Where the paper is notice that it was indorsed for collection,1 or where the correspondent bank has other notice of the fact,2 the correspondent bank can retain no portion of the proceeds as against the holder for the debt of the remitting bank.3 But where the paper does not so indicate and it has no notice, it may hold the proceeds against the holder for a claim due it from the remitting bank which has been contracted on account of the paper.4 As against the remitting bank it may, of course, hold the proceeds, or if it credits them by mistake it may recover from the remitting bank,5 or from the holder if he has received the proceeds.6 Where the proceeds of the collection have been credited by the correspondent bank to the initial bank, the latter bank is simply a general creditor, unless the former agreed to hold the proceeds as the property of the initial bank.7 As long as it holds the proceeds of a collection in its hands it is responsible to the true owner. It cannot cut off the true owner's claim by paying to some one else, even the clearing-house.8

38 Mechanics' Bank v. Earp, 4 Rawle, 384; Union Nat. Bank v. Sixth Nat. Bank, 43 N. Y. 452.

39 Bank of Orleans v. Smith, 3 Hill, 560. But acquiescence in the payment will be a waiver of the right to recover. Harley v. Eleventh Ward Bank, 76 N. Y. 6ia

40 Marine Bank v. Fulton Bank, 2 Wall. 252. As to taking in payment Confederate money, see Strauss v. Bloom, 18 La. Ann. 48.

1 See last section, notes 5, 6 and 7.

2 See last section, notes 5, 6 and 7. 3 See last section, notes 5, 6 and 7. 4 See last section, notes 5, 6 and 7.

5 First Nat. Bank v. Behan, 91 Ky. 560.

6 Bank of Orleans v. Smith, 3 Hill, 560. Compare Canterbury v. Bank of Sparta, 91 Wis. 53. The same result is attained by revoking a credit. When forged paper is remitted for collection, see Sec. 155, ante,

7 Continental Nat. Bank v. Weems, 69 Tex. 489; Hunt v. Townsend, 26 S. W. R. (Tex.) 310. In the latter case there was an agreement implied from a course of dealing.

8 First Nat. Bank v. Bache, 71 Pa. 213; Union Bank v. Johnson, 9 Gill & J. 297. It is bound by an injuncproceeds. The same principle governs the relation of the secondary bank to the primary that governs that of the primary bank to the holder of the paper. 18 Continental National Bank v.