Warren Bank v. Suffolk Bank

Dewey, J. It is unquestionably true that a bank receiving a promissory note for collection is bound to use due care and diligence in demanding payment of the maker, and giving notice of the non-payment. It is equally true that where the nature of the business in which an agent is engaged requires for its proper and reasonable execution the employment of a sub-agent, the principal agent is not responsible for the defaults of the sub-agent, provided a proper sub-agent was selected. This latter rule was sanctioned and applied by this court in Fabens v. Mercantile Bank, 23 Pick. 332; Dorchester and Milton Bank v. New England Bank, 1 Cush. 177. The question arising in the present case is, whether the duty of making a demand on the maker of this note thus sent for collection, is one that rests wholly with the collecting bank, or one that may justify placing the note in the hands of a notary public, for the purpose of making a demand, and this being done, in a proper time and with proper care, in the selection of a notary, for his defaults he alone is liable. Upon this point there has been certainly some diversity of views entertained by different judicial tribunals. The decisions of the courts of New York have been supposed to be adverse to the discharge of the collecting bank from further liability, by reason of having placed the note in the hands of a notary [586] public, for the purpose of making a demand. Allen v. Merchants’ Bank, 22 Wend. 215. Other tribunals have held that such delivery of the note to a competent notary public, was a case of sub-agency without further responsibility on the part of the collecting bank. Baldwin v. Bank of Louisiana, 1 Louis. Ann. Rep. 13; Bellemire v. Bank of United States, 4 Whart. 105. But the case here is one arising upon the rejection of evidence offered to show the general usage of the banks including this bank, as to the employment of a public notary to make the proper demand upon the promisor, when such demand is necessary. It was conceded in the New York eases, that the collecting bank would not be liable for the default of the sub-agent, if there had been any understanding or agreement, express or implied, that the notes were to be transmitted to a sub-agent for collection. That effect is to be given to the usages of banks, was held by this court in Dorchester and Milton Bank v. New England Bank; and Chicopee Bank v. Eager, 9 Met. 584. The defendants offered to show that it was the invariable usage of the banks in Boston, including the Suffolk Bank, when notes have been sent to them for collection by other banks, if the same are not paid at the proper time, to place them in the hands of a notary public, for demand on the maker and for protest, and that the defendants did this in the present case. The defendants had already shown by the evidence in this case that they had been the collecting agents of the plaintiffs of their notes for ten years at least, and that it had been the invariable custom of the defendants when such notes were not paid, to place them in the hands of a notary public, for demand and protest, and that they had demanded, and the plaintiffs had paid, the fees of the notary in such cases. This evidence of the usage and course of business was proper, and ought to have been submitted to the jury. Those dealing with a bank, and especially the plaintiffs, as to whom knowledge of this usage and the course of business in the collection of notes was shown to exist, were bound by it. It would, we think, have authorized the jury to find an im [587] plied agreement or assent to the employment of a sub-agent, or notary public, for the purposes of making a demand on the maker, requiring only of the collecting bank due diligence and care in selecting the notary, or a general usage binding certainly those who were conversant of it. It is no sufficient answer to this to say that it was not absolutely necessary to employ a notary in a case like the present to certify to the demand and protest. If this was the well established course of business and known to the plaintiffs, when they sent to the defendants this note for collection, they must be bound by it. It is also further urged that this proof of usage thus to employ a notary public is insufficient, because it does not prove any usage that banks are not in such cases liable for the default of the notary. But we think if the usage authorizes the employment of a sub-agent holding an official character, it then becomes a case of sub-agency, with the.incidents of a sub-agency. A similar objection was taken in the case before cited from 1 Cush. 177, but it did not avail there. New trial ordered