Cooley, C. J.
The facts in this case are the following:
On May 15, 1883, Eugene Angelí was doing business as a private banker in Lansing, Michigan. His New York correspondent was the Chase National Bank. On the day named Grammel, the petitioner in this case, purchased of Angelí two small drafts on the Chase National Bank, amounting together to $174.50, and paid for them. They were ordinary [202]*202bankers’ drafts, payable at sight. Angelí at this time was insolvent, though it was not publicly known, and two days thereafter he made a general assignment of his property for the benefit of all his creditors. Arthur N. Hart was named assignee. Two days subsequent to the assignment the drafts of petitioner were presented to the Chase National Bank for payment, and payment refused upon the ground that the assignee had notified the bank to pay no drafts. The bank had moneys belonging to Angelí at the date of the drafts more than sufficient for their payment, and continued to have until the time of presentation. Hart, the assignee, failed to give bond as such, and finder the statute the respondent Carmer was appointed receiver to execute the trust in his stead. The Chase National Bank then paid over to the receiver the balance which was due to Angelí when he assigned.
On this state of facts the petitioner claimed tobe entitled to payment of his drafts in full from the amount paid over to the receiver by the Chase National Bank, and he petitioned the circuit court for an order directing such payment to be made. The receiver contested his right, insisting that he must receive proportionate payment with other creditors; but the circuit court made the order prayed for. The receiver appeals.
It is contended on the part of petitioner that a banker’s sight-draft is in legal effect a check, and that if there are in-the hands of the drawee funds for its payment, the payee is absolutely entitled to payment from such funds, and cannot be deprived of this right by any action of the drawer, or of the assignee or receiver of the drawer who would stand in his shoes. It is further contended that the holder of the draft may bring suit against the drawee for the amount if the latter refuses to make payment, and that in effect he has a lien upon the fund and may follow it into the receiver’s hands if it is paid over to him. And several cases are cited in support of these positions.
The doctrine that a banker’s draft, drawn and payable within the -country, is in legal effect a check, is held by a [203]*203divided court in Roberts v. Corbin 26 Ia. 315, in which case it was also held that the holder of a bank check drawn against funds sufficient for its payment may maintain suit for the amount against the bank if payment is refused. The case of Munn v. Burch 25 Ill. 35, is relied upon as authority. An examination of the facts in that case will show very clearly that the question supposed to have been decided by it did not arise at all, for the check which was in question had actually been received by the bank on which it was drawn and actually-charged up to him on his pass-book. The court went beyond the case and expressed an unnecessary opinion, which in Chicago &c. Co. v. Stanford 28 Ill. 168, and Union Bank v. Oceana Bank 80 Ill. 212, has been followed as aiithoritative. See also Fogarties v. State Bank 12 Rich. 518; Lester v. Given 8 Bush 357. But the great weight of judicial authority is unquestionably to the contrary of this. In Bank of Republic v. Millard 10 Wall. 152, 156, Davis, J., speaking for the court says: “ It is no longer an open question in this court since the decision in the cases of the Marine Bank v. Fulton Bank 2 Wall. 252, and of Thompson v. Riggs 5 Wall. 663, that the relation of banker and customer in their pecuniary dealings is that of debtor and creditor.” He adds that on principle there can be no foundation for an action on the part of the holder of a check against the bank unless there is privity of contract between him and the bank. “ How-can there be such a privit_y when the bank owes no duty and is under no obligation to the holder ? The holder takes the check on the credit of the drawer, in the belief that he has funds to meet it; but in no sense can the bank be said to be connected with the transaction.” See also First Nat. Bank v. Whitman 94 U. S. 343. Many cases might be cited to the same effect if it were needful, but we think the case of Perley v. County of Muskegon 32 Mich. 132, recognizes the same principle.
This case, however, is not the case of a check, but of bills of exchange. The bills were drawn by banker upon banker, it is true, and against deposits made to meet them; and it might be difficult to say why any distinction should be taken [204]*204between checks and such drafts as to the rules which should govern the rights of the parties. We have no occasion in this case to consider whether a distinction exists, because we think it dear that if it could be held, as some courts do hold, that the payee of a check drawn against actual deposits may sue the banker who refuses to pay it, it would be impossible to so hold in the case of a draft without disregarding long-settled rules.
The cases of Williams v. Everett 14 East 582, 597; Yates v. Bell 3 B. & Ald. 643; Hopkinson v. Forster L. R. 19 Eq. 74; and Citizens’ Bank v. First Nat. Bank L. R. 6 H. L. 352: s. c. 7 Moak 56, are sufficient to show that the law in England is that the drawee of a bill of exchange is liable on it only after he has become acceptor. The same rule is recognized in Mandeville v. Welch 5 Wheat. 277, 283, and Bank of Republic v. Millard, already cited. In Gibson v. Cooke 20 Pick. 15 it appeared that a party had drawn a bill which was dishonored for want of funds. Afterwards the- drawer remitted funds expressly to meet that and another small bill which had previously been drawn. The drawee paid the small bill, but refused to pay the other. It was held that the payee could not maintain an action against the drawee for the amountj there being no privity of contract between them. If any case could be conceived whose facts would support such an action, this must be such a ease, for here the funds were remitted for the express purpose of paying the bill sued upon. To the same effect are Bullard v. Randall 1 Gray 605; Hopkins v. Beebe 26 Penn. St. 85; Jermyn v. Moffitt 75 Penn. St. 399; Gibson v. Finley 4 Md. Ch. 75; Poydras v. Delamare 13 La. 98; Harris v. Clark 3 N. Y. 118; Cowperthwaite v. Sheffield 3 N. Y. 243; Winter v. Drury 5 N. Y. 525; Noe v. Christie 51 N. Y. 273; Duncan v. Berlin 60 N. Y. 151; Tyler v. Gould 48 N. Y. 682; Risley v. Phenix Bank 83 N. Y. 318; Bank of Commerce v. Russell 2 Dill. 215; Bank of Commerce v. Bogy 44 Mo. 13; Weinstock v. Bellwood 12 Bush 139; Caldwell v. Merchants’ Bank U. C. 26 C. P. 294.
The reason for these decisions is found in the fundamental [205]*205rules governing this class of paper. The drawer, by drawing and delivering the paper to the payee, agrees that if duly presented it shall be accepted and paid by the drawee, and that in default thereof he will, if duly notified of the dishonor, pay it himself.
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Cooley, C. J.
The facts in this case are the following:
On May 15, 1883, Eugene Angelí was doing business as a private banker in Lansing, Michigan. His New York correspondent was the Chase National Bank. On the day named Grammel, the petitioner in this case, purchased of Angelí two small drafts on the Chase National Bank, amounting together to $174.50, and paid for them. They were ordinary [202]*202bankers’ drafts, payable at sight. Angelí at this time was insolvent, though it was not publicly known, and two days thereafter he made a general assignment of his property for the benefit of all his creditors. Arthur N. Hart was named assignee. Two days subsequent to the assignment the drafts of petitioner were presented to the Chase National Bank for payment, and payment refused upon the ground that the assignee had notified the bank to pay no drafts. The bank had moneys belonging to Angelí at the date of the drafts more than sufficient for their payment, and continued to have until the time of presentation. Hart, the assignee, failed to give bond as such, and finder the statute the respondent Carmer was appointed receiver to execute the trust in his stead. The Chase National Bank then paid over to the receiver the balance which was due to Angelí when he assigned.
On this state of facts the petitioner claimed tobe entitled to payment of his drafts in full from the amount paid over to the receiver by the Chase National Bank, and he petitioned the circuit court for an order directing such payment to be made. The receiver contested his right, insisting that he must receive proportionate payment with other creditors; but the circuit court made the order prayed for. The receiver appeals.
It is contended on the part of petitioner that a banker’s sight-draft is in legal effect a check, and that if there are in-the hands of the drawee funds for its payment, the payee is absolutely entitled to payment from such funds, and cannot be deprived of this right by any action of the drawer, or of the assignee or receiver of the drawer who would stand in his shoes. It is further contended that the holder of the draft may bring suit against the drawee for the amount if the latter refuses to make payment, and that in effect he has a lien upon the fund and may follow it into the receiver’s hands if it is paid over to him. And several cases are cited in support of these positions.
The doctrine that a banker’s draft, drawn and payable within the -country, is in legal effect a check, is held by a [203]*203divided court in Roberts v. Corbin 26 Ia. 315, in which case it was also held that the holder of a bank check drawn against funds sufficient for its payment may maintain suit for the amount against the bank if payment is refused. The case of Munn v. Burch 25 Ill. 35, is relied upon as authority. An examination of the facts in that case will show very clearly that the question supposed to have been decided by it did not arise at all, for the check which was in question had actually been received by the bank on which it was drawn and actually-charged up to him on his pass-book. The court went beyond the case and expressed an unnecessary opinion, which in Chicago &c. Co. v. Stanford 28 Ill. 168, and Union Bank v. Oceana Bank 80 Ill. 212, has been followed as aiithoritative. See also Fogarties v. State Bank 12 Rich. 518; Lester v. Given 8 Bush 357. But the great weight of judicial authority is unquestionably to the contrary of this. In Bank of Republic v. Millard 10 Wall. 152, 156, Davis, J., speaking for the court says: “ It is no longer an open question in this court since the decision in the cases of the Marine Bank v. Fulton Bank 2 Wall. 252, and of Thompson v. Riggs 5 Wall. 663, that the relation of banker and customer in their pecuniary dealings is that of debtor and creditor.” He adds that on principle there can be no foundation for an action on the part of the holder of a check against the bank unless there is privity of contract between him and the bank. “ How-can there be such a privit_y when the bank owes no duty and is under no obligation to the holder ? The holder takes the check on the credit of the drawer, in the belief that he has funds to meet it; but in no sense can the bank be said to be connected with the transaction.” See also First Nat. Bank v. Whitman 94 U. S. 343. Many cases might be cited to the same effect if it were needful, but we think the case of Perley v. County of Muskegon 32 Mich. 132, recognizes the same principle.
This case, however, is not the case of a check, but of bills of exchange. The bills were drawn by banker upon banker, it is true, and against deposits made to meet them; and it might be difficult to say why any distinction should be taken [204]*204between checks and such drafts as to the rules which should govern the rights of the parties. We have no occasion in this case to consider whether a distinction exists, because we think it dear that if it could be held, as some courts do hold, that the payee of a check drawn against actual deposits may sue the banker who refuses to pay it, it would be impossible to so hold in the case of a draft without disregarding long-settled rules.
The cases of Williams v. Everett 14 East 582, 597; Yates v. Bell 3 B. & Ald. 643; Hopkinson v. Forster L. R. 19 Eq. 74; and Citizens’ Bank v. First Nat. Bank L. R. 6 H. L. 352: s. c. 7 Moak 56, are sufficient to show that the law in England is that the drawee of a bill of exchange is liable on it only after he has become acceptor. The same rule is recognized in Mandeville v. Welch 5 Wheat. 277, 283, and Bank of Republic v. Millard, already cited. In Gibson v. Cooke 20 Pick. 15 it appeared that a party had drawn a bill which was dishonored for want of funds. Afterwards the- drawer remitted funds expressly to meet that and another small bill which had previously been drawn. The drawee paid the small bill, but refused to pay the other. It was held that the payee could not maintain an action against the drawee for the amountj there being no privity of contract between them. If any case could be conceived whose facts would support such an action, this must be such a ease, for here the funds were remitted for the express purpose of paying the bill sued upon. To the same effect are Bullard v. Randall 1 Gray 605; Hopkins v. Beebe 26 Penn. St. 85; Jermyn v. Moffitt 75 Penn. St. 399; Gibson v. Finley 4 Md. Ch. 75; Poydras v. Delamare 13 La. 98; Harris v. Clark 3 N. Y. 118; Cowperthwaite v. Sheffield 3 N. Y. 243; Winter v. Drury 5 N. Y. 525; Noe v. Christie 51 N. Y. 273; Duncan v. Berlin 60 N. Y. 151; Tyler v. Gould 48 N. Y. 682; Risley v. Phenix Bank 83 N. Y. 318; Bank of Commerce v. Russell 2 Dill. 215; Bank of Commerce v. Bogy 44 Mo. 13; Weinstock v. Bellwood 12 Bush 139; Caldwell v. Merchants’ Bank U. C. 26 C. P. 294.
The reason for these decisions is found in the fundamental [205]*205rules governing this class of paper. The drawer, by drawing and delivering the paper to the payee, agrees that if duly presented it shall be accepted and paid by the drawee, and that in default thereof he will, if duly notified of the dishonor, pay it himself. The drawee enters into no contract relations with the payee in respect to it until it is presented to him, nor then unless he does so by acceptance. If he accepts, he undertakes to pay according to the terms of the bill or of the acceptance; but up to the time of that act the payee looks exclusively to the drawer for his protection. If the drawee refuses to accept when he has funds-for the purpose, he becomes liable to the drawer for the wrong done to his credit. Marzetti v. Williams 1 B. & Ad. 415; Rolin v. Steward 14 C. B. 595. But the payee can maintain no such action for the plain reason that until acceptance the drawee owes to the payee no legal duty whatever. An action at law must be grounded on some failure in the performance of legal duty.
It is said a draft should be considered an assignment of so much money in the drawee’s hands. If this were so, then drafts would operate as assignments in the order in which they were given, and should be paid in that order. But to so hold would be to introduce a new and vicious rule into the law of commercial paper. The well-understood rule— and, we may add, the convenient rule — now is that the drawee, when a draft is presented, should pay it if he has funds, and is not concerned with the question whether drafts of prior issue do not remain unpaid. But if a draft operates as an assignment, then either he would pay at his peril, or the payee receiving payment would be liable over to the holder of a prior unpaid draft for money received to his use. This rule would greatly and injuriously affect the value of this class of paper for commercial purposes.
Something has been said in the case about this being an equitable proceeding, as if that should make a difference in the rules that should be applied to it. But in no proper sense is this an equitable proceeding at all. The receiver is appointed by an order made on the chancery side of the [206]*206court; but this merely puts him in the place of the assignee who failed to give bond, and in order that creditors may enforce through him their legal rights. When Angelí failed, this petitioner had certain legal rights in respect to this paper, and these rights qualified the rights of all other .creditors. The failure of Angelí and the appointment of this assignee could not increase this petitioner’s rights at the expense of other creditors: it leaves them as they were, to be enforced by such remedies as shall be appropriate. The statute which prescribes this particular remedy has no purpose to modify rights in any manner.
But if this were strictly an equitable proceeding it would make no difference. Courts of equity have no different rules in respect to the rights and obligations of parties to negotiable paper to those which are recognized in courts of law, but they recognize and enforce the same rules, and there would be gross injustice in their doing otherwise. Some of the cases above cited in support of these views were cases in equity.
The order of the circuit court is erroneous and should be set aside.
Campbell and Champlin, JJ. concurred.