Streissguth v. National German-American Bank

Collins, J. The single question presented by this appeal is whether a bank with which a customer has left for collection his draft upon a party residing at some distant point can be held responsible for the failure and default of a correspondent to whom the bank has forwarded the draft for collection. It must be admitted that there is apparently a great conflict of precedents upon this precise question, and it is possible that, as contended by the appellant, the weight of the authorities, numerically speaking, is with the proposition that when, under such circumstances, a bank has exercised ordinary care and prudence in the selection of a correspondent to whom it transmits a draft, bill, or note for collection, and remittance of the proceeds, its liability terminates, because, as it is necessary and customary, and in the usual course of business, for banks to collect through correspondents, of which necessity, custom, and course of business the owners and holders of paper have full notice and knowledge, it must be held that they have assented to and authorized the work of collection through others. The question involves a rule of general application and of commercial law. As it concerns trade between different and distant places, and, in the absence of a statute or contract or usage which has obtained the force of law, is not to be determined according to the views or interests of any particular persons, classes, or localities, it should be decided according to those principles which govern and best promote the general welfare of the entire commercial community, and in accordance with the general principles which apply to all who contract to perform a service. When the appellant received the draft for collection, it entered into a contract, by implication, to per-I form such duties as were necessary for the protection of its customer. [52] It agreed to collect the paper itself, not to procure the services of another to make the collection. The plaintiffs had no voice in the selection of appellant’s agent or correspondent, and it is difficult to.see why banks and banking-houses should be excepted from the operation of a cardinal and well-established principle of law, that every person is liable for the acts of such agents as may be appointed or designated by him to transact such business as he has undertaken to perform for others. The appellant, having undertaken the collection of the paper, stands in the attitude of an independent contractor, who, having unrestrained liberty so to do, has designated a subagent, and is therefore answerable for his neglect, failure, or default. It is true that in the adjudicated cases cited by the appellant strong arguments are found, and cogent reasons stated, in support of its position ; but we are of the opinion that the conclusion we have reached is the sounder one upon principle. It is also sustained by the supreme court of the United States, and the courts of last resort of several of the states, including that of the great commercial centre, New York. It is also the rule in England. Exchange Nat. Bank v. Third Nat. Bank, 112 U. S. 276, (5 Sup. Ct. Rep. 141;) Allen v. Merchants’ Nat. Bank, 22 Wend. 215; Ayrault v. Pacific Bank, 47 N. Y. 570; Simpson v. Waldby, 63 Mich. 439, (30 N. W. Rep. 199;) Titus v. Mechanics’ Nat. Bank, 35 N. J. Law, 588; Reeves v. State Bank, 8 Ohio St. 465; Tyson v. State Bank, 6 Blackf. 225; Am. Express Co. v. Haire, 21 Ind. 4; Mackersy v. Ramsays, 9 Clark & F. 818; Van Wart v. Woolley, 3 Barn. & C. 439. Judgment affirmed.