First Nat. Bank of Rigby v. First Utah Nat. Bank of Ogden

WILLIAMS, District Judge (after stating the facts as above). Under controlling authority in federal courts upon the deposit of paper unrestrictedly indorsed and credit of the amount to the depositor’s account, the bank becomes the owner of the paper, notwithstanding a custom or agreement to charge such paper back to the depositor in event of dishonor; such agreement evidenced by following indorsement on the deposit or credit slip: “Outside checks credited subject to payment.” City of Douglas v. Federal Reserve Bank of Dallas, 271 U. S. 489, 46 S. Ct. 554, 70 L. Ed. 1051, decided by Supreme Court of United States June 1, 1926, and Federal Reserve Bank v. Malloy, 264 U. S. 166, 167, 44 S. Ct. 296, 68 L. Ed. 617, 31 A. L. R. 1261. The defendant bank, in receiving the checks for collection, was itself bound, not only to use due care, but was also liable to plaintiff for a failure to collect, resulting from negligence of any bank to which it transmits the cheeks for collection, in effect being responsible for proper diligence on part of correspondent employed by it to effect such collection. City of Douglass v. Federal Reserve Bank of Dallas, supra. The acceptance of the draft on Walker Bros., of Salt Lake City, by the First National Bank of Blaekfoot, Idaho, acting for the defendant, had effect of releasing drawer as well as indorsers of said three checks, resulting in a transfer of the drawer’s funds and surrender of his right of action against the drawee bank; previous rights and obligations by the owner of the cheek and drawer being superseded and released to the drawee, the checks being thereby paid, and the drawer and indorsers discharged. City of Douglas v. Federal Reserve Bank of Dallas, supra; Id. (C. C. A. 5th Cir.) 2 F.(2d) 818, 44 A. L. R. 1425; Id. (D. C.) 300 F. 573; Malloy v. Fed. Reserve Bank, supra; Id. (C. C. A. 4th Cir.) 291 F. 763; Id. (D. C.) 281 F. 997. A bank, as collecting agent, is without authority to accept for the debt of the principal anything but that which the law declares to be a legal tender, or which is by common consent considered and treated as money, and passes as such at par; the rule applying to a bank receiving commercial paper for collection. If such bank accepts the check of the party bound to make payment and surrenders the paper, it is responsible to the owner for any resulting loss. The acceptance by the bank as collecting agent of anything else rendered it liable to the holder as though it had been collected in cash. Federal Reserve Bank v. Malloy, 264 U. S. 166, 167, 44 S. Ct. 296, 68 L. Ed. 617, 31 A. L. R. 1261. The cause of action as herein declared complies with the essentials of assumpsit at common law: (1) Implied promise; (2) breach; and (3) damages — the measure of recovery'being sum due on account of what was done under such contract. The effect of a request by each side for a directed verdict in the hearing before this court is not in any way considered by counsel. Both parties, asking for a directed verdict, thereby submitted to the court the ascertainment and final determination of the disputed facts of the case, and as to such controverted facts there can be, under this record, no review. But as to the undisputed facts in the court below, as disclosed by the record before us, on review here, it may be determined whether error was committed as to the application of the law. Empire State Cattle Co. v. Atchison, Topeka & S. F. R. Co., 210 U. S. 1, 28 S. Ct. 607, 52 L. Ed. 931, 15 Ann. Cas. 70; Meyer & Chapman State Bank v. First National Bank of Cody (C. C. A.) 291 F. 42; Jackson v. Bell (C. C. A.) 14 F. (2d) 61. The trial court upon the uncontroverted evidence should have directed a verdict — 916 — in favor of plaintiff for $3,341.82, with, interest. This ease is reversed and remanded, with instructions to proceed in accordance with this opinion.