Commercial Law - Supreme Court Review

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1978
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FIRST PARAGRAPH(S)|In Berman v. United States National Bank, the Nebraska Supreme Court addressed for the first time the problem of whether a particular bank was to be classified as a "collecting bank" or "payor bank." The classification was critical to the defendant United States National Bank (Bank) since its liability for allegedly failing to give sufficient notice of dishonor of five drafts depended on whether it had acted as a payor or a collecting bank in the handling of the drafts. The controversy arose out of the financial difficulties of an international scrap metal dealer whose operations were based in Omaha. The dealer had three accounts with the Bank. One was a "payable through" account which was a bookkeeping account for the bank's use. The purpose of this account was to keep a separate and accurate record of dealer's drafts which were received under a "payable through agreement." The second account was a general account, which had been in a continuous state of overdraft since April 1, 1974. The third account was a collateral account from which the dealer would transfer funds to his general account. Such transfer required the authorization of the Chase Manhattan Bank of New York (Chase) which had been extending credit to the dealer...
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11 Creighton L. Rev. 47 (1977-1978)
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Creighton University School of Law
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