Cummins v. Heald

The opinion of the court was delivered by Horton, C. J.: The principal question presented for our determination is, who shall bear the loss occasioned by the embezzlement of F. W. Kroenke — Heald, the owner of the notes, or Cummins, who received the notes for collection? Counsel for plaintiff in error contend that as Cummins failed to receive any of the proceeds of the notes from Kroenke, he is not responsible for the loss, as he acted in good faith, and exercised ordinary care and diligence in all the transactions. Again, it is claimed by them, that Cummins received the notes for collection as a banker; that he was requested by Heald to send the notes to an attorney at law for collection; that in accordance with the request, he forwarded them to Kroenke; that Heald approved of his selection and action, and thereby that Kroenke was not the agent of Cummins, [603] but of Heald only. In view of the evidence adduced upon the trial, and the special findings that Cummins received the notes as attorney at law “for collection,” and that the notes were to be collected by him, the latter claim has no support in the record. Therefore, we can inquire only as to the liability of Cummins under the terms of the receipts for the collections. The decision in Bradstreet v. Everson, 72 Pa. St. 124, is a leading case upon the legal interpretation of a similar receipt of a claim for collection. It is there stated that such a receipt “for collection,” imports an undertaking by the attorney himself to collect, and not merely that he receives it for transmission to another for collection, for whose negligence he is not to be responsible; that the attorney executing the receipt is therefore liable by its very terms for the negligence of the distant attorney, who is his agent; that he cannot shift responsibility from himself upon his client; that there is no hardship in this, for it is in his power to limit his responsibility by the terms of his receipt, when he knows he must employ another to make collection. See, also, Weeks on Att’ys, §117; Wharton on Neg., §753; 8 Ohio St. 465; 11 N. Y. 203; 79 Ill. 193; 83 Pa. St. 305; 13 Blatch. 237. The authorities are decisive against the relief of Cummins on the ground of his good faith, or the exercise of ordinary care and diligence. He took the notes “for collection;” he corresponded with Kroenke; he selected him as his agent; he sent the notes to him at his own instance, and as he must be held liable under the receipts for collections made by his own agent, he must suffer the loss occasioned by the fraud of-such agent. Counsel question the correctness of the instruction of the court that Heald was entitled to interest from the time the money was collected: $173.75 was collected by Kroenke on January 15, 1878; and $256.75 was collected August 26, 1878. Heald was informed by Cummins early in November, 1878, that Kroenke had collected the notes and absconded. Plaintiff in error alleges no demand was made until November 25, 1878, and that the jury cast interest on the [604] money from the dates of the collections. It is the general rule that an attorney who collects money must give his client notice thereof immediately and await instructions, and that no action will lie for the money collected by him until a demand is made, (Voss v. Bachop, 5 Kas. 59;) yet, when the collection is followed by an embezzlement of the monéy collected, no demand is necessary to maintain an action for the recovery of the money. As Cummin's was civilly liable for the fraud of his agent, and as the money was embezzled upon its collection, the instruction of the court was not erroneous. (Comp. Laws 1879, ch. 51, p. 509.) The judgment of the district court will be affirmed. All the Justices concurring.