BILLS AND NOTES--INDORSEMENT "FOR DEPOSIT ONLY"--EFFECT ON NEGOTIABILITY

Defendant, in payment for goods purchased, drew two checks payable to W which W indorsed "pay to order of plaintiff bank for deposit only" and deposited with plaintiff. Plaintiff credited W's account with the amount of the checks, which sum was immediately withdrawn. Defendant then stopped payment of the checks as W failed to deliver the goods purchased; and, since W was bankrupt, plaintiff sought to recover the amount of the checks from defendant. Defendant sought to assert a defense which was good against W, on the theory that plaintiff, as restrictive indorsee, was merely a trustee for W and not a holder in due course.

Held, the trial court was correct in finding that plaintiff was a holder in due course. Rubio Sav. Bank of Brighton v. Acme Farm Products Co., (Iowa 1949) 37 N.W. (2d) 16.