January 4, 1932
MANUFACTURERS' TRUST CO. ET AL.
On Petition for Rehearing by the Manufacturers' Trust Company.
We find only one thing which the petition requires us to say, and this does not require a rehearing. In estimating the amounts with which the bank was to be credited, we took the balance as shown on Rose's books, not on the bank's. This we did because, in estimating that part of his deposits after the critical date which should be regarded as preferential, we held that he must be understood to have assumed that his outstanding checks would be paid out of the balances then at hand. The bank now argues that it may appear that some of the items appearing on his books as debits had not in fact been presented, when the larger note was paid. We did not of course pass upon that possibility, and our opinion is not to be taken as foreclosing the bank from proving that there were such items. If there be any, the question will present itself to the District Court whether they are proper credits to the bank. In view of the fact that this question has not been argued, and that it may never arise, we will not pass upon it now, but leave it to the disposition of the District Court.
We take this occasion to correct an error in our opinion which was not noticed in the petition. We said that it was a matter of indifference whether the deposit of $25,575, made on February 14th, was applied to the $25,000 note due that day, or whether that note was charged against Rose's balance. If the note be charged against the balance, that balance fell to $9,000, below which it never went; if, on the other hand, it be charged against the deposit of that day, the lowest balance was $30,000 on the 16th. We think that it must be charged against the balance, not the deposit. The note being due, the bank's right to payment by set-off was absolute. There is nothing to deprive the bank of this right, now that the transaction is to be unraveled. If the lowest balance were treated as $9,000, the preferential deposits were $91,000; if the $25,000 note were treated as paid preferentially, the total preferences were $95,000. The bank is entitled to the first alternative.
Except as set forth above, we make no change in our former disposition of the case.
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