Cohen v. Tradesmen's National Bank

Opinion by Trexler, J., The plaintiff sent his check for $29.15 in payment of his dues to the treasurer of a club of which he was a member. The treasurer deposited the check in his account at his banker’s who in turn deposited it with the Tradesmen’s National Bank, the defendant, for collec: tion. Instead of forwarding the check to the Southwark National Bank on which it was drawn, the defendant by mistake sent it to the Kensington National Bank. It was returned with the letters “W.B.” signifying “wrong bank” endorsed thereon. Whereupon the defendant bank through an error of its clerk returned it to the [30] plaintiff’s bank as “not provided for” confusing the letters “W.B.” with “N.F.” which is usually endorsed when a check is not provided for, meaning “no funds.” The plaintiff has lost no money through the tuansactio-n but has brought suit for substantial damages by reason of his check being returned dishonored when he had ample funds in the bank to meet it. Two questions are presented. Did the defendant owe any duty to the plaintiff and if so, is the plaintiff entitled to substantial damages irrespective of the fact that’ no actual loe.j was shown? There are a number of cases that hold that when a depositor’s check is improperly dishonored by the bank having his account, he may recover substantial damages for the injury done to him: Weiner v. North Penn Bank Inc., 65 Pa. Superior Ct. 290, and cases therein cited: Love v. Tioga Trust Co., 68 Pa. Superior Ct. 447. The appellant seeks to confine the decisions to the relation existing between a bank and its depositor and a reading of the cases discloses that such relation existed in each case. It remains for us to consider whether the application of the principle is thus limited. When the plaintiff’s payee gave the check for collection to his bankers and they in turn deposited it with the defendant bank they were all acting with a common purpose and were each a medium employed to transmit the check to the bank against which it was drawn. They were all links in the chain. The first bank receiving this check for collection was charged with the duty of transmitting it to a responsible agent to collect the money. The agent to whom the instrument was sent either to make demand for payment or to further transmit it to some one for that purpose became the agent of the depositor “and is liable to such depositor for loss arising from failure on his part to- perform the duty which is incident to an undertaking to collect the money”: Merchants Nat. Bank v. Goodman, 109 Pa. 422 (427). The agent in default may be sued directly by the owner [31] of the paper who is the original principal of the whole series and this is so irrespective of whether the first bank is considered as responsible for the other agents or whether each be an independent agent: Morse on Banks and Banking, 5th Ed., Section 250. In Pennsylvania the rule prevails that the forwarding bank is required merely to select a suitable and competent agent and with that its responsibility ends: Farmers National Bank v. Nelson, 255 Pa. 455. Ordinarily, if by the failure to present or protest or any other negligence of a like kind the owner is not able to collect the amount of the paper transmitted his damages are the amount due on the paper. When the negligence of the bank results in a refusal of payment of a check for which there are funds provided is it relieved from responding in damages by reason of the fact that no actual money loss can be shown? We think the same principle that is applicable to a bank negligently dishonoring its depositor’s check applies to a bank whose act causes such a situation to arise, although the person affected is not its depositor. We do not see why there should be any greater liability between the bank who has the depositor’s money and one who transmits his paper for collection. They both owe a duty to him and he hás a right to rely upon both maintaining the accurate standards which are required for the proper conducting of the banking business. Whethe; or not the damages should be substantial is not determined by the relation of the parties but by the nature of the injury done. The reason for substantial damages for the dishonor of a check is analogous to that in actions of slander where the words are actionable per se. If we are right in our conclusion that damages are recoverable it necessarily follows that they should be substantial. It would be an anomaly to hold, conceding that a duty is present in each relation, that a bank negligently dishonoring a. depositor’s check shall respond with substantial damages whilst another bank who [32] through its negligence causes the dishonoring of a check, need not so respond. We are of the opinion that the plaintiff Avas entitled to substantial damages in this case and that the judgment of the loAver court is correct. The judgment is affirmed. Head, J., dissents.