Farley National Bank v. Pollock & Bernheimer

SIMPSON, J. The vital question raised by the pleading in this case is, can a bank, to which is intrusted a check for collection, send that check to the bank upon which it is drawn, receive its check on New York in payment, and, when the later check is protested on account of the failure of the bank drawing it, shield itself behind a custom to transact business in that way. It may be admitted that a party commiting a paper to a bank for collection may be bound by a custom which is reasonable and sufficiently general to presume that it is known. The point has not been directly decided in this state. In the case of Lowenstein v. Bresler, 109 Ala. 326, 19 South. 860, Chief Justice Brickell said: “It may be the drawee of a check is not-a suitable agent to be intrusted with [327] its collection; and it may be that the Bank of Commerce, in selecting tlie banking company as the agent to collect the check and-remit the collection, rendered itself liable to the plaintiffs for whatever loss might result to them from the unsuitable selection.” And he cites several authorities, supporting this proposition. The proposition seems to be generally recognized. Undoubtedly an agent who undertakes to collect a claim, although by custom he may be allowed to employ sub-agents, yet is certainly bound to select his subcollecting agents with judgment and care, and one of the first elements of care is to select a subagent who is not adversely interested in the subject matter. What would be the use of a party placing his claim in the hands of a, bank for collection, if that duty could he performed by merely indorsing the paper by mail to the party who is obliged to pay it and receive his check on New York? The owner of the paper could send it directly, and receive his New York exchange in much less time. A custom must be reasonable, and the best considered cases hold, not only that the bank or party who is to pay the paper is not the proper person to whom the paper should be sent for collection, but also that a custom to that effect is unreasonable and bad. — 1 Morse on Banking, § 236 ; National Bank v. Anglo A. Packing Co., 7 N. E. 601, 57 Am. Rep. 855 ; First Nat. Bank of Chicago v. Citizens’ Savings Bank, 82 N. W. 66, L. R. A. 583 ; Minneapolis Sash & Door Co. v. Metropolitan Bank, 78 N. W. 980, 44 L. R. A. 504, 77 Am. St. Rep. 609 ; German Bank v. Burns (Colo). 21 Pac. 714, 13 Am. St. Rep. 247 ; Wagner v. Crook, 167 Pa. 259, 31 Atl. 576, 46 Am. St. Rep. 672 ; Merchants’ Nat. Bank v. Goodman, 109 Pa. 422, 2 Atl. 687, 58 Am. St. Rep. 728. The judgment of the court is affirmed. Haralson, Dowdell, and Denson, JJ., concur.