164 S.E. 596 | S.C. | 1932
June 14, 1932. The opinion of the Court was delivered by Plaintiff brought its action to recover from the defendant the sum of $5,215.48. It states in its complaint its claim of right to recover in this wise:
November 5, 1929, it was the owner of a check for the above-stated amount drawn in its favor by Smith Brothers of Easley, S.C. on Easley Loan Trust Company, which it deposited, the same day, in People's National Bank for collection; that People's National Bank sent the check to the defendant, Commercial Bank, at Easley, for collection; that Commercial Bank, on November 6, presented the check to the drawee bank, Easley Loan Trust Company; that it was duly paid, was surrendered, canceled, and charged to the account of Smith Brothers; that defendant has refused to remit the collection and People's National Bank has, for value, assigned to plaintiff such claim, or claims, as it has against the defendant because of its failure to so remit.
Plaintiff demands judgment for the amount of the check, with interest.
For answer defendant admits the corporate capacity of plaintiff, and that it received from People's National Bank, for collection, the mentioned check, but alleges that it received it under the laws of South Carolina, and the agreement existing between itself and the People's National Bank of Greenville, S.C. to the effect that: "This bank would not be liable except for its own negligence, and that it might send all items directly or indirectly to the drawee bank, and accept its draft or credits as conditional payments in lieu of cash, and might charge back any item not actually paid." It *239 further alleges that in pursuance of this agreement it presented the check to Easley Loan Trust Company, the drawee bank, and received from it its check, covering this item, on the South Carolina National Bank of Greenville, S.C. that this check was not paid, was protested, and the item charged back to the People's National Bank of Greenville. It admits that it has refused to pay the check sued on, and denies all the other allegations of the complaint.
The case was heard by Judge H.F. Rice and a jury. At the close of the testimony, each party made a motion for a direction of a verdict in its favor. That of the defendant was refused; that of plaintiff was granted. From the judgment entered on the verdict, this appeal comes.
There are eight exceptions, but appellant's counsel have condensed them in argument, as follows.
"I. The plaintiff in its original right as owner of the check has no cause of action against the defendant —
"(A) The check was deposited by plaintiff under a special agreement permitting the collecting bank to accept the check of a drawee bank —
"(B) There was no privity between plaintiff and defendant.
"II. The plaintiff as assignee of the People's National Bank, in which it deposited the check for collection, cannot recover in this action against the defendant, the collecting bank.
"(A) Check was handled under a special agreement between the People's National Bank and the Commercial Bank.
"(B) Under the terms of a special agreement between the People's National Bank and the defendant, the relation of principal and agent existed.
"(C) Prior to assignment by People's National Bank to plaintiff, that bank accepted charge-back of item in question.
"III. In any event the question of plaintiff's liability should have been left to the jury." *240
We shall consider them in this manner.
The plaintiff brings its action against the defendant without specifically stating in its complaint that it does so as assignee of the People's National Bank, but at the trial plaintiff's counsel stated that the suit was predicated on that assignment. The question has, however, been argued. Can plaintiff maintain the action of its own right? Unless it can show some direct relation between itself and this defendant, it cannot do so.
Plaintiff opened its account with the People's National Bank August 8, 1928, and at that time signed a card which bore on it this statement: "The undersigned accepts and agrees to the conditions on the back of this card."
On the back of the card was printed, among other things, these words: "This bank, or its correspondents, may send items directly, or indirectly, to any bank, including the payor, and accept its draft or credit as conditional payment in lieu of cash."
When plaintiff's agent and manager, Mr. Riordan, deposited the check of Smith Brothers, which is now in suit, in the People's National Bank of Greenville, he listed it on a deposit slip which contained substantially the same agreement as that quoted from the card above mentioned. He testified that he had not read the agreement on the card, signed by him, and on the deposit slips, but we do not think that of itself is sufficient to relieve plaintiff of the liability of the agreement which the signing carried with it. It is true that it has been held by our Courts that the mere signing of such provisions or agreements does not necessarily make them binding upon a depositor; the indication is that the matter must have been brought to the attention of the depositor in order to bind him. In this present case the evidence shows that Mr. Riordan, as the agent of the plaintiff who made the deposit in question and who signed the card when the first deposit was made, continued to make deposits in that bank about every day for a period of more than a *241
year; that these deposits were made on the regular deposit slips of the People's National Bank, every one of which contained the agreements and provisions above stated. There is no allegation, nor even a suggestion, that there was any deceit, concealment, or fraud about these transactions. It is evident that Mr. Riordan is a man of intelligence and education. The fact that he did not read the card cannot excuse him, and through him the principal for whom he acted. It is the established rule of law in this jurisdiction that a person who signs a written instrument must read it, or, if he cannot read, have it read to him, unless he be deceived by misrepresentation or concealment or fraud into signing. In the case of Prince v. Insurance Company,
In the case of Baldwin v. Cable Company,
Then the learned Judge goes on to explain that this rule does not bind one who is deceived by false representation and induced to sign the paper.
In the case of J.B. Colt Co. v. Britt,
There follows the citation of a number of cases in South Carolina, United States Courts, and other jurisdictions.
Respondent relies upon the case of Stone v. WachoviaBank,
"There was evidence tending to show that no officer of the Coddington Company knew, until long after the transaction of the Stone item, that such printed matter was in their passbook, that it had never been called to their attention.
"It appears that the Charlotte Bank was accustomed to employ signature cards for depositors, which contained an agreement to the same affect as the printed matter in the passbooks, but there was no evidence tending to show thatsuch card had been signed by the Coddington Company inthis particular instance." (Italics added.)
In the present case it is undisputed that the plaintiff, by its agent and manager, had signed the card. The necessary *243 inference from the Wachovia Bank case is that, if the Coddington Company had signed the card at the Charlotte Bank, it would have been bound thereby. In the present case, again, it is also established that the plaintiff by its representative almost daily made deposits in the People's National Bank upon deposit slips which contained the same agreement printed upon the signature card, which deposit slips the agent himself prepared at plaintiff's office before they were taken to the bank.
In view of the undisputed facts of this case, it must be held that plaintiff is bound by the rule which we have quoted, and it is bound by the agreement which its agent made.
In the light of this conclusion, can it be held that there was such privity between plaintiff and defendant as will enable plaintiff to maintain this action?
It was for a while an issue in this State whether the Massachusetts rule or the New York rule governed. The New York rule is that, when a bank receives paper for collection and forwards it to another bank, the latter becomes the agent of the forwarding bank and is not the agent of the depositor, or the owner of the check.
The Massachusetts rule is that when a bank receives paper for collection it merely obligates itself to exercise proper care and diligence in selecting its agents and sub-agents, and the bank to which it forwards the paper, the collecting bank, is not the agent of the forwarding bank, but is the agent of the depositor or owner of the paper.
In the case of City Nat. Bank v. Cooper Griffin,
From the same case: "We adopt this rule as the just one, because it is in accord with the common understanding of bank and customer in their dealings. In depositing his paper, the customer ordinarily surrenders all control of it and has nothing to do with the means taken to collect. On the other hand, the bank undertakes the collection for its own profit, takes its own methods, and selects its own agents. It seems, therefore, illogical to regard the collecting bank or any of the intermediate banks as agents of the depositor, or to put upon him loss due to their default."
In the case of Harter v. Bank,
It would seem, then, that the New York rule is the established law of this State, and it would seem to follow as a matter of course that there is no privity between plaintiff and defendant which enables plaintiff to maintain this action in its own right.
In the case of First National Bank v. Federal ReserveBank,
That is the exact situation in our case. The People's National Bank of Greenville accepted the check in question to transmit for collection and thus became the agent of the plaintiff and is liable to him, if there be liability. Certainly *245 there was no privity between plaintiff and this defendant in this transaction.
In the case of Douglas v. Federal Reserve Bank (C.C. A.),
To the same effect is the holding of the United States Supreme Court in the case of Federal Reserve Bank v.Malloy,
It seems unnecessary to cite further authorities to sustain the position that there is no privity between plaintiff and defendant which would sustain this action, if plaintiff sued in its own right.
Can plaintiff recover against defendant in its right as assignee of People's National Bank? It could take no higher right than its assignor. *246
Respondent herein relies upon the case of Stone v.Wachovia Bank as authority for its right to recover in this action. The plaintiff Stone did not bring his action against the Anderson Bank, which was the collecting bank, but against the Wachovia Bank, the transmitting bank, and brought his action as the assignee of Coddington, who, in turn, was the assignee of the Charlotte Bank, who had transmitted the item for collection to the Wachovia Bank. In the present case plaintiff is endeavoring to sue the collecting bank as assignee of its agent, the People's National Bank. There is no authority needed to be cited to sustain the proposition that plaintiff has only the right which the People's National Bank had against the defendant. The question then arises whether the special agreement between the People's National Bank and Commercial Bank to the effect that the Commercial Bank might accept the checks of the drawee bank with its corresponding right to charge back the item to the People's National Bank if it were not paid, was binding. The Wachovia Bank case contains this: "The general rule is that a forwarding bank, in the absence of a special agreement, is authorized to accept only legal tender from its collecting agency" — citing numerous authorities.
The italicized words which are in the opinion show that this rule may be abrogated by a special agreement.
The case of First National Bank v. Federal ReserveBank, supra, is authority for the statement that an agreement similar to that between the People's National Bank and Commercial Bank is binding, and that Commercial Bank may limit its liability by such agreement — quoting NationalRevere Bank v. National Bank of Republic,
The case of Merchants' National Bank v. Bank of NinetySix,
In the case of Ryan v. Columbia National Bank,
Continuing, we take from the Ryan case: "A necessary inference from this declaration of the law is that the Massachusetts rule, the antipode of the New York, Federal and South Carolina rule, may be incorporated into the contract of deposit by expression or implication."
Quoting again from the Ryan case: "The stipulation not only incorporates the Massachusetts rule into the contract of deposit, but it authorizes the depository bank to accept the check of the collecting bank in remittance of the collection, when under ordinary conditions it is not authorized to accept anything but money" — citing Federal Reserve Bankof Richmond v. Malloy,
In First National Bank v. Federal Reserve Bank,
It is plain, then, that the agreement between the depositor, the plaintiff in this case, and the depository bank, the People's National Bank, provides that the depository bank "acts only as a depositor's collecting agent, and assumes no responsibility beyond the exercise of good care. All items are credited subject to final payment in cash or solvent credit. This bank will not be liable for default or negligence of its duly selected correspondents, nor for losses in transit, and each correspondent so selected shall not be liable except for its own negligence. This bank or its correspondent maysend items directly or indirectly, to any bank including thepayor, and accept its draft or credit as conditional paymentin lieu of cash; it may charge back any item at any time beforefinal payment whether returned or not, also any itemdrawn on this bank not good at close of business on day deposited." (Italics added.)
To this agreement we have held plaintiff assented by the act of its agent and manager.
The depository bank selected as the collecting bank the Commercial Bank of Easley, defendant herein. The agreement between these two banks is identical with that just quoted. *249
Unquestionably, under this agreement the defendant had the right to accept the draft or check of Easley Loan
Trust Company drawn upon the South Carolina National Bank of Greenville and, unquestionably, when the check was not paid and which contained the item of $5,215.48, it had the right to charge the item back to the People's National Bank of Greenville. This it did and notified People's National Bank of its action. The People's National Bank acquiesced in this action, as it was bound to do under its agreement with Commercial Bank. It in turn, and before the assignment to plaintiff, charged the item back to plaintiff, as it had the right to do under its agreement with plaintiff, when it accepted the deposit for collection. It had the right to charge back as a matter of law. In the case of Inter-StateNational Bank v. Ringo,
In the case of Pinkney v. Kanawha Valley Bank, a West Virginia case reported in
In the case of Southern Stove Works v. Converse SavingsBank,
What did this assignment by the People's National Bank convey to the plaintiff? Only such right or claim as it had against Commercial Bank. It is incontestable that Commercial Bank carried out in every particular its agreement with People's National Bank. The latter bank recognized this fact when it received notice from the Commercial Bank that it had charged back to People's National Bank plaintiff's item of $5,215.48. It accepted and acquiesced in this action of Commercial Bank, when it, in turn, charged the item back to plaintiff and required plaintiff to pay the money back to it, before the assignment to plaintiff. Its account with Commercial Bank on this item was closed. It had no cause of action against Commercial Bank, and hence could not, and has not, assigned to plaintiff any right of action against this defendant. If plaintiff has any right of action in these premises it is against People's National Bank, which question is not before us for determination at this time; *251 nevertheless, we are inclined to agree with the proverb of Heywood, uttered many, many years ago: "He hath the wrong sow by th' eare," in so far as this defendant is concerned.
In the view which we take of this case it is not necessary to consider the third question, namely, whether the issue of defendant's liability should have been left to the jury.
The judgment of the Court below is reversed, with instructions to enter judgment for defendant under Rule 27 of this Court.
MR. CHIEF JUSTICE BLEASE and MESSRS. JUSTICES STABLER and CARTER and MR. W.C. COTHRAN, ACTING ASSOCIATE JUSTICE, concur.