Bank Acceptances In Domestic Trade

Any member bank may accept drafts drawn upon it which grow out of transactions involving the domestic shipments of goods provided shipping documents conveying or securing title are attached at the time of acceptance.

Relating to Bank Acceptances Based on Domestic Shipments of Goods

Shipping Documents

Documents conveying or securing title which are an essential part of the transaction based on the domestic shipment of goods must be made out or endorsed so as to convey or secure title to the accepting bank.

Documents Not Required To Be Physically Attached

The fact that Section 13 provides that shipping documents should be "attached" should not be construed so as to require the documents to be physically fastened to the draft. It is sufficient if the accepting bank has possession of the documents at the time of acceptance. If placed in possession of the bank's agent and under control of the bank, such documents could clearly be considered as in its possession.

Transaction Not Required To Involve Sale Of Goods

A member bank may accept a draft drawn against a shipment of goods from a corporation to its agent or bank even though no sale of the goods is involved in the transaction. In any case where a draft is drawn against a shipment of goods in a transaction which docs not involve the sale of those goods, the maturity of the draft should approximate the duration of their transit. In such a case, the law contemplates that the acceptance of the draft should be for the purpose of financing the shipment, and that it should not be by the means of furnishing a credit for any other purpose.

Acceptance Must Arise Out Of Actual Transaction

A draft which has been drawn by the purchaser of the goods against a national bank is not eligible for acceptance by that bank merely because it is secured by a bill of lading covering the goods bought. The law contemplates some actual connection between the acceptance of the draft and the transaction involving the sale and shipment of the goods, that is, it is evidently intended that the draft should be drawn to finance that transaction. If a seller ships goods and mails the bill of lading to the purchaser, and on arrival of the bill of lading the purchaser draws on his own bank attaching the bill of lading as security and offers it for acceptance, the transaction is merely a straight loan to the drawer secured by a bill of lading.

Retention Or Release Of Shipping Documents Against Acceptance

The bank is believed to have the right, if it becomes necessary to do so, to release either the shipping document or warehouse receipt, provided the draft or drafts accepted by one person do not exceed ten per cent. of the capital and surplus of the accepting bank. This is a question, however, which should be determined by the bank itself.

Retention Or Release Of Warehouse Receipts Against Acceptance

It has been ruled proper for a bank not to release warehouse receipts other than in exceptional cases, this being purely a matter of agreement as between the bank and its customers. The Federal Reserve bank, in rediscounting such acceptances, may reasonably take into consideration the question of whether or not they are secured or unsecured at the time they are offered for rediscount.