds, against the plaintiff.”
It has frequently been held that the correspondent does not become vested with the title to such paper, even when he has remitted on general account, in anticipation of collection. Dickerson v. Wason, supra; National Park Bank of New York v. Seaboard Bank, 114 N. Y. 28, 20 N. E. 632; Arnot v. Bingham, 55 Hun, 553, 9 N. Y. Supp. 68. These decisions seem to be the logical and necessary result of the established doctrine that the title to such paper continues in the owner until payment, when the proceeds become vested in him as a substitute for the paper paid. If there be any exception to the general rule which we think the authorities completely establish, it would seem to be confined to a case where the correspondent makes with the agent of the owner an express contract to purchase the paper, and, in pursuance thereof, actually pays to the agent the face value of it. If the effect of the transaction between Nicholson & Sons and these defendants is not to bring it within this possible exception, defendants would seem to be without defense in this controversy.
The defendants insist, among other things, that the facts stipulated in this submission establish that they had actually paid to the agents the amount of the check, and had become the owners of it. That portion of the agreed facts upon which this contention is founded reads as follows:
“By the agreement and course of business between Nicholson and the defendants, the sole method by which the collections made by the defendants-on account of Nicholson and Nicholson’s customers were remitted, or to be remitted to Nicholson, was the honoring of drafts drawn upon them by Nicholson against the amount of Nicholson’s remittances, * * * without waiting for the collection of the paper against which they were drawn. Said draft of $10,330.73, and said four drafts aggregating $216.74 [all paid by defendants before knowledge of Nicholson’s insolvency], in connection with said existing overdraft of $2,913.74, were intended by Nicholson and by the defendants to be the means by which the payment of said amount of $12,700.98, including therein the amount of plaintiff’s said check for $500, should be paid to Nicholson; and, so far as the agreement between Nicholson and the defendants provided, the defendants’ responsibilities for the remittance to Nicholson of the proceeds of plaintiff’s said check ended when they had thus honored drafts of Nicholson upon them equal to or in excess of that amount, and of the amount of all other remittances theretofore made to them by Nicholson.”
It will be observed that there was no express agreement with reference to the check in question. The stipulation refers to the general agreement and course of business between Nicholson & Sons and the defendants. There should be read, in connection with it, another stipulation contained in the facts agreed upon. It reads:
“It was the custom of the defendants to return to Nicholson & Sons checks credited to them, and not paid on presentment, and charge the same to the account of Nicholson.”
*1116According to their agreement and course of business, then, the defendants credited Nicholson & Sons with all paper received, whether for collection or deposit; and if, on presentment, any of such paper was not paid, then it was charged against Nicholson & Sons. Clearly, then, it was not the understanding or agreement of the parties that the defendants should become tire owner of, and absolutely bound to pay for, all the paper with which they gave Nicholson & Sons credit upon their books. Both the credit and advancement were "merely provisional. If the paper should be paid, the credit would stand; otherwise, defendants would charge Nicholson & Sons with the amount of it, and return the dishonored paper.
It may be further said in this connection that the course of business between Nicholson & Sons and the defendants shows that the latter relied as largely upon the responsibility of the former as upon the paper transmitted by them. When the inclosure containing this and other checks was received, Nicholson & Sons already had an overdraft of nearly $3,000, and, about the time of their receipt, Nicholson & Sons’ check was presented for payment, and paid in an amount exceeding, by $364.66, their total credit, based upon checks and drafts which might or might not turn out to be collectible. To this situation the remarks of the court in Bank v. Hubbell, supra, are entirely applicable:
“The finding shows that the credit was a provisional one only. It was a mere matter of bookkeeping. It would seem to have been more in the form of a memorandum of the different pieces of paper received, because, if any were not paid, such as went to protest were at once charged back upon the books of the firm against the plaintiff, and returned to it with the expenses of protest charged to it. The firm never became absolutely responsible to the plaintiff for the amount of these collections until the collections were actually made and the proceeds received by them.”
So, here, the defendants intended the credit to stand, provided the check was paid, but not otherwise. It was a conditional credit,— a matter of convenient bookkeeping. A mere statement of the facts, such as has been made, malees it sufficiently clear that there is no foundation for the claim that the defendants purchased the paper. The transaction was in effect an advancement on general account, which, both on principle and authority, did not operate to divest the plaintiff of, and invest the defendants with, title to the check. The title to it, then, was in this plaintiff on the morning of the 15th, when the check was paid by the Bank of the Republic, at which time the defendants had full knowledge of the insolvency of Nicholson & Sons, which operated to revoke their authority as agents of the owner. That being so, the right of plaintiff to recover of the defendants the proceeds is established by the universal consent of the authorities. Plaintiff should have judgment, with costs. All concur.