142 N.C. 187 | N.C. | 1906
This action is prosecuted by plaintiff bank against the Murchison National Bank and the other defendants for the recovery of $1,059, being the amount of a check drawn by Griffin & Aiken on the Merchants and Farmers Bank of Dunn. In the view which we take of the case much of the testimony becomes immaterial. The plaintiff set forth several causes of action against the different defendants. The facts material to the discussion and decision of the case, in regard to which there is but little, if any, controversy, are:
Griffin & Aiken on 21 January, 1904, gave to defendant Floyd, in payment of a note held by his wife, their check on the Merchants and Farmers Bank of Dunn for $1,059. On 29 January, 1904, Eloyd deposited the check for collection in the plaintiff bank, and by an arrangement made with said bank the amount was credited to him, to be charged back if the check was not paid. Eloyd drew several checks against the credit. On the same day the plaintiff bank forwarded the check for collection to defendant Murchison Bank, its correspondent at Wilmington, N. 0. It was received on 30 January, 1904, and on same day forwarded, for collection, to its correspondent, the Merchants and Farmers Bank of Dunn, N. O. The check was received by the bank at Dunn on 1 February, 1904; was marked “Paid,” and charged to Griffin & Aiken, the drawers, who had funds to their credit in excess of the amount of the check.
On 2 February, 1904, the Murchison National Bank wrote plaintiff: “We have not been able to get any returns. Hope to get something by Monday.” On 2 February, 1904, the Merchants and Farmers Bank had in its vaults an amount
On 10 February the Murchison Bank wired the plaintiff bank: “Merchants and Farmers Bank, Dunn, reported closed. Check mentioned was taken, subject final actual payment. Have used every effort to collect. We do not assume any responsibility. We notified you on 6th that it was unpaid.” Plaintiff bank wired: “Telegram. All liability on us will fall on you and Dunn Bank. Notify it.” The introduction of this telegram was objected to, and exception duly noted to its admission. While we think it compe- - tent, its admission was entirely harmless. It did not in any respect change the status of the parties.
The Murchison Bank on 9 February wired the plaintiff that it had no returns from .Dunn and had sent a man there, advising that plaintiff’s customer send some one there.
Mr. Tillery, cashier of plaintiff bank, testified: “The Murchison National Bank notified us of the receipt of the cash item of $1,059, and they had on it the same, or in substance the same, as our credit-card had relative to our side collections. The usual credit-card customary among banks relative to collections of papers outside of the town in which the bank is located is to receive them with the understanding and agreement that the bank so receiving shall not be liable until it receives actual final payment, and the credit-card which acknowledged the receipt of the check of $1,059 had printed on it the following: ‘Items outside of Wilmington are remitted at owner’s risk until we receive full actual payment.’ And this is the usual custom among banks relative to out-of-town collections. I do not know which route the mail goes from Wilmington to Dunn. I think it goes by Golds-boro. Goldsboro is between Bocky Mount and Wilmington.
Tbe Murchison Bank, at and about tbe time of tbis transaction, sent other collections to tbe Dunn Bank. There was much testimony in regard to tbe transactions between tbe Dunn Bank and tbe Murchison Bank between 1 February and 10 February, 1904, which is immaterial in tbe view which we take of tbe case. Tbe defendant Murchison Bank tendered a number of issues directed to tbe several aspects of tbe controversy, which are eliminated from tbis discussion. We carefully examined them and find that several relate to matters in regard to which there is no controversy. The others are immaterial. 'The issues submitted by his Honor cover the material questions in controversy. The answers to them establish the essential facts herein stated. The 12th and 13th issues are as follows: “Was the Murchison Bank guilty of negligence in the discharge of any duty it owed in connection with the collection of said check of $1,059 ? Ans.: Yes.” “If the Murchison Bank was guilty of negligence in the collection of said check, what loss was sustained thereby? Ans.: $1,059, with interest at 6 per cent, from 6. February, 1904.” Issues were submitted in regard to the conduct of the plaintiff bank and its liability to the owner' of the check. The answers to these issues exonerated it from liability. This view renders it unnecessary to discuss the correctness of the instructions given.
The first question presented for our consideration is the duty of the plaintiff and the Murchison Bank to the owner, in dealing with the check. While there is a diversity of opinion and the decisions of the courts are not uniform upon the subject, this Court, in Bank v. Bank, 75 N. C., 534, approved and adopted the following rule of conduct: “It is well settled that when a note is deposited with a bank for collection, which is payable at another place, the whole duty of the bank so receiving the note in the first instance is seasonably
Mr. Morse in his work on Banks and Banking, vol. I, sec. 235, thus states the law: “When the paper is payable in some other place than that in which the bank is located, its duty is (1) to forward the bill, or note or check, in proper season, to a sub-agent selected with due care; (2) to send to such agent any instructions bearing upon its duty that may have been received from its depositor, -and (3) to make inquiry with due diligence if notice of the arrival of the paper does not come to it within such time as it might reasonably be expected.” He further says: “If a bank fails to do its duty in the matter of collection with reasonable skill and care, it is liable for the damage resulting to any party interested in the paper, whether his name appears on the paper or not.” See. 252.
It is conceded that there is much diversity of opinion and decision in respect to the liability of the receiving bank for the default of its sub-agent, and the courts of the several jurisdictions, holding variant views, proceed upon entirely distinct and opposite constructions of the implied powers conferred upon the bank first receiving the collection. “If a bank receive a paper for collection on a party at a distant place, the agent it employs at the place of payment is the
As we have seen, this Court has adopted the Massachusetts rule, which is based upon the following satisfactory reason: “The employment of a sub-agent is justifiable, because this manner of conducting business is the usual and known custom, and in a business which requires or justifies the delegation of an agent’s authority to a sub-agent, who is not his own servant, the original agent is not liable for the errors or misconduct of the sub-agent, if he has exercised due care in the selection.” Measured by this standard there can be no doubt in regard to the conduct of the plaintiff bank in sending the check to defendant Murchison Bank, its standing and fitness to discharge the duty being conceded. Elis Honor would have been justified in so instructing the jury. Measured by the same rule, the Murchison Bank would have been in the strict line of its duty in sending its collection to its correspondent in Dunn but for the fact that the Dunn Bank was the drawee of the check.
This brings us to the pivotal question in the case: Is the drawee or payee of a bill, note, or check a suitable agent to which such paper should be sent for collection? This question has never been decided by this Court, hence we must seek for air answer upon the reason of the thing, the general principles underlying the law of agency, and adjudged cases in other jurisdictions. By accepting the collection from the plaintiff bank the Murchison National Bank became, in respect to Eloyd’s interest, his agent; but as the amount had been credited to him, the plaintiff was entitled to the proceeds. In this view of the case it is not material whether the bank of Rocky Mount was the proper party plaintiff, as
The law is well stated in Ger. Natl. Bank v. Burns, 12 Col., 539, in which it is said: “Even if we can conceive of such an anomaly as one bank acting as the agent of another to make a collection against itself, it must be apparent that the selection of such an agent is not sanctioned by businesslike prudence and discretion. How can the debtor be the proper agent of the creditor in the very matter of collecting the debt ? His interests are all adverse to those of his principal. If the debtor is embarrassed there is the temptation to delay. # * * qq^e fact that the L. B.ank was a correspondent of
In this connection it is said by the Court of Appeals of Missouri, in Bank v. Bank, supra: “It was said to be customary for banks to transmit collections to their correspondent, even though such correspondent was the debtor. To this we answer that it is not a reasonable custom, and therefore must fail of recognition by the courts. We concede it may be and perhaps is, in many instances, the most convenient mode for the bank intrusted with the collection. But if the bank adopts that mode it takes upon itself the risk of the consequences.”
In Min. S. and Door Co. v. National Bank, 44 L. R. A., 507, the Court says: “We cannot agree with counsel that the usage and custom' here relied upon as a defense to the claim that the defendant was negligent when forwarding this check to the Mapleton Bank for presentation and pay
The defendant says, however this may be, the check was received for collection pursuant to an express contract that “items outside of Wilmington are remitted at owner’s risk until we receive full actual payment.” This language was brought to the attention of the plaintiff bank, and we may assume entered into the contract under which defendant received the paper for collection. We cannot suppose that it was intended to be understood as releasing the defendant from the consequences of its own negligence. The extent to which it will be permitted to exonerate defendant bank is that it shall not be responsible for the negligence or misconduct of its sub-agents properly selected. If given its literal meaning, no liability whatever in respect to the collection of the check would attach to it. This construction would relieve it from the duty of using due care in the selection of a sub-agent. If such is the proper construction of the language, and if, thereby, it is relieved from the responsibility for its own negligence, we should not hesitate to hold it unreasonable and invalid.
An agreement to relieve an agent or fiduciary of all responsibility for its own negligence or misconduct is unrea
But when it is sought to relieve itself of all liability for negligence in the selection of such agent quite a different question arises. Whatever may be the proper construction of the language, we do not think that the defendant Murchison Bank was authorized, in violation of a well-settled rule of law, to send the check to the drawee; and if by reason of doing so, loss has been sustained, it must be held responsible therefor. It appears that upon the receipt of the check by the Dunn Bank on 2 February, 1904, the cashier of said bank immediately canceled the same and charged the amount to the drawer, who had funds sufficient to meet it. It further appears that on that day the Dunn Bank had in its vaults an amount sufficient to have paid the check. The defendant, however, contends that as the Dunn Bank was insolvent, the status of the parties was in no respect changed; that it was “a mere playing with figures,” and cites Bank v. Davis, 114 N. C., 343.
There are a large number of exceptions to bis Honor’s rulings in tbe admission of testimony, and the instructions given and declined. The scope of the action, as set forth in the complaint, comprehends a number of questions affecting the rights and liabilities of tbe several defendants, which were properly discussed in tbe brief. We are of tbe opinion that, eliminating every other phase of the case, tbe right of the plaintiff to recover of the defendant Murchison Bank rests upon facts found by tbe jury, being largely upon undisputed testimony.
We do not think it necessary to discuss or decide tbe other questions; they are not so related to the facts upon which the conclusion is based as to affect tbe result. Tbe entire testimony, and'tbe result of tbe action in sending tbe check to the drawee bank, although entirely unexpected, strongly illustrates tbe wisdom of tbe law which declares that tbe party whose duty it is to pay is not the proper party to
Upon a consideration of the whole record we find
No Error.