Third National Bank v. Vicksburg Bank,

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Notebook

| Miss. | Oct 15, 1883

Lead Opinion

Cooper, J.,

delivered the opinion, of the court.

There is irreconcilable conflict between the courts on the question of the responsibility of a bank which receives for collection a claim on one at a place other than that at which it is situated, and sends it to an agent at the place of payment, for the default of such agent. In England, New York, Ohio, and New Jersey it is held that the bank is liable for the default of its correspondent. In Massachusetts, Maryland, Connecticut, Missouri, Illinois, Iowa, Tennessee, and Wisconsin, it is held that the bank is an agent for collecting the paper, by the employment of the customary agencies used by banks for that purpose, and that when it has transmitted it to a suitable agent with proper instructions, it is not responsible for the default of the agent.

In Tiernan v. Commercial Bank, 7 How. 648, the collecting bank had handed the bill to a notary who failed to protest it for non-payment, whereby the drawer was discharged. In a suit brought by the owner against the bank, it was held that the bank, having placed the bill in the hands of the notary in time for presentment and protest, was-not responsible for a loss occurring by reason of his default. No' distinction was attempted to be drawn by the court between the liability of the collecting bank, in those cases in which it employs a notary to collect, and those in which a private person is selected to perform that duty. The decision was that a bank in undertaking to collect becomes the agent of the owner with authority to employ such sub-agents as are usual in the prosecution of the business it has undertaken, and is discharged from all liability if due care and prudence is used in the selection of the sub-agent, and because the notary ivas such sub-agent the bank Ayas discharged from responsibility by his employment. The authority of this case, upon the reasons'given in it, has been twice followed by this court. Agricultural Bank v. Commercial Bank, 7 S. & M. 592; Bowling v. Arthur, 34 Miss. 41" court="Miss." date_filed="1857-10-15" href="https://app.midpage.ai/document/bowling-v-arthur-8257254?utm_source=webapp" opinion_id="8257254">34 Miss. 41.

These decisions we think are conclusive of the case now before us. If Aye should noAV say that these cases were rightly decided, not because of the reasons given by the court, but because of the official character of the notary, we Avould practically overrule them by *118denying the correctness of the principle declared by them and which controlled their decision. Whether a bank in undertaking to collect becomes liable for the default of any of the agents it is required by the nature of its business to employ, where such agent is selected with due diligence and care, is, as we have seen, a question on which there is great conflict of decision, and we must assume that our predecessors on due deliberation preferred the rule of non-liability where the bank is without fault in the selection of the sub-agent.

Jtodgment affirmed.

Dissenting Opinion

Campbell, C. J.,

delivered the following dissenting opinion.

I think the rule which prevails in England, and New York, New Jersey, and Ohio, and which is preferred by several eminent text writers, is the true one, and that a bank taking paper for collection is responsible for the default of its correspondent. I do not find fault with the cases cited from our own reports. They were where the claim was handed to a notary, and it was properly held that he was the agent, not of the bank, but of the owner of the paper, and that the bank was not responsible for the default of the notary. Where protest becomes necessary or proper the paper must be handed to a notary, and the owner of the claim knows that, and is conclusively presumed to have authorized the bank to commit the paper to a notary if it should become necessary to protest it, and the bank could not be held to be the surety of the notary any more than for a sheriff or other officer in executing the duties of his office, if suit became necessary on the claim and should be instituted. The language of the court in the cases cited seems broad enough to conduct to the conclusion a majority of the judges have reached in this case; but it should be interpreted and limited to the case before the court, and, this done, those cases are authority only for the proposition that a bank handing paper, which istobeprotested, to a competent officer for that purpose, is not to be held answerable for his failure of duty. To this I agree, but I am unable to assent to the doctrine that a bank is not responsible for its own agents in the conduct of its regular business. It seems to be *119settled that a collecting agency which takes a claim for collection at a distant point is responsible for the acts of its agent to whom the claim is sent for collection. Hoover v. Wise, 91 U.S. 308" court="SCOTUS" date_filed="1876-02-14" href="https://app.midpage.ai/document/hoover-v-wise-89178?utm_source=webapp" opinion_id="89178">91 U. S. 308; Bradstreet v. Everson, 72 Penn. St. 124; Morgan v. Tener, 83 Penn. St. 305. I am not able to draw a distinction between a collection agency, by that name, and a bank, which is a collection agency, where it undertakes to collect claims for customers. Dan. Neg. Inst., § 342; 34 Am. Dec. 316.