Federal Reserve Bank of San Francisco v. Idaho Grimm Alfalfa Seed Growers' Ass'n

During the period herein mentioned, the Idaho Grimm Alfalfa Seed' Growers’ Association was a farm marketing association organized under the laws of that state, and was engaged in the business of cleaning and marketing alfalfa seed produced by its members. When alfalfa seed was sold, a draft was drawn on the buyer for the purchase price, with a bill of lading attached. Up to about a year prior to November 28, 1923, all drafts thus drawn were deposited with D. W. Standrod & Co., Bankers, for collection only, and the association was not permitted to draw against the amount of the drafts until payment was actually made to the Standrod Bank; but in the fall of 1922 this arrangement was changed through an agreement between the association and the Standrod Bank, and thereafter the association was given Immediate credit for the amount of the drafts when deposited, and was permitted to draw against them to the full amount, if it so desired. If a draft was not paid when presented, the amount was charged back to the account of the association, and, if paid, the association was charged with interest on the amounts cheeked out before the draft was actually paid.

On November 23, 1923, the…