43 P.2d 902 | Mont. | 1935
Lead Opinion
When the maker of negotiable instruments, such as were the interest coupons in suit, specifies some bank as the place where he will pay the obligation, such bank is the agent of the maker and not the agent of the payee or owner. Forwarding money to such agent, especially when the agent does not have possession of the bond or coupons, is never payment of the bond or coupons, no matter how long the money remains in the hands of the agent or how late the owner or holder of the bonds or interest coupons may present the same to such bank for payment. Here, the New York bank, Kountze Brothers, never received the interest coupon notes. Even though they had received from the defendant the amount of money required to pay the coupon notes, and retained the funds *390
for that purpose, yet, not having received the notes, the loss resulting because of the bank's insolvency must fall on the defendant. (7 C.J. 627.) That such is the law has been fully recognized by this court and is the rule generally followed, especially in states where the Uniform Negotiable Instruments Law has been adopted. (7 C.J. 605, 606; Kalman v. TreasureCounty,
Interest coupons, whether attached or detached from bonds, are promissory notes, and, therefore, the maker is not discharged from liability through neglect to make presentment for payment. (Perry v. Norddeutscher Lloyd,
Section 8477, Revised Codes 1921, which is embodied in the Uniform Negotiable Instruments Law, has uniformly been construed to relieve the owner of a negotiable promissory note of any duty to make presentment of it either to the maker or to the place specified in the instrument for payment thereof in order that the owner may have a right of action against the party primarily liable. (8 C.J. 527, sec. 741; First State Bank of Hilger v.Lang,
Where the holder of negotiable paper through his own conduct caused the maker to believe that a certain dealer was his agent for receiving payments and such dealer appropriated such payments to his own use, the holder, whose negligence made it possible for the dealer to commit the wrong, must suffer the loss. (Millious
v. Thompson,
Where a bank fails after paper has been paid through actual receipt of the money to the bank where such paper is payable, the loss falls upon the owner of the paper and not upon the maker. (7 C.J. 627.) The act of the county treasurer in transmitting the money to the actual holders of the interest coupons, in accordance with his records, was a payment of said interest coupons for the account of the respondent school district.
If a party selects a bank to collect a note and payment is made to such bank, it is the agent of the person selecting it and payment to it is equivalent to payment to him. (Porter v.Roseman,
Appellant's entire argument is based on the proposition that, where a note is made payable at a particular bank, this does not of itself make the bank the agent of the payee or holder to receive payment, and payment to a bank of the amount due on the note made payable there when the bank does not have possession of the note, or authority to collect it, does not discharge the maker. The facts in the case at bar do not support such a theory. It is our contention that the banking house of Kountze Brothers, by the acts of the appellant itself in exercising its option as to payment and from the terms of the agreement and from all conditions, usages and customs in relation to the payment of the interest coupons in question, did have the authority, as the collecting agent for appellant, to receive the interest due on the bonds; thus the law so strenuously relied upon by appellant as to payment is not applicable to the facts in this case. Plaintiff corporation brought this action in the district court of Big Horn county to recover $1,650 with interest, which sum is alleged to be due to plaintiff from the defendant school district, on fifty-five interest coupons for $30 each.
It appears that on January 15, 1921, the defendant school district issued seventy-five bonds for $1,000 each, bearing interest at the rate of six per cent. per annum, payable on the fifteenth days of January and July in each year, as evidenced by interest coupon notes attached to and made a part of the bonds. The coupons were made payable at the office of the county treasurer of Big Horn county, or at the banking house of Kountze Brothers in New York City, hereinafter called the bank. The bonds were payable to "bearer" and were sold and delivered to Kountze Brothers. Thereafter the bank sold and disposed of the bonds to some third party. The evidence discloses that they were purchased by J.K. Mullen from Bosworth, Chanute Co., in Denver, Colorado, in March, 1921, and were transferred to the plaintiff corporation on March 30, *394 1929. It appears that the money to pay the coupons was always sent by the county treasurer to the bank. This was the practice which was followed from the time when the bonds were issued.
From the time it became the owner of the bonds, plaintiff always deposited the interest coupons, when due, in the First National Bank of Denver. That bank then forwarded them to the bank in New York for payment, and in this manner all the coupons which fell due prior to July 15, 1931, were paid.
On May 23, 1931, the county treasurer, according to his custom, transmitted enough money to the bank to pay the interest coupons which were to become due July 15, 1931. Plaintiff deposited its coupons with the First National Bank of Denver on October 6, 1931; thereafter that bank proceeded to present them to the New York bank for payment. This presentment was not made until after October 13, 1931, upon which date that bank had become bankrupt. The coupons were returned to the Denver bank with the advice that, Kountze Brothers having closed its doors, no presentation of the interest coupons could be made. The Denever bank then transmitted them to the county treasurer of Big Horn county for payment, but they were returned without payment. Plaintiff then instituted this action.
The county treasurer testified that he transmitted the interest due on the bonds in question to Kountze Brothers on May 23, 1931; that he had no notice prior to July 15, 1931, that the interest was to be paid to any other than the New York bank; that it did not return the money to him; and that he did not know what disposition was made of the remittance forwarded by him.
The cause was submitted to the court sitting without a jury. The court found generally in favor of the defendant and against plaintiff. From the judgment entered thereon plaintiff appeals.
The controlling question presented for our solution is whether the transmittal of the money by the county treasurer to the New York bank constituted a payment of the interest *395 coupons so as to bar plaintiff from recovery in this action. Plaintiff contends that it did not, because "(1) the school district having seen fit to make the bonds payable at the banking house of Kountze Brothers at New York City, did thereby make that banking house its agent and was responsible for any dereliction or defalcation of its agent; (2) the interest coupons being negotiable instruments and having all the attributes of commercial paper, the plaintiff was not required to present them to Kountze Brothers for payment on July 15, 1931, the due date, or at any particular time, and cannot be required to suffer the loss resulting from the failure of Kountze Brothers to pay the interest coupon notes."
It will be noted that the coupons in question are payable to[1, 2] bearer and possess all the qualities and incidents of commercial paper. Title to such paper passes by delivery. (SeeKalman v. Treasure County,
Defendant, however, contends that this rule is not applicable[3] in the instant case, for the reason that plaintiff, by virtue of a long course of dealing, made Kountze Brothers its agent. *396
There is respectable authority supporting the proposition that in certain instances there may be an exception to the general rule, viz., that through a course of dealing plaintiff might be deemed to have constituted Kountze Brothers its agent for the purpose of receiving payment on the coupons. (See First Nat. Bank v.Hessell,
A careful study of the record in this case fails to disclose anything establishing, or tending to establish, that plaintiff had made the New York Bank its agent or had recognized it as such. The facts are quite to the contrary. While it is true that Kountze Brothers' bank was the original purchaser of the bonds from the district, there is nothing to show that it held them for any length of time. It is affirmatively disclosed that it did not sell the bonds with the coupons attached to the plaintiff, but the bonds passed through the hands of at least two intermediate holders. There was never any direct dealing of any kind between plaintiff and Kountze Brothers, except the fact of the transmittal of coupons to it for payment. This cannot be construed as constituting Kountze Brothers the agent of plaintiff, because the district, in the first instance, had made that bank the place of presentment and payment, so that the mere presentation of the coupons there was only equivalent *397 to presenting them direct to the county treasurer. In all of the cases wherein an exception to the general rule has been recognized, there was something to show an independent relation between the holder of the paper and the alleged agent. Here, the only relation of agency shown is between the district and Kountze Brothers. In such circumstances we are forced to hold that this case does not furnish any basis sufficient to create an exception to the general rule.
It is further contended by defendant that, if plaintiff had[4-6] been diligent in presenting the coupons for payment, it would have suffered no loss, and that its laches in not so doing should be chargeable to it and not to defendant, citing section 8488, Revised Codes 1921. Such contention and the authority cited in support thereof might be very forceful if the paper in question had been checks or bills of exchange, rather than interest coupons. The interest coupons were, in effect, promissory notes. (See sec. 8591, Id., and note; also, Perry v.Norddeutscher Lloyd,
In accordance with the foregoing statutes which are embodied in the Uniform Negotiable Instruments Law, it has been uniformly held that the holder of a negotiable promissory note does not have to make presentment of the same in order that he may have a right of action against the party primarily liable. (First StateBank of Hilger v. Lang,
The interest coupons involved here being in effect negotiable promissory notes, and defendant school district being the party primarily liable thereon, plaintiff is not foreclosed from recovery because it failed to present them to the bank before it became bankrupt. The bank was not the agent of plaintiff. It is obvious that if it can be said to have been the agent of anyone in this transaction, it must, under the authorities to which we have already adverted, be held to have been the agent of defendant.
It has been suggested that by reason of business custom prevailing in such matters, defendant was required to have its money in the New York bank on July 15, 1931, to pay the coupons. There is neither allegation nor proof of such a custom. A particular custom or usage relied on as a basis for recovery or defense must be pleaded. (Lewis v. Aronow,
It has also been urged that the defendant school district should not lose because the holder of the coupons was not diligent in their presentation. This position is not tenable in the circumstances of this case. Here it would seem that defendant may have been wanting in diligence, in that it apparently did not avail itself of every opportunity at its command to prevent *399 loss to itself. The facts of this case indicate that the $1,650 may have been a trust fund in the possession of the New York bank, and that timely and appropriate action might have resulted in reclaiming the fund in whole or in part, so that the full loss to defendant would have been averted.
The judgment is reversed and the cause remanded to the district court of Big Horn county, with direction to enter judgment in accordance with the prayer of plaintiff's complaint.
ASSOCIATE JUSTICES MATTHEWS and ANDERSON concur.
MR. CHIEF JUSTICE SANDS, absent on account of illness, takes no part in the foregoing decision.
Dissenting Opinion
I dissent. The question involved here is, in my opinion, one of negligence rather than of statutory construction, and the majority opinion rewards the slothful and negligent, and penalizes the diligent. Plaintiff's tardiness might be excused if in the presentation of the coupons it had been late for only a day or two or a week, but when, though due in July, they were not presented until October, a case of such gross neglect is presented which, because of the stretch of time elapsing, takes it out of any case I have been able to find supporting the rule laid down by the majority, unless we concede that negligence of any degree, regardless of the loss the innocent party may incur, is not to be taken into account in interpreting the provisions of section 8477, Revised Codes 1921. The rule, that one who by his neglect causes another loss shall answer to the other to the extent of such loss, is fundamental and as old as the law itself.
Defendant, by the business custom prevailing in such matters, was required to have its money at the New York bank on July 15, 1931, to meet the payment of plaintiff's coupons. The defendant fulfilled its obligation and had the money there. The suggestion that defendant itself was wanting in diligence I do not think sustained by the record. Furthermore, when it was sued it pleaded such fulfillment of its contract as it *400 believed afforded it full protection, and to then attempt to go into a foreign jurisdiction and set up a defense such as that suggested would have been an abandonment of the defense pleaded in this action — an acknowledgment of its lack of faith in the defense pleaded, and that before its rights were determined here.
Plaintiff, in spite of the unsettled business conditions which prevailed at that time, neglected to exercise the prudence required of the average man, and made no move to obtain its money for the coupons until on October 6, when it delivered them to the Denver bank for collection, and by the time they reached New York that bank had closed. It is clearly obvious that plaintiff's tardiness was the sole cause of the loss involved, and the judgment of the lower court should be affirmed.
Rehearing denied May 3, 1935.
