Hazlett v. Commercial N. Bank

Opimos, Me. Chief Justice Paxson: When the plaintiff drew his check for $5,000 on the Penn Bank of Pittsburgh, and deposited said check with the Commercial National Bank of Philadelphia for collection, he made the latter bank his agent. The mere fact that the collecting bank credited him with the check as cash did not alter that relation. 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. The receipt of a check for collection involves the duty of due diligence on the part of the collecting bank. If the money is lost through its neglect, it becomes fixed for the money. This is familiar law. The defendant bank, instead [126] of sending the check to an agent in Pittsburgh for collection, sent it direct to the Penn Bank, and received by return mail the check of that bank on the National Bank of the Republic, its Philadelphia correspondent. This was irregular. As a collecting agent, it had no right to receive anything from the Penn Bank but the money. A check or draft on another bank is not payment. If the money had been lost, for this reason, without more, the defendant bank would have been liable, and would have had no right to charge off the check against the plaintiff. It appears probable, however, that the check might still have been collected, if due diligence had been used. The Penn Bank suspended about noon on May 21, 1884; it re-opened on Saturday, May 24, about 2 p. m., and remained open until noon on Monday, May 26th. During this reopening all checks that were presented were paid. The check of the Penn Bank reached Philadelphia on May 22d, and was presented to the National Bank of the Republic. Payment was refused then, as well as on several subsequent days. On May 22d, the defendant bank wired the plaintiff: “We have received from Penn Bank, in return for your check, their draft on Bank of Republic, which is not good, which we hold subject to your orders.” The plaintiff had then a right to repudiate what the defendant bank had done, and hold it for the money. He did not do so. On the contrary, he wired the bank as follows : “ Your telegram was duly received, and contents noted. The Penn Bank is all right; and their draft, as mentioned, will be paid in a day or two. Please hold for a few days, and, if not honored, return it to me.” It must be borne in mind that when the plaintiff sent this telegram, he was in possession of all the facts, and knew far more about the Penn Bank than did the collecting bank in Philadelphia. With this information, he directed the draft on Philadelphia to be held for a few days. He cannot now complain of the delay. It was his own act, and condoned the original negligence. Moreover, it is a conclusive answer to the allegation that the defendant bank was no longer his agent. The telegram was an order from a principal to his agent, or it was a piece of impertinence. We find no error in the rulings of the court below. Judgment affirmed.