Royal Bank of Canada v. Universal Export Corp.

HAND, Circuit Judge (after stating the facts as above). The defendant’s supposed faults are two — the failure to demand money of the drawees, and the surrender of the draft. As to the first, there is not a particle of proof that the drawees bad any money at band; on the contrary, it is extremely improbable that they did. People do not generally keep over $3,000 in their till, but expect to take up their paper by cheek. It did not appear that tbe drawees could have got the money anywhere but by cheek on their bank, and it does appear that it was too late to do that. The plaintiff bad to prove that insistence on currency would have resulted in currency. The record contains nothing of the kind, and every reasonable surmise is to the contrary. It was plainly error to direct a verdict for more than nominal damages on tbe first fault. The second fault was in surrendering the draft. Had this been without getting any corresponding obligation, it may be that the defendant would stand charged prima facie with-the face of the draft as in trover (Potter v. Mechanics’ Bank, 28 N. Y. 641, 86 Am. Dec. 273; Griggs v. Day, 136 N. Y. 152, 32 N. E. 612, 18 L. R. A. 120, 32 Am. St. Rep. 704; McPeters v. Phillips, 46 Ala. 496; Hoyt v. Stuart, 90 Conn. 41, 96 A. 166; Citizens’ Bank v. Shaw, 132 Ga. 771, 65 S. E. 81), [671] though even then it is hard to see how, in the face of the drawees’ bankruptcy, it was proper to direct a verdict for the full amount. But the defendant got a check in exchange for the draft, and a check was as good to hold the drawees as their surrendered acceptance. So, if it was a breach to surrender the draft, we can see nothing but nominal damages following upon the second fault, as well as upon the first. The complaint does not allege that the defendant was remiss in collecting the cheek, and strictly the evidence in the record is not relevant. However, the defendant was not remiss. Rodriguez, the defendant’s collector, took the cheek to the drawees’ bank as soon as he could and found it closed. Thereafter nothing could be done till February 15th, and two days later the defendant presented the cheek and protested it. It presented it several times later, always without success. There is no suggestion that the drawees’ affairs got worse between February 17th and the time when the plaintiff learned of the cheek’s dishonor, April 6th. Therefore, even if the complaint had alleged it, the proof would have failed to prove any damage through the neglect of the defendant. Indeed, even if it was a fault, strictissimi juris, to take the check at all, on October 9, 1920, it was the best available course in the plaintiff’s interest, one which, so far as this record shows, put the plaintiff in a better posture than that in which it originally had been. The action is at best ungenerous, and the damages on any theory nominal. Besides, we think that the defendant made out its defense of ratification by documentary proof and ought to have secured a directed verdict in its favor. Confessedly it was acting as the plaintiff’s agent when it took the check. Assuming that its act was unauthorized, none the less it acted on the plaintiff’s behalf; it intended to act as an agent. When the plaintiff learned what it had done, it might by hypothesis have repudiated the transaction in toto and charged the defendant with its dereliction, as it later did. But this it did not do. On the contrary, from April 6, 1921, to June 13, it treated the exchange as proper. Not only did it fail to complain, but it asked for delivery of the cheek, got it, proposed to sue upon it, later suggested that the defendant should do the same, and offered to guarantee its expenses. It was only after more than two months had passed, and upon the suggestion of its lawyer, that it first raised any question as to the propriety of the defendant’s conduct. That was too late. If a principal would challenge his agent’s doings, he may not postpone too long; above all, he must not undertake any projects based upon their propriety. While it is often said that as against an agent the proof must be clearer, the rule still’obtains that forbids the principal to blow hot and cold. The books have precedents clearly akin to the case at bar. Bray v. Gunn, 53 Ga. 144; Argus v. Ware, 155 Iowa, 583, 136 N. W. 774; Halloway v. Arkansas, etc., Co., 77 Kan. 76, 93 P. 577; Pickett v. Pearsons, 17 Vt. 470; Courcier v. Ritter, 6 Fed. Cas. 644, No. 3,282. In the case at bar ratification was complete. We decline to direct judgment for the defendant. Slocum v. N. Y. Ins. Co., 228 U. S. 364, 33 S. Ct. 523, 57 L. Ed. 879, Ann. Cas. 1914D, 1029, stands, as we understand it, to the contrary. The Supreme Court must modify the rule; not we. Our decision in Royal Italian Government v. National Brass & Copper Tube Co. (C. C. A.) 294 F. 23, appears to be to the contrary, but the point was not discussed, and probably not argued. An error in the first trial of a cause as little removes its eventual disposition from a jury, when the court directs the verdict, as when a jury has found it. It is never impossible, at least not in this case, that new evidence may develop on the second trial, which will change the result. Judgment reversed, and new trial ordered.