BANKS AND BANKING - APPLICATION OF BANK COLLECTION CODE TO NATIONAL BANKS

Defendant national bank received from an out-of-town correspondent bank for collection a check drawn on another local bank. Through the local clearing house this check was presented and paid, whereupon defendant bank sent to its correspondent its draft in payment. Before presentment of the draft, however, defendant bank failed and the draft was dishonored. In an action by the payee of the check, from whom the correspondent bank had taken it, to impress a trust on the assets of defendant bank, it was held, reversing the lower courts, that the state statute (the Bank Collection Code) which was applied below in affecting the preference was inapplicable because of inconsistency with federal law. Jennings v. United States Fidelity & Guaranty Co., 294 U. S. 216, 55 S. Ct. 394 (1935)