191 Iowa 1259 | Iowa | 1921
The plaintiff, a manufacturer of cans in the east, shipped to the defendant a carload of cans at the agreed price of $844.92, and drew a sight draft on defendant dated October 1, 1914, for the amount thereof, with bill of lading attached, through the National Newark Banking Company, of Newark, New Jersey. The draft was payable to said bank, signed by plaintiff, and addressed to National Pickle & Canning Company, St. Louis, Missouri. Upon the face of the draft, in red ink, was printed the notation:
“This draft must be paid in cash or its equivalent, the bank named as payee acting only as agent to collect and remit to the drawer. ’ ’
It also recites:
“Bill of sale attached, deliverable only on payment hereof.”
It is indorsed:
*1261 “Pay to the order of any bank for collection for account of National Newark Banking Co., Newark, N. J.”
The transaction was treated as if the draft had passed through the Newark bank, although, by agreement between plaintiff and that bank, plaintiff sent out such drafts itself for collection, and accordingly the draft in question was forwarded for collection to the Sage Banking Company, at Alexandria, Missouri, at which point defendant had a factory. The defendant treats that transaction as having been done by the Newark bank. The Sage Banking Company received the draft, and called up defendant company’s manager, who came down on the evening of October 13, 1914, between 7 and 8 o’clock, to pay the draft and take up the bill of lading attached, and gave defendant’s check on said Sage Banking Company for the full amount. Defendant, as drawee of the draft, had to its credit on the books of the Sage Banking Company about $1,100; yet, at the time the check was given, the bank was insolvent, and had no funds on hand sufficient to pay the draft. The Sage Banking Company did not advise defendant’s manager that his check was worthless, or that the bank was in a failing condition. Upon drawing defendant’s check, as before stated, and with such worthless cheek, he took up the draft, received the bill of lading from the bank, and defendant afterwards procured and used the cans covered by the bill of lading. The check was marked across the face, “Paid. Sage Banking Co.” But it appears that the bank clerk who received the check did nothing further with it, and did not charge it to the account of the defendant on the books of the bank. There was at no time after the check was received sufficient money in the bank to pay it; and the next day, between 1 and 2 o’clock, the bank closed its doors, and thereafter passed into bankruptcy. Later, when the facts were made known to the Newark bank, it, for the purpose of protecting both plaintiff and defendant and all parties in interest, filed a claim in bankruptcy for the amount of the check, said claim setting out the facts and the existence of a dispute as to whether the draft was paid by the check, and as to whether the bankrupt had exceeded his authority as a collecting agent, and expressly stating that the claim was filed without prejudice to any action against the defendant, either by the Newark bank or by plain
Appellant’s contention, as we gather from the errors assigned and brief points, is that plaintiff and the Newark bank selected the Sage Banking Company, at Alexandria, as agent to collect the draft, with bill of lading attached, rather than an agent at St. Louis, Missouri, and selected the Sage Banking Company as its agent to present and receive payment of the draft, thereby justifying defendant in acting as it did in payment of the draft by the check. But the draft was to be paid in cash or its equivalent, whether it was sent to one bank or another. That is the question in the case, — whether, under the circumstances, the check transaction was a payment.
1. Appellant’s argument and reply, and the two so-called additional arguments, all four of them, refer to two Iowa cases, British & Am. Mtg. Co. v. Tibbals, 63 Iowa 468, 473, and Griffin v. Erskine, 131 Iowa 444. "While other cases are cited,
In the instant case, however, there were specific instructions that the draft drawn by plaintiff upon the defendant should be paid in cash only, or its equivalent. Though it appears that the defendant had an amount on deposit with the Sage Banking Company larger than the draft, still the bank, was, at that time, insolvent, and this fact was known to the Sage Bank and to the party who took defendant’s check; so that the bank knowingly took a worthless check and sought thereby, as the agent of plaintiff, or of the bank through which plaintiff made the draft, to pay the draft, although authorized to accept only cash or its equivalent. The Sage Banking Company might as well have taken a carload of broken grindstones. Under the authorities before cited, the acceptance of the check would, at most, be a conditional payment. It appears, as before stated, that the check was not charged to the account of the defendant by the Sage-Banking Company or its employees. There was, then, no conditional credit on the books of the bank. We do not understand either party to claim anything in that regard, although appellant cites authority to the proposition that the giving of the check by the defendant was an appropriation of the funds in its hands to the payment of the draft. But there were no funds to be appropriated. There was a paper balance in favor of defendant on the bank’s books, but the bank was insolvent. We understand appellee to concede that the bank was, in a sense, plaintiff’s agent,- — that is, for the purpose of collecting the money on the draft. The draft on its face so provides. But they contend, and cite authority for the contention, that by accepting a worthless check the bank exceeded its authority, and that, in regard to such excess of authority, the Sage Banking Company was the agent of the defendant; and further, that, in so doing, it was a matter between the defendant and the Sage Banking Company, which does not affect the rights of the plaintiff, as drawer of the draft, against the defendant. Appellee cites
Without further discussion, we are of opinion that the trial court rightly decided the case, and the judgment is — Affirmed.