111 Ky. 930 | Ky. Ct. App. | 1901
Affirming.
The Second National Bank of Louisville made an agreement with the Merchants’ National Bank of New Albany, Ind., by which, in consideration of the New Albany bank depositing with it its surplus', it agreed to pay three per cent, interest upon the daily balances in favor of the New Albany bank, and also agreed to do the collecting of that bank without charge. After this, en April 1,1893, the Bed-ford Stone Quarries Company, a corporation doing business at Bedford, Ind., executed its two negotiable notes to the New Albany Manufacturing Company, a corporation doing business in New Albany, Ind., — one for $652.07, due in thirty days, and the other for $650, due in sixty days, — both payable at the Bedford Bank, of Bedford, Ind. The New Albany Manufacturing Company discounted the notes before maturity to the Merchants’ National Bank, and the latter on April 22d sent the thirty-day note, which matured May 4th, to appellant by mail, for collection, and on May 13th sent it the other note in like manner. Appellant, on the same day that it received the notes, sent them to the Bedford bank for collection. On June 6, 1893, the Bedford bank assigned for the benefit of its creditors; and so, soon afterwards, did the Bedford Stone Quarries Company, the maker of the two notes. On June 14th the two notes were returned to appellant unpaid and ■ unprotested, and' were returned by it to the New Albany bank. On the next day it returned them to appellant, claiming that diligence had not been used, and that by the failure to protest them the indorser was released. The notes were governed by the laws of Indiana, and thereby were placed on the footing of foreign bills of exchange. The indorser was therefore released, and, the maker being insolvent, it was insisted
That the Bedford bank was negligent, and that it is primarily liable for the loss1, is admitted; but appellant is not liable for the neglect of its correspondent. In Bank v. Newland, 97 Ky., 464 (17 R. 329) (31 S. W., 38), this court-said: “When a customer deposits with a bank a note, bill of exchange, certificate of deposit, check, etc., for collection at a point distant from the location of the bank, he must know the bank can not send one of its officers or agents to such point to make the collection. He is presumed to know the method employed by banks in making such collections. He knows that the bank must select some other bank or agency to aid in accomplishing the undertaking imposed on it. He has made the bank his agent for that purpose. He has employed the bank to do, through its method of making collection, that which would cost him much time and money to do himself. When he so engages, the bank, and makes it his agent to make the collection^ he does so with the implied understanding that the bank will follow the customary method in making such collections, which necessitates the selection of agents or correspondents at other points to cayry out the undertaking; and the bank can only be held responsible for the exercise of due care and diligence in making such selection.” The evidence in this case shows very conclusively that the Bed-ford bank was regarded as solvent, and appellant can not be held liable for negligence in the selection of the agent. But there are other facts shown by the proof. The notes were both signed thus: “Bedford Stone Quarries Company, by W. C. Winstandley, Secretary and Treasurer.”
It is urged for appellant that the pleadings are not sufficient; to present this issue. It is alleged by appellee that appellant did not exercise reasonable care and diligence in collecting the note, or any care whatever, but was guilty of gross negligence in the collection thereof, and that no notice was given it of the nonpayment of the notes, or to what bank they had 'been sent, until June 15th; that the notes were not presented for payment, and not protested; and that by reason thereof the money was lost to appellee. Appellant denied these allegations, and pleaded affirmatively that it did exercise reasonable care and diligence throughout the transaction, and that the loss was without fault on its part. The pleadings aptly present the issue which the court tried.
It is also insisted that' the finding of the court that appellant took no steps to trace the notes until June 7th is erroneous, and in support of this we are referred to the deposition of appellant’s cashier, who states that the collection clerk sent a tracer before June 7th. But when this
Judgment affirmed.