Fabens v. Mercantile Bank

Shaw C. J. afterward drew up the opinion of the Court. The plaintiff seeks to recover damages, in an action of the case, on the ground, that the defendants are chargeable with negligence, in respect to a note which he left with them for collection. We think this question must depend upon the general usage and custom of merchants and bankers, and the implied obligations upon the latter, resulting from their relations, as no special contract was made, and no special instruction given in the present case. We think it very clear upon principle and au thority, that by a general usage, now so well understood as [332] safely to be considered a rule of law, when a bank receives a note for collection, it is bound to use reasonable skill and diligence in making the collection, and for that purpose is. bound to make a seasonable demand on the promisor, and, m case of dishonor, to give due notice to the indorserr, so that the security of the holder shall not be lost or essenualy impaired by the discharge of indorsers. How far this liability may be modified by agreement or by general or special notice, is a subject of distinct consideration. Smedes v. Utica Bank, 20 Johns. R. 372 ; Mechanics Bank v. Earp, 4 Rawle, 384. But it is equally 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 other 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, has his residence in another place, it shall be presumed to have been intended and understood between the depositor for collection and the bank, that it was to be transmitted to the place of the residence of the promisor, and the same rule shall then apply, as if on the face of the note, it was payable at that place. Bank of Washington v. Triplett, 1 Peters, 25 ; Allen v. Merchants Bank, 15 Wendell, 482 ; Jackson v. Union Bank, 4 Harris & Johns. 146 ; Lawrence v. Stonington Bank, 6 Connect. R. 528. In the present case, it was known at the time of the indorsement of the note, that the promisor lived in Philadelphia, and of course, that the note must be sent there for collection. We are therefore of opinion, that the defendants had performed their duty, when they transmitted the note to a solvent bank in good standing, and were not responsible for the misfeasance or negligence of that bank. We cannot perceive, that it makes any difference, in respect to the defendants’ liability, that this note was received as collateral security. The general property was still in the plaintiff. It was to be collected for him. It was a power coupled with an interest, and therefore could not be revoked. But it was only on the contingency of being collected, that this note [333] or its proceeds, were to be applied to the payment of Appleton’s note. Until then the whole beneficial interest was in the plaintiff. And so the plaintiff himself understood it, by paying the fees and taking it up. According to the decision in Bank of Washington v. Neal, above cited, the plaintiff will have his remedy against the Bank of the United States, if his loss is imputable to their negligence. Plaintiff nonsuit.