Banking and Finance Law Commons^™

Banks And Banking - Relationship To Customers - Principal Or Creditor, Charles E. Nadeau

Michigan Law Review

A collection agreement permitted plaintiff to clear items through defendant bank in return for maintaining a balance of $10,000 which was not subject to check. All items received immediate credit, and twice weekly defendant bank remitted, in New York exchange, all amounts in excess of $10,000. On insolvency of defendant bank, plaintiff sought a preferred claim on the basis that the bank was its agent for collection. Held, where, as here, the bank may use the funds before remittance, or where the depositor may withdraw any part of the funds, the relationship is that of debtor-creditor and not of …