Winchester Milling Co. v. Bank of Winchester

120 Tenn. 225 | Tenn. | 1907

Mr. Justice Neil

delivered the opinion of the Court.

The Whitwell Mercantile Society, located in Marion county, this State, was indebted to the Winchester Milling Company, located at Winchester, in Franklin county, and on account of such indebtedness forwarded to the milling- company two checks, one for $242.15 and the-other for $262, the two aggregating $504.15. These checks were drawn by the mercantile society on the Whitwell Savings Bank in favor of complainant, the milling company. On tbe 1st and 2d days of May, 1906, respectively, tbe complainant indorsed these checks, making them payable to the order of the Bank of Winchester, and deposited them to their credit as cash in the bank, and checked out the proceeds; their account being overchecked May 3d to the amount of 1315.62. For a number of years the Bank of Winchester and the American National Bank, of Nashville, Tennessee, had been in regular banking correspondence with each other. The Bank of Winchester sent these two checks to the American National Bank for collection. There was only one bank at Whitwell; that is, the Whit-well Savings Bank, on which these checks were drawn. The American Bank promptly forwarded these checks to the Whitwell Savings Bank for payment. They were marked by that bank “Paid,” respectively, on May 3d and 5th. That bank charged up the checks to the Whit-well Mercantile Society, and on May 5th both of them were surrendered to the society; the society having, at the time the checks were charged up, more than enough on deposit to pay them. The Whitwell bank sent to the American National Bank, on account of these checks, two cashier’s drafts on the Citizens’ Bank & Trust Company, of Chattanooga. These two drafts were promptly forwarded by the American National Bank to its banking correspondent at Chattanooga, and by the latter they were presented to the drawee bank for payment, and, payment being refused, they were duly protested and promptly returned to the American National Bank. The American National Bank, having previously credited them to the Bank of Winchester, charged back to that bank the amount of the two drafts, together with the protest fees thereon; the whole amounting to $509.15. The Bank of Winchester accepted the drafts, and acquiesced in the action of the American National Bank, and charged back to the complainant, the Winchester Milling Company, the $509.15, notifying the complainant of the fact, and on the 21st of June surrendered the drafts to complainant. They were accepted by complainant without objection made at the time, so far as the record shows. The evidence shows that it was the universal custom in Nashville, and in Winchester, and all over the country, to charge back items received by banks for collection which had been credited to depositors and returned unpaid. The evidence also shows that this was the custom between the American National Bank and the Bank of Winchester and also the custom between the Bank of Winchester and its patrons, including complainant. In addition to this, the American National Bank had printed on its stationery, which it used, in acknoAvl-cdging the receipt of collections, the following: “All items payable outside of Nashville received by this bank for credit, or for collection, are taken at the sender’s risk. Should returns sent by the collecting agents for such items be dishonored, the amount will be charged back to the bank or banker from whom the item was received. This bank assumes no liability for neglect or default of collecting agents, nor for items lost in the mail, and hereby gives notice to that effect.” There was another notice to the same effect, and in almost the same language, on the stationery of the American National Bank, hut not limited to items payable out-ride of Nashville, being general in its terms, and covering all items taken by that bank for credit or collection. These blanks were used in the dealings between the American National Bank and the Bank of Winchester.

On May 10th the Whitwell Savings Bank suspended and went into the hands of a receiver.

On July 26th the original bill in this case was filed against the Bank of Winchester, the American National Bank, and the Whitwell Mercantile Society. There was subsequently an amended bill. It is not necessary to recite the contents of these bills, further than to say that the original bill was amended by the amended bill so as to charge that the Bank of Winchester forwarded the checks to the American National Bank for collection, and that the latter bank forwarded them to the said Whitwell Savings Bank for collection; that thereupon the Whitewell Savings Bank forwarded to the American National Bank the cashier’s drafts above mentioned in settlement for the checks; and that the said checks and cashier’s drafts were not collected, because of the negligence of the American National Bank “in its failure to present said checks and drafts for payment within a reasonable time and in due course.”

There was no evidence offered in the court below that there was any custom among- the banks of this State, or in the business of the Bank of Winchester or of the American National Bank, that collections should be sent, or could properly be sent to the drawee bank. Likewise there was no evidence of any instructions on the part of complainant that would justify such a course of business.

The chancellor dismissed the bill as to the Bank of Winchester, but rendered a decree in favor of the complainant against the American National Bank and the Whitwell Mercantile Society for the amount of the checks and interest, and the other items making up the sum of $509.15 above mentioned.

From this judgment the American National Bank prayed an appeal to the court of civil appeals, and the Whitwell Mercantile Society earned the case into that court by writ of error. The complainant also filed the record for error in that court, to have reviewed the decree of the chancellor dismissing its bill as to the Bank of Winchester.

By some chance, no notice was taken by the court of civil appeals of the writ of error filed by the complainant against the Bank of Winchester. That court, however, reversed the decree of the chancellor as to the American National Bank and the Whitwell Mercantile Society. Thereupon the original complainant brought the case to this court by the writ of certiorari to review the action of the court of civil appeals.

The foregoing facts present several questions for decision. The first question suggested is whether the American National Bank acted negligently in sending the collection directly to the drawee bank. The next concerns the effect and result of the American National Bank’s taking from the Whitwell Savings Bank the drafts on Chattanooga in payment of the checks sent for collection; next, the effect of the acceptance and retention of these drafts by complainant, when turned over to it by the Bank of Winchester, and the allegations of the bill as to negligence on the part of the American National Bank in this regard. Another question that may present itself for solution is whether the Whitwell Mercantile Society is still liable.

Under the rule designated by Mr. Morse as the Massachusetts rule, which prevails in Tennessee and several other States, each successive bank handling an item for collection is agent of the owner, and liable to him for the discharge of the duties incumbent upon collecting agents, and the several banks in the course of the chain of transmission are held responsible only for the selection of proper agents, and for their own diligence and propriety of action in respect of the collection. Bank of Louisville v. Bank of Knoxville, 8 Baxt., 101, 35 Am. Rep., 691; Bank v. Cummings, 89 Tenn., 609, 18 S. W., 115, 24 Am. St. Rep., 618; Morse on Banks and Banking, section 214.

The author last referred to says, in respect of the selection of the drawee bank as agent:

“In this country the party who is to pay a check is not a suitable agent for its collection. A Chicago bank received a certified check for collection, and sent it to the draAvee bank. The latter mailed in return a worthless draft, surrendered the check to the draAver as paid, failed, and closed its doors. The Chicago bank was liable to the depositor for the full amount of the check. The debtor cannot be the disinterested agent of the creditor to collect the debt, and it can not be considered reasonable care to select an agent known to be interested against the principal, to put the latter into the hands of its natural adversary.” Morse on Banks and Banking, section 236 (a), citing Drovers’ National Bank v. Anglo-American P. & P. Co., 117 Ill., 100, 7 N. E., 601, 57 Am. Rep., 855. To the same effect is 1 Daniel, Neg. Inst., 328a; 3 Amer. and Eng. Enc. of Law (2d Ed.), p. 809; and 5 Cyc., p. 506.

On the page of the Encyclopedia of Law referred to Avill be found the following:

“The forwarding bank must exercise due care in the selection of the correspondent to whom it transmits the paper for collection, and it will be liable for negligence in selecting an unsuitable correspondent. The hank upon which the bill is drawn is not a suitable agent to collect the bill, and the forwarding bank must answer for all loss occurring as the result of such a selection” — citing numerous authorities.

On the page of Oyc. referred to will be found the following :

“The old rule that paper may he sent to the drawee for payment no longer prevails in many States, notwithstanding the custom of thus sending it; but some States which deny the legality of the rule permit the paper to be sent to the drawee when there is no other bank in the place known by the owner, and collection by a different method would be costly and inconvenient. These rules may be modified, of course, by instruction or agreement.”

The latter publication cites in the notes all of the cases, so far as we have been able to find, upon the subject, except a few . which have been decided since that publication came out.

On the proposition that the drawee bank is not a proper agent for selection by a transmitting or collecting bank the following eases are cited: Lowenstein v. Bresler, 109 Ala., 326, 19 South., 860; German National Bank v. Burns, 12 Colo., 539, 21 Pac., 714, 13 Am. St. Rep., 247; Drovers’ National Bank v. American Provision Co., 117 Ill., 100, 7 N. E., 601, 57 Am. Rep., 855; Anderson v. Rodgers, 53 Kan., 542, 36 Pac., 1067, 27 L. R.

A., 248; Chicago First National Bank v. Citizens’ Savings Bank, 123 Mich., 336, 82 N. W., 66, 48 L. R. A., 583; Minneapolis Sash & Door Co. v. Metropolitan Bank, 76 Minn., 136, 78 N. W., 980, 44 L. R. A., 504, 77 Am. St. Rep., 609; American Exchange National Bank v. Metropolitan National Bank, 71 Mo. App., 451; Western Wheeled Scraper Co. v. Sadilek, 50 Neb., 105, 69 N. W., 765, 61 Am. St. Rep., 550; National Bank of Commerce v. Johnson, 6 N. D., 180, 69 N. W., 49; Wagner v. Crook, 167 Pa., 259, 31 Atl., 576, 46 Am. St. Rep., 672; Hazlett v. Commercial National Bank, 132 Pa., 118, 19 Atl., 55; Harvey v. Girard National Bank, 119 Pa. 212, 13 Atl., 202; Merchants’ National Bank v. Goodman, 109 Pa., 422, 2 Atl., 687, 58 Am. Rep., 728; Givan v. Alexandria Bank (Tenn. Ch. App., 1898), 52 S. W., 923, 47 L. R. A., 270; Corsicana First National Bank v. Dallas City National Bank, 12 Tex. Civ. App., 318, 34 S. W., 458; Evansville First National Bank v. Louisville Fourth National Bank, 56 Fed., 967, 16 U. S. App., 1, 6 C. C. A., 183; Farwell v. Curtis, 7 Biss. (U. S.), 160, Fed. Cas. No. 4690.

We have examined all of the foregoing cases, except the last, which is not accessible to ns, and find that they fully sustain the text to which they are cited.

Other later cases are Bank v. Hendrix, 147 Ala., 670, 39 South., 295, 1 L. R. A. (N. S.), 246; Bank v. Pollock & Bernheimer, 145 Ala., 321, 39 South., 612, 2 L. R. A. (N. S.), 194, 117 Am. St. Rep., 44; Carson & Co. v. Fincher, 129 Mich., 687, 89 N. W., 570, 95 Am. St. Rep., 449; Bank of Rocky Mount v. Floyd, 142 N. C., 187, 55 S. E., 95.

We shall refer particularly to a few of the foregoing cases.

The case of Givan v. Bank of Alexandria et al., 52 S. W., 923, was decided by the court of chancery appeals of this State, and affirmed orally by this court on January 1.0, 1899. It will be found reported in the publication above referred to, and also in 47 L. E. A., 270. In that case it appeared that certain checks were placed in the hands of the Bank of Alexandria for collection on the bank of A. Bryan & Co., of Watertown, this State. The Bank of Alexandria transmitted the checks to its correspondent at Nashville, the First National Bank, and the latter transmitted the checks directly to the drawee bank, and they were never paid. Upon this subject the court said:

“It folloAvs that under the facts found the Bank of Alexandria exercised proper care in selecting the First National Bank as an intermediary, ánd that its duty was then discharged to the complainant when it sent the paper by the mail of the next day to said First National Bank, and the latter became the agent of thé complainant. It is true that when the First National Bank sent the check directly to the drawee bank it was guilty of negligence. The authorities upon this point in favor of the proposition stated are overwhelming” — citing Merchants’ National Bank v. Goodman, 109 Pa., 422, 2 Atl., 687, 58 Am. Rep., 728; Drovers’ National Bank v. Anglo-American Packing & Provision Co., 117 Ill., 100, 7 N. E., 601, 57 Am. Rep., 855; Anderson v. Rodgers, 53 Kan., 542, 36 Pac., 1067, 27 L. R. A., 248, and note to the hitter case containing a collection of the authorities.

In Anderson v. Rodgers it is said:

“In this case the check seems to have been forwarded for payment in due time; but it was sent directly to the drawee by mail, with the request that the Bank of Whitfield [tlie drawee bank] remit the amount of mail in exchange on Kansas City. The Hamilton County Bank, therefore, selected the drawee of the check as its agent for collection. That this was negligent is well settled by the authorities. It is said in Daniel on Neg. Inst, vol. 1, section 228a: ‘For the purposes of collection, the collecting bank must employ a suitable subagent. It must not transmit its checks or bills directly to the bank or party by whom payment is to be made, with the request that remittances be made therefor. It is considered that no firm, bank, corporation or individual can be deemed a suitable agent, in contemplation of law, to enforce in behalf of another a claim against itself.’ This proposition is sustained by abundant authority.”

• In Minneapolis Sash & Door Co. v. Metropolitan, Bank, supra, the same proposition is laid down, and the same text of Daniel is quoted with approval.

In First National Bank v. Citizens’ Savings Bank, supra, it is said:

“The main question in this case, and in fact about the«. only question, is whether the defendant was justified in sending the certificate directly to- Parsons [a private banker, the drawee] for collection. It is conceded by counsel for defendant that, in the absence of instruction to do so, it is negligence to send a collection directly to the drawee, and such negligence makes the sender liable for any loss resulting. We think this rule is sustained by the authorities” — citing authorities.

It is unnecessary to quote further from the afithorities on this side of the question. The only authorities to the contrary that we have any knowledge of are cited in note 81, p. 506, 5 Cyc., being certain New York cases and some English cases and the case of Kershaw v. Ladd, 34 Or., 375, 56 Pac., 402, 44 L. R. A., 236, and Trinidad First National Bank v. Denver First National Bank, 4 Dill. (U. S.), 290, Fed. Cas., No. 4810. The leading New York case cited is Indig v. National City Bank, 80 N. Y., 100. Of this case the Yew York court said, in the later case of St. Nicholas Bank v. State National Bank, 128 N. Y., 26, 32, 27 N. E., 849, 13 L. R. A., 241, that it was “a broader case,” and that its doctrine should not be extended. We do not think the case of Kersham v. Ladd sustains the text. We shall have occasion to refer to this more particularly infra.

We do not think that the text of Cyc., supra, is sustained by the authorities cited in the foot note, in which text it is said: “Some States which deny the legality of the rule permit the paper to be sent to the drawee when .there is no other bank in the place known by the owner, and collection by a different method Avould be costly and inconvenient.” The cases cited on this subject are Wilson v. Carlinville National Bank, 187 Ill., 222, 58 N. E., 250, 52 L. R. A., 632, and Minneapolis Sash & Door Co. v. Metropolitan Bank, 76 Minn., 136, 78 N. W., 980, 44 L. R. A., 504, 77 Am. St. Rep., 609. Other authorities upon the point are Kershaw v. Ladd, 34 Or., 375, 56 Pac., 402, 44 L. R. A., 236; Drovers’ National Bank v. American Provision Co., supra; American Exchange National Bank v. Metropolitan National Bank, 71 Mo. App., 451; Bank v. Floyd, 142 N. C., 187, 55 S. E., 95.

In Wilson v. Carlinville National Bank, the court said: “The evidence sufficiently tended to show, and the court recited, in proposition No. 5, held for the ap-pellee, ‘that it is a Avell-known, long-established, and general custom of collecting banks to transmit directly to their correspondent out of toAvn banks for collection checks draAvn upon such out of toAvn banks and in their hands for collection, in cases Avhere there is no other bank in such town.’ It also appeared from the testimony, and Avas recited by the court in proposition No. 1, in the same behalf, that the Citizens’ Bank of Gillespie Avas the only bank in Gillespie. The evidence further sufficiently recited that appellant kneAV there Avas but one bank in Gillespie, namely the Citizens’ Bank, upon Avhich the check he held Avas draAvn. It Aims also shOAvn by the proofs that the appellant had, on prior occasions, deposited Avith the appellee bank other checks upon out of toAvn banks, and availed himself of the facilities offered by the system adopted and in vogue only among banks and bankers for the collection of that class of paper. He may not have knoAvn the details of the system or custom in force among banks for the collection of such checks, but he kneAV the collection Avas to be made, Avithout expense to him, through banks co-operating together, in compliance Avith certain usages and customs existing betAveen such institutions to enable such collections to be so made. He knew there was but one bank in Gillespie, and that the one on which the check was drawn. The co-operation of that bank was essential to the operation of the mode of collecting* checks, for there was no other hank at Gillespie to act in the matter. With this .knowledge the appellant accepted the benefit of the facilities for the collection of his check which the bank held ont to their customers. The usages and customs thus availed of by appellant contemplated the sending of the check directly to the bank upon which it was drawn, there being no other bank at that point. The appellant, having knowledge there was hut one hank at Gillespie, and that his check was to be collected, without cost or expense to him through the medium of business usages and customs in force only between banks and bankers, could not be permitted to accept the facilities thus afforded by the appellee bank for his accommodation, and afterwards insist that compliance by the ap-pellee bank with the usages and customs, the benefit whereof he sought to avail himself of, should constitute actionable negligence.”

In Minneapolis Sash & Door Co. v. Metropolitan Bank, supra, it was said: “We have stated the grounds upon which the defendant attempts to justify. It did show that it was usual and customary for banks to send checks and drafts payable to other banks at distant points to the drawee direct and by mail, provided there Avas no other bank of good standing in the same town; Avhile plaintiff was allowed to prove that an express company, whose business it was to collect and transmit money, had offices in both places. We fail to see what possible effect upon a case of this kind the fact .that the drawee is the only bank in good standing in the town can have upon the duty of a bank which undertakes the collection. Any reason for such a course is equally as sound where there are two or more banks in the town as where there happens to be but one. While the syllabus of one of the cases cited in support of counsel’s proposition (Western Wheeled Scraper Co. v. Sadilek, 50 Neb., 105, 69 N. W., 765, 61 Am. St. Rep., 550) may justify him, the opinion does not. We cannot agree with counsel that the usage and custom here relied upon is a defense to the claim that defendant was negligent when forwarding this check to the Mapleton Bank for presentation and payment. As a general rule, usage and custom will not justify negligence. It may be admitted that such a course is frequently adopted, but it must be at the risk of the sender, who transmits the evidence of indebtedness upon which the right to demand payment depends to the party who is to make the payment. Such a usage and custom is opposed" to the policy of the law, unreasonáble, and invalid. It was so decided in Drovers’ Nat. Bank v. Anglo-American Packing & P. Co., 117 Ill., 100, 7 N. E., 601, 57 Am. Rep., 855, and Merchants' Nat. Bank v. Goodman, 109 Pa., 422, 2 Atl., 687, 58 Am. Rep., 728. Counsel for defendant has cited two cases from the English law reports and three from the New York court of appeals as authority upon this question. An examination of these cases will show that this exact question was not decided.”

In Drovers’ National Bank v. Anglo-American P. & P. Co., supra, it was said that it made no difference if the collecting bank did not know of any other bank at the place. Said the court: “If appellant had no correspondent or agent at Cadillac through whom to make collection, it should hare so informed appellee, and then acted on the directions of appellee.”

In Kershaw v. Ladd, supra, it was said in the opinion: “The parties agree that at the time the transactions which form the basis of the present controversy took place there existed and still exists, among the banks in Portland and elsewhere, a general and well-established custom to the effect that when a bank or banker receives for collection an ordinary check against an account with a bank or banker situated and doing business at a place distant from where the collecting bank is located, and such collecting bank has no agent or correspondent at the place of the 'drawee bank, for the collecting bank to forward the check by mail directly to the drawee bank for collection and returns, and that it is also a general and well-established custom among such banks that when a bank or banker receives, from a bank or person at a distance, for collection and returns an ordinary check, drawn upon a bank situated at the same place as the receiving bank, for the receiving bank not to remit cash to the bank or person from whom such check was received, but to remit the check or draft, either of the receiver or drawee bank, drawn upon the correspondent of suck receiving or drawee bank at the place from which the original check was forwarded payable to the order of the bank or person from whom the check was received. It is contended by the respondent that these customs are to be considered the law of the case, and are controlling for the government of the parties, and that, measured thereby, the defendants are not chargeable with negligence for pursuing the course adopted in endeavoring to make the collection. Upon the other hand, it is maintained that the custom of sending the check direct to the drawee bank for collection and return is unreasonable, and therefore it does hot and cannot obtain the sanction of law, and that such an act is negligence per se, which will, in case loss should occur by reason thereof, render the collecting bank liable therefor.”

The conclusion reached by the court was: “Upon principle it would seem that the usage is not an unreasonable ■one, in so far, at least, as it may apply to the collection of a plain, unindorsed check.”

In American Exchange National Bank v. Metropolitan National Bank, supra, it was said that the rule Avhich forbids the collection to be sent directly to the drawee bank is not altered by the fact that there is only one bank in the place where the collection is to be effected, the drawee bank, and that it is the correspondent of the defendant. Continuing, the court said:

“Again, it was said to be customary for banks to transmit collections to their correspondents, even though such correspondent was the debtor. To this we answer that it is not a reasonable custom, and therefore must fail of recognition by the court. We concede it may be, and perhaps is, in many instances, the most convenient mode for the bank intrusted with the collection; but if the bank adopts that mode it takes upon itself the risk of the consequences.”

In Bank v. Floyd, supra, it was held: “It is negligence in a bank having a draft or check for collection to send it directly to the drawee; and this is true, though the drawee is the only bank at the place of payment. A custom by which a bank, having a check upon its oavu correspondent in good standing, intrusts it with the collection, is unreasonable and invalid, and if a bank adopts that mode it takes upon itself the risk of the consequences.” 142 N. C., 187 (syl., points 3 and 4), 55 S. E., 95. And see Whitney v. Esson, 99 Mass., 308, 96 Am. Dec., 762.

In First National Bank v. Citizens’ Savings Bank, supra, the general rule was announced that it was negligence to send directly to the drawee bank, even though it was the only bank at the point of collection; but the defendant in that case was protected because the court construed the letter sending the collection to the transmitting bank as in substance instructing that the paper might be sent to the drawee bank, or at least that it was clearly susceptible of the construction that such course Avas expected.

We need not consider the question whether the custom to send a collection to the drawee bank, when there is only one bank at the place of collection (the drawee bank), would be reasonable or the contrary, since in the case before us there is no evidence whatever that any such custom prevailed at the time the transactions under examination here took place.

It is clear therefore that the American National Bank was guilty of negligence in sending the collection directly to the Whitwell Savings Bank, the drawee.

Tt is equally clear from the evidence that, if the checks had been sent to some other person and presented at the counter of the bank on the day they reached there by mail, or within several days thereafter, they would have been paid in cash, inasmuch as it appears that the Whitwell Savings Bank continued to pay cash for several days thereafter, and 'did not fail until the 10th of the month.

The form of settlement which the American National Bank accepted consisted of drafts drawn in its favor by the Whitwell Savings Bank on a bank in Chattanooga, which were dishonored as soon as they reached that city; that is, on the 10th of the month.

Was the Whitwell Mercantile Society discharged by the settlement just referred to, as the result of which the Whitwell Savings Bank charged to it the two checks in controversy and canceled and surrendered them? We think it was. The Whitwell Mercantile Society had more than enough money on deposit at the time the checks arrived to meet and satisfy them. The society had no means of preventing the application of their money to the checks and the cancellation of the latter. It was not incumbent upon the society to inquire whether the Whitwell Savings Bank had authority, since the possession of the checks for the purpose of collection constituted apparent authority, and it was entirely possible that the transmitting bank might have sent the checks to the Whitwell Savings Bank by consent of the holder. Even the holder himself might have sent them directly to the Whitwell Savings Bank. It was not the duty of the society to institute an inquiry as to the source from which the Whitwell Savings Bank had received the checks; that bank being at the time a reputable concern, and there being nothing to arouse suspicion or to put the society upon inquiry. The society had the right to rely upon the authority of the Whitwell Savings Bank, and rightly acquiesced therein. As the result of the transaction, and this acquiescence, the society lost in the failure of the Whitwell Savings Bank the amount represented by the checks; that is, if those checks had not been charged up to the society and canceled, the society would have draAvn out that sum of money when it drew out the balance of its account on the 5th of the month.

It results, therefore, that the complainant sustained injury to the amount of the checks by reason of the negligence of the American Rational Bank; and, nothing else appearing, that hank must respond to the complainant in the amount of the sum lost.

But it appears that the American National Bank, as already stated, took in settlement from the Whitwell Sayings Bank drafts on Chattanooga. There is no evidence in the record that there is a custom among hanks to make collections in this manner (that is, hy receiving checks on other hanks), and it is insisted hy complainant that in the absence of a proven custom to take payment in this form, from which the consent of the owner of the check would he inferred in the act of putting the paper in hank for collection, such a method of settlement would he unauthorized — citing Morse on Banks and Banking, section 247. And see Merchants’ National Bank of Philadelphia v. Goodman et al., 109 Pa., 422, 2 Atl., 687, 58 Am. Rep, 728. And, if this was an act of negligence on the part of the American National Bank, the warning copied upon its stationery, supra, Avould he immaterial, because the bank could not thereby he protected against its OAvn negligence. Minneapolis Sash & Door Co. v. Metropolitan Bank, 76 Minn., 136, 78 N. W., 980, 44 L. R. A., 504, 506, 77 Am. St. Rep., 609.

However, it is unnecessary to decide whether this was an act of negligence or not, because, when the complainant Avas informed that the drafts on the Chattanooga Bank had been accepted by the American National Bank, it had a right either to accept those drafts so taken in payment of the checks, or, if the hank had no right to receive such drafts, complainant could repudiate the transaction and sue for the negligence of its agents, both in surrendering- the checks and taking for them the Chattanooga drafts, and also in failing to present the checks to the drawee hank by some other agent than the latter hank itself. National Bank of Commerce of Seattle v. Johnson, 6 N. D., 180, 69 N. W., 49.

What actually transpired was this: When the drafts were dishonored at Chattanooga, and returned to the American National Bank, that bank transmitted them in due course to the Bank of Winchester, and that hank on the 21st of June turned these drafts over to the complainant. The complainant accepted them without objection, and subsequently brought the present action, and made it one part of its complaint against the American National Bank that the latter had failed to present these drafts for payment “within a reasonable time and in due course.”

This was a ratification of the American National Bank’s action in taking the drafts. It is immaterial that in the same connection in the bill the complainant joins the checks and drafts in his allegation of negligence against the American National Bank. The two demands are inconsistent. The compiainant could not have a right of action for the failure of the American National Bank to duly present the Chattanooga drafts, unless it ratified the action of the American National Bank in taking those drafts; and if it did this it would have no right of action against the bank referred to for its conduct in sending the checks directly to the drawee bank, because the drafts so ratified and accepted were the product of that act.

On ,the ground thus stated we are of opinion that the complainant has no right of action against the American National Bank; it not being shown that that bank was in any default in its treatment of those drafts after they came into its hands.

We cannot consider the rights asserted against the Bank of Winchester, inasmuch as there was no decree entered in respect of that party in the court of civil appeals. This being true, we have no jurisdiction of that particular controversy.

Before closing the opinion it may not be improper to add one remark concerning some observations that were made during the discussion of the case at bar, and also in the briefs, to the effect that the Bank of Winchester had credited the checks when it received them as cash, and permitted the complainant to check out all the money. This is an immaterial subject. As said by Pax-son, O. J., referring to one who had deposited a check for collection with a bank: “The mere fact that the collecting bank credited him with the check as cash did not alter that relation [the agency of the bank for collection], This is done daily; indeed, it is the almost universal usage to credit such collections as cash, unless the customer making such deposit is in weak credit. If the check is unpaid, it is charged off again, and the unpaid check returned to the depositor.” Hazlett v. Commercial National Bank, 132 Pa., 118, 125, 19 Atl., 55, 56.

For the reasons and on the ground stated, we are of opinion that complainant is not entitled to recover against either of the parties defendant in this court.

The bill Avill therefore he dismissed, at the cost of the complainant.