13 Blatchf. 237 | U.S. Circuit Court for the District of Southern New York | 1876
The plaintiff, as assignee of the Corn Exchange National Bank, of Chicago, Illinois, brings this action to recover of the defendant the amount of a draft sent to the defendant for collection. A draft drawn upon one Wis-wall, of Washington, North Carolina, and owned by the Corn Exchange National Hank, was transmitted by mail by the latter to the defendant, at Wilmington, North Carolina, with directions to collect and remit the returns. The residence of the drawee was distant from the defendant’s place of business 170 miles. Upon receipt of the letter from the Corn Exchange National Bank, the defendant replied, stating, in substance, that the draft had been credited to the Corn Exchange National Bank and entered for collection; and thereupon the defendant transmitted the draft to Burbank & Gallagher, bankers at Washington, N. C., who were the correspondents and collecting agents of the defendant at that place. Burbank & Gallagher collected the draft, but failed before remitting the amount to the defendant, and the proceeds passed to their assignees in bankruptcy. They were in good credit at the time the draft was forwarded to them by the defendant.
Two questions arise upon these facts: First — are the rights of the parties to be de-' termined by the law of Illinois or by that of North Carolina? Second — is the defendant liable for the default of Burbank & Gallagher, on the theory that they were its agents and it was responsible for their miscarriage, or, is it exonerated, on the theory that its duty towards the Corn Exchange National Bank was discharged upon transmitting the draft, with proper directions, to competent and responsible agents at the drawee’s place of residence?
If the rights of the parties are to be governed by the law of Illinois, the plaintiff cannot recover, as the adjudications of the highest court of that state settle the question involved in favor of the defendant. Fay v. Strawn, 32 Ill. 295; Aetna Ins. Co. v. Alton City Bank, 25 Ill. 243. It is urged, for the defendant, that the contract between the parties originated by the letter enclosing the draft mailed at Chicago, and was ■ not complete until the Corn Exchange National Bank received the letter of the defendant in reply, acknowledging the receipt of the draft and assuming to undertake its collection, and was, therefore, wholly made in the
In the decisions of questions of commercial law. the federal courts do not feel bound to adhere to the course of adjudications in the courts of the state in which the action is tried. It is to be regretted that a uniform rule should not have been adopted by the courts upon a question of such importance, and one that so frequently arises; but it will be seen that it is involved in a hopeless conflict of authorities. In New York and Ohio, and in England, the adjudications are, that the receiving bank is the agent of the owner to make collection, and liable for the default of the sub-agent to which it transmits the paper (Allen v. Merchants’ Bank, 22 Wend. 215; Montgomery Co. Bank v. Albany City Bank, 3 Seld. [7 N. Y.] 463; Reeves v. State Bank, 8 Ohio St. 465; Van Wart v. Woolley, 3 Barn. & C. 439; Mackersy v. Ramsays, 9 Clark & F. 818); while, in Connecticut, Massachusetts, Pennsylvania, and Illinois, the contrary doctrine is asserted (East Haddam Bank v. Scovil, 12 Conn. 303; Fabens v. Mercantile Bank, 23 Pick. 330; Dorchester & Milton Bank v. New England Bank, 1 Cush. 177; Mechanics’ Bank v. Earp. 4 Rawle, 384; Aetna Ins. Co. v. Alton City Bank, 25 Ill. 243; Fay v. Strawn, 32 Ill. 295). No decision upon the question, of which I am aware, has been made by the courts of the United States, though the case of Bank of Washington v. Triplett, 1 Pet. [20 U. S.] 25, is referred to in several of the decisions as one in point; but that case differs essentially from this, because, there, it was conceded that the draft was sent to the receiving bank to be by it transmitted to a sub-agent for collection, and the action was brought by the owner of the draft against the sub-agent. In many of the cases referred to, the liability of the receiving bank was predicated upon the theory that the sub-agent was its agent, and not the agent of the owner of the paper, while, in others, liability was denied upon the theory that the sub-agent was the agent of the owner. Accordingly, the same conflict of adjudication exists where the question has arisen whether the owner of the paper can maintain an action against the sub-agent for the latter’s default in making collection, or whether his only remedy is against the receiving bank by whom the paper is transmitted to the sub-agent (Montgomery Co. Bank v. Albany City Bank, 3 Seld. [7 N. Y.] 463; Commercial Bank v. Union Bank, 11 N. Y. 203); while, in some of the cases, the conclusion is reached that the owner has his election to proceed against either (Wilson v. Smith, 3 How. [44 U. S.] 763). In this confusion of precedent, and in the absence of any decisión which should be held controlling upon this court, it only remains for me to adopt such a conclusion as to my judgment seems best to accord with principle; and, in view of the very elaborate discussion of the question involved, to be found in several of the cases cited, I do not deem it necessary to do more than indicate some of the reasons which lead me to dissent from the doctrine that the receiving bank is exonerated from liability if it transmits the paper with proper instructions to a suitable agent. The cases which exonerate the bank from liability under such circumstances, rest their conclusions upon the supposed intention of the parties to the transaction, and insist, that, when the paper is to be collected at a place distant from the bank to which it is sent, the fair presumption is, that the parties do not intend that the receiving bank shall collect by its own officers or employees, but shall transmit to another a gent to perform that duty. The first obj ection to this position is, that it is inconclusive, because it fails to determine the vital question, whether it is to be presumed the parties intend that the ultimate agent shall be the agent of the receiving bank or the agent of the owner of the paper; and the doubt thus presented has found expression not only in the cases cited, but in others, where the question was, whether the bank is liable for the default of a notary to whom it delivers paper to protest. Ayrault v. Pacific Bank,
For these reasons, I am of opinion that judgment should be rendered for the plaintiff, and it is ordered accordingly.