Bank of Whittier v. First National Bank

Mr. Justice Baker delivered the opinion of the court. That the act of the Citizens Bank in sending the certificate direct to Parsons, the payor, for collection, was an act of negligence is not disputed. Drovers Nat. Bank v. Packing Co., 117 Ill., 100; First Nat. Bank v. Citizens Savings Bank, 123 Mich., 336. The question in this ease is well stated in the brief for appellee as follows: “We did not forward the certificate to Parsons, hut, of course if we induced the Citizens Savings Bank to do so we did what was in effect the same thing; and we do not deny that we should he liable to the plaintiff if that were the case.” The Citizens Savings Bank upon receiving from the defendant bank the certificate in question with accompanying letters and written directions, sent the certificate direct to Parsons and the question whether it was authorized to do so by the defendant bank depends upon the construction of the letters and written directions. In construing these letters and written directions it. is our duty, by the aid of extrinsic evidence, to place ourselves in the position of the parties so that we may understand the language used, in the sense the defendant bank intended the Citizens Bank to understand it. The defendant bank, through its officers, knew that Parsons had the only bank at Burr Oak and that, therefore, if the certificate was to be sent to a bank at Burr Oak for collection, it must be sent to Parsons, and knew that Parsons" was the correspondent of the Citizens Bank. Knowing these facts, the defendant bank, in place of sending the collection to its correspondent at Detroit, sent it to the Citizens Bank and with it, in addition to the letter of its cashier enclosing the collection, sent the following: “Citizens Savings Bank, Detroit, Mich. We send this C-D for $1,650 & Int. to you for collection as we note that you have a correspondent at Burr Oak, Mich. Please collect for us at your best rate of exchange, and oblige First Katiomal Baste, 9-6-’98. Chicago. Kindly take this ticket off before forwarding to Burr Oak.” “As” in this letter must be held to mean “because” and the letter to state that the collection was sent to the Citizens Bank because it had a correspondent at Burr Oak. The fact that the Citizens Bank had a correspondent at Burr Oak was of no importance to the defendant bank unless it expected the Citizens Bank to send the certificate to its correspondent at Burr Oak. We think that the only just inference that can be drawn from the evidence is that the defendant bank sent the certificate for collection to the Citizens Savings Bank expecting that bank to send it to its Burr Oak correspondent who, as the defendant bank knew, was D. F. Parsons. The correspondence shows that the defendant bank construed its directions sent with the certificate to mean that the Citizens Bank was instructed to send the collection direct to Parsons. In a letter of the defendant to the Citizens Bank September 16, 1898, it was said: * * * “In sending you the item as we did, we supposed it was intended to have the advantage of your knowledge of Parsons. We were aware that his was the only bank at Burr Oak but we thought that you would know enough about him not to send an item on himself for $1,650 unless you had and were warranted in having considerable confidence in him.” It appears from the correspondence that Parsons was in good credit and standing and upon the defendant’s construction of its own letters the Citizens Bank was thereby authorized to send the collection direct to Parsons. In First National Bank v. Citizens Savings Bank, supra, the Supreme Court of Michigan held that the Citizens Savings Bank was authorized by the directions given to it by the First national Bank to send the draft direct to Parsons. We think that the papers forwarded by the defendant bank to the 'Citizens Bank with the certificate, construed in the light of facts and circumstances known to both banks, authorized the Citizens Bank to forward the certificate to Parsons for collection and that in giving such instructions the defendant bank was guilty of the negligence charged in the declaration. The judgment of the Superior Court will be reversed with a finding of facts and judgment will be entered here in favor of appellant and against appellee for the amount of the certificate of deposit September 6, 1898, $1,688.50, with interest thereon at five per cent from that date to this, amounting in all to the sum of $2,315.44. Reversed with finding of, facts and judgment.