Early v. Federal Reserve Bank of Richmond, 281 U.S. 84 (1930)

Early v. Federal Reserve Bank of Richmond

No. 226

Argued February 26, 27, 1930
Decided March 12, 1930
281 U.S. 84

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR

THE FOURTH CIRCUIT

Syllabus

A circular of a federal reserve bank, authorized by law, provided that, when checks were received by the reserve bank for collection and forwarded to the member bank on which they were drawn, the drawee should remit or provide funds to meet them within an agreed transit time, failing which the amount should be chargeable against the reserve account of the drawee in the reserve bank, but that the reserve bank reserved the right to charge checks so forwarded against the drawee’s reserve account at any time when in any particular case it deemed it necessary to do so.

Held:

1. That the last provision, consented to by the drawee bank, created a power, in the interest and for the security of the owners of such checks, which was not revoked by insolvency of the drawee bank, and that, upon learning of such insolvency it became the duty of the reserve bank, even though the transit time had not expired, to charge such checks against the reserve account of the drawee. P. 89.

2. This lien was not affected by the fact that the drawee bank had retained the right to draw drafts on the reserve. P. 90.

30 F.2d 198 affirmed.

Certiorari, 280 U.S. 540, to review a judgment of the circuit court of appeals reversing in part a judgment of the district court recovered by the Receiver in a suit against the Reserve Bank.