A clearing-house association is properly sued In the names of the committee who have the entire control of its securities and business funds ; Yardley v. Philler, 58 Fed. 740.
The tendency of the decisions upon the rights and liabilities of clearing-houses is to treat them with respect to the customs of the banks as merely instruments of making the exchanges, and not as liable to individu al depositors or holders of paper for funds which have passed through the clearing house in the process of exchange between banks. They are not responsible for any thing except the proper distribution of mon ey paid to settle balances, their purpose be ing to provide a convenient place where checks may be presented and balances ad justed ; German Nat. Bank v. Bank, 118 Pa. 294, 12 Atl. 303. When a bank suspended after the morning exchanges but before the payment of the general balance due from it, which was made good by the other banks and applied by the clearing-house to the in debtedness of the suspended bank, it was held that the clearing-house was not liable to the holder of a draft on one of the other banks depoSited in the suspended bank, be cause the draft was never in the hands of the clearing-house for collection, nor did its manager hold the proceeds thereof with knowledge of the plaintiff's rights or of the existence of the draft until demand was made upon it ; Crane v. Clearing-House, 32 W. N. C. (Pa.) 358.
The rules of a clearing-house have the binding effect of law as between the banks; People v. Bank, 77 Hun 159, 28 N. Y. Supp. 407 ; German Nat. Bank v. Bank, 118 Pa. 294, 12 Atl. 303 ; Overman v. Bank, 31 N. J. L. 563 ; Blaffer v. Bank, 35 La. Ann. 251; but do not affect the relations between the payee of a check presented through the clear ing-house for payment, and the bank on which the check is drawn; People v. Bank, 77 Hun 159, 28 N. Y. Supp. 407.
The course of business of a clearing-house is based upon the idea that the members are principals (and trusted by each other as such), and not agents of parties not mem bers, and this renders possible the volume of business transacted ; Overman v. Bank, 31 N. J. L. 563.
With respect to the effect of presentment at the clearing-house or failure to demand payment there, it has been held that pres entation to the banker's clerk at the clear ing-house was a presentation at the place of payment designated in a bill of exchange; 2 Campb. 596 ; that the failure to present a check at the clearing-house 'in violation of an imperative custom to do so does not dis charge the drawer of the check as between the bankers and their customer ; 1 Nev. & M. 541; and such failure to present is not material if presented in the ordinary way, even if the check was to have been paid if presented at the clearing-house, the latter be ing merely a substitute for ordinary pres entation, authorized by custom but not re quired except as a substitute for the regular mode if that is omitted; Kieekamp v. Meyer, 5 Mo. App. 444. Sending notes to a bank through the clearing-house is bat leaving them there for payment during banking hours and not a demand at the bank for im mediate payment ; National Exchange Bank v. Bank, 132 Mass. 147.
The right of return of paper found not good secured by the rules of the clearing house is a special provision in compensation for payment without inspection, with an op portunity for future inspection and recall of the payment. When the opportunity is had and not availed of, the general principles of law intervene to regulate the rights and lia bilities of the paying bank ; National Bank of North America of Boston v. Bangs, 106 Mass. 441, 8 Am. Rep. 349. The return of such paper after its receipt through the clearing-house is not prevented by its having been marked cancelled by mistake; 1 Campb. 426 ; 5 Mann. & G. 348 ; nor by putting it on a file and entering it in the journal; Ger man Nat. Bank v, Bank, 118 Pa. 294, 12 Ad. 303 ; nor by failure to return by the time fixed by rule whether caused by mistake of fact ; Manufacturers' Nat. Bank v. Thompson, 129 Mass. 438, 37 Am. Rep. 376 ; Merchants' Nat. Bank v. Bank, 101 Mass. 281, 100 Am. Dec. 120 ; or not; Boylston Nat. Bank v. Rich ardson, 101 Mass. 287 ; nor in such case if the bank had through mistake given credit to the depositor ; Merchants' Nat. Bank v. Bank, 139 Mass. 513, 2 N. E. 89 ; but a rule of the Chicago clearing-house limiting the time of return was held to constitute a bind ing contract, and the right to recover back a payment made by mistake and discovered within fifteen minutes was denied and the Massachusetts rule criticised ; Preston v. Bank, 23 Fed. 179.
When there is no rule and no uniform cus tom, payment at the clearing-house is provi sional, to become complete when payment is made in the ordinary course of business, and if not so made to be treated as payment un der a mistake of fact, and with the same rights of reclamation as if made without a clearing-house ; National Exchange Bank v. Bank, 132 Mass. 147. The rules may be waived ; Stuyvesant Bank v. Banking Ass'n,. 7 Lans. (N. Y.) 197.
A bank not a member, in sending checks through the clearing-house, Is bound by Its action under its rules in returning payment made by mistake; id.; but a bank not a member is not bound by the clearing-house rules as to the time of returning checks not good, in case of a check sent by it through a bank which was a member ; such a case is governed by the ordinary principles applica ble to it and not by the clearing-house rules; Overman v. Bank, 31 N. J. L. 563.
When the drawee bank received a forged check through the clearing-house as genu ine and failed to return it or to discover the forgery for several days, the bank which took the check and sent it to the clearing-house could not be held liable for negligence in re ceiving it from a stranger and sending it through the clearing-house without notice ; Commercial & Farmers' Nat. Bank of Balti more v. Bank, 30 Md. 11, 96 Am. Dec. 554.
In London there is also a railway clearing house.
See National City Bank v. Bank, 101 N. Y. 595, 5 N. E. 463; 25 L. R. A. 824, note. See INSOLVENT.