White v.

National Bank
102 U.S. 658 (1880)
J. Miller

Topic: TRANSFER- KINDS OF INDORSEMENTS- RESTRICTIVE

Case Summary: White sued Miner’s National Bank to recover money from drafts he “bought.” The
indorsement said “pay to White or order for account of MNB,” thereby making White an agent of the
bank for collection of money, and the title or ownership did not pass to him because the language of the
instrument was without ambiguity (people should be able to rely on the instrument on its face).
However, the Court also said that there was a mutual mistake on the part of White and the bank
president who “sold” him the drafts, therefore he can recover his money.

Facts:
● Twelve drafts were drawn by Steward Silver Reducing Co. on Thomas Phelps to the order of Miner’s
National Bank of Georgetown, Colorado.
● The bank’s president Brownell indorsed said drafts to White. White sued the bank for nonpayment,
and included a $60,000 indebtedness that the defendant used to be paid to the plaintiff upon request.
● The case was tried by jury which decided White $15k debt and $2625 in damages on account of three
drafts. The other claims were rejected, hence this appeal.
○ The endorsement had the words “pay S.V. White or order for account Miner’s National Bank,
Georgetown, Colorado. J.L. Brownell, p’t.”
● Because of such words, the Circuit Court ruled that the bank had no obligation to pay the draft
or return the money, although due demand of the acceptor and refusal to pay was proved , with
notice to the bank.
● White:
○ 1. Indorser is liable notwithstanding the words so long as it is proved that he brought and paid full
value for the draft with the understanding that he was buying a commercial paper.
○ 2. Such manner of indorsement is the custom of bankers who deal in such paper in NY, where
drafts are payable and that the custom must control the construction of the contract.

Issues + Held:

1. W/N Title transferred to White? – NO.

● Court held that the language of the indorsement is without ambiguity. The plain meaning is that the
acceptor of the draft is to pay it to the indorsee for the use of the indorser. It does not purport to
transfer the title of the paper or transfer the ownership of money when received. Both remain in the
indorser. White merely became an agent of the bank for the collection of money which he gave to the
bank.
● Nevertheless, the Court remanded the case for new trial because they think White is still entitled to
recover more than he did (for the other drafts).
● It appears from the evidence that there was a mutual mistake when White paid the drafts thinking that
he was buying them and that they became his property upon delivery to him, and when bank president
Brownell thought he was selling the drafts.
● The two did not notice the restrictive words of the endorsement. The legal effect of the
transaction was to enable White to collect the money for the Bank.
● Though a restricted endorsement, it was no assignment at all.
○ Therefore it is a contradiction or a varying of the meaning of the written instrument to prove that,
in the delivery of this paper to White:
 (1) he and the bank were under the mistake as to the effect of it, or
 (2) that he paid this money to the bank without consideration, or
 (3) that he advanced money to the bank in the idea that he was to be reimbursed out of the
draft when collected.

Dispositive Portion: The judgment will be reversed, and the case remanded with directions to set aside
the verdict and grant a new trial.

So ordered.