Qualls v. Farmers & Merchants Bank

Adams, J. In Quarles v. O. B. Taylor & Company and the Farmers and Merchants Bank we held that as to Taylor & Company the check in controversy had been paid. 195 N. C., 313. The action is now prosecuted against the bank alone. In this appeal the first question is whether the plaintiff is entitled to prevail on the ground that one of the correspondent banks, the Merchants National Bank of Richmond, instead of demanding the cash, accepted the drawee’s cheek or draft on another bank which was not paid for want of funds. The question involves the legal relation sustained by the plaintiff, not only to the defendant, but to the corresponding banks to whom the check in controversy was sent in due course of *441 tbe attempted collection; and with us, notwithstanding a divergence of views expressed by various courts, this relation bas been definitely determined. We bave adopted the Massachusetts rule, which is thus' stated: When the first bank transmits the paper with proper instructions to a reputable and proper agent, either in the place where the collection is to be made, or in the place nearest thereto where it has a correspondent or agent whom it deems fit to employ for the purpose of forwarding, it has done its duty, and is not responsible for the negligence of the correspondent or its agents. 1 Morse on Banks (6 ed.), sec. 274. Accordingly, in Bank v. Bank, 75 N. C., 534, Bynum, J., cited Fabens v. Mercantile Bank, 23 Pickering, 330, and quoted with approval this statement of the principle: “It is well settled that when a note is deposited with a bank for collection which is payable at another place, the whole duty of the bank so receiving the note in the first instance is- seasonably to transmit the same to a suitable bank or otb^r agent at the place of payment. And as a part of the same doctrine it is well settled that if the acceptor of a bill or promisor of a note bas bis residence in another place, it shall be presumed to bave been intended and understood between the depositor for collection and the bank that it was to be transmitted to the place of residence of the promisor,” ... to which, in Bank v. Floyd, 142 N. C., 187, 191, the words “drawee or payer” are super-added. In the latter case there is a comprehensive discussion of the principle by Justice H. G. Connor, who said that Bank v. Bank, supra, bad been recognized as controlling in this State and as sustained by the weight of authority “in other courts and the reason of the thing.” He also approved the proposition affirmed in Bank v. Bank, 71 Mo. App., 451, that if a bank receives a paper for collection on a party at a distant place, the agent it employs at the place of payment is the agent of the owner and not of the bank, and if the bank selects a competent and reliable agent and gives proper instructions its responsibilities cease. In bis brief the plaintiff admits we are committed to the Massachusetts Rule, but be insists that our decisions supporting it should be overruled. As an exhaustive investigation of the authorities led to the conclusion reached in Bank v. Floyd, supra, that is, that the rule is sustained both by reason and by the weight of judicial thought, we see no convincing reason for receding from the position which bas been uniformly upheld by this Court for more than half a century. See Annotation in 52 L. R. A. (N. S.), 608, and in 36 A. L. R., 1308. The Merchants National Bank of Richmond sent the check to the drawee bank; but if this could formerly bave been negligence, as held in Bank v. Floyd, supra, and in Bank v. Trust Co., 172 N. C., 345, it would now-be recognized as “due diligence” in view of the provisions of Public Laws 1921, ch. 4, sec. 39. It was so held in Bank v. Barrow, *442 189 N. C., 303, 309. Tbe Merchants National Bank of Richmond was the agent of the plaintiff, and its liability to its principal, if any, would not be the liability of the defendant. Besides, as above suggested, under Public Laws 1921, ch. 20, the plaintiff’s cheek having been presented to the drawee through the postoffice was payable by the drawee on exchange drawn on its reserve deposits, in the absence of a contrary specification on the face of the check. The drawer did not on the face of the check demand payment in cash; nor was such demand made by the plaintiff as endorser. The plaintiff’s agent, the Merchants National Bank of Richmond, received just what it was authorized to accept. Braswell v. Bank, ante, 229. The second question is whether the defendant was negligent in failing promptly to notify the plaintiff of noncollection. The drawee was closed by the Corporation Commission on 4 January, 1926. It does not clearly appear when the defendant was notified that the First National Bank of Portsmouth had charged back to it the amount of the check; but it does appear that the defendant charged the amount against the account of the plaintiff on 8 January, 1926, and in the absence of specific evidence it is reasonable to infer that the plaintiff was immediately notified. In any event there is no evidence of loss sustained by the plaintiff by reason of the alleged delay. "We concur with his Honor in the conclusion that the facts agreed disclose no such negligence or want of due diligence on the part of the defendant as will subject it to liability in damages to the plaintiff. Judgment Affirmed.