Minneapolis Sash & Door Co. v. Metropolitan Bank

COLLINS, J. On the admitted facts in this case, the only question necessarily 'to be determined, in our opinion, is whether defendant bank, doing business at Minneapolis, was negligent when it sent by mail, and for collection, the Norton check directly to the bank of Mapleton, 117 miles distant, upon which bank the check was drawn; loss having resulted by reason of the adoption of this method of presenting the paper for payment. The defendant seeks to justify its procedure upon the ground that it had restricted its liability to its depositors, when collecting checks and drafts, by means of the notice printed upon its depositors’ bank or pass books, of which notice plaintiff’s secretary had actual knowledge; and also because of a well-settled usage and custom then prevailing in banks; and, further, because the same result would have ensued had another correspondent been selected. 1. Although the defendant had limited its liability so that when [143] receiving checks or drafts for collection, or on deposit, it acted as an agent only in forwarding these items to other points for collection, it was only bound to select agents who were responsible, according to its judgment and means of knowledge, and assumed no risk or responsibility on account of their omission or neglect or failure, defendant was obliged to exercise reasonable care and diligence in adopting a method of presenting the check in question to its drawee for payment, in selecting its agent. Now, can it be held that defendant exercised reasonable care when it sent the check by mail to the very party most interested against the payee and principal, thus placing such principal entirely in the hands of its adversary. Norton had ample funds on deposit when he drew the check, and also when the check reached the drawee, presumably on July 31, at the opening of business hours. It was important that it should speedily be presented for payment, in order to fix his liability in case of nonpayment. This was of the utmost importance to both payee and maker, in order that the interests of each might be protected. The interest of the drawee would naturally be to procrastinate, and possibly this would be its inclination. It seems to be settled by all of the authorities that, “For the purposes of collection, the collecting bank must employ a suitable subagent. It must not transmit its checks or bills directly to the bank or party by whom payment is to be made, with the request that remittances be made therefor. It is considered that no firm, bank, corporation, or individual can be deemed a suitable agent, in contemplation of law, to enforce, in behalf of another, a claim against itself.” 1 Daniel, Neg. Inst. § 328a; 3 Am. & Eng. Ene. (2d Ed.) 809; Drovers v. Anglo-American, 117 Ill. 100, 7 N. E. 601; Merchants v. Goodman, 109 Pa. St. 422, 2 Atl. 687; Wagner v. Crook, 167 Pa. St. 259, 31 Atl. 576; German v. Burns, 12 Colo. 539, 21 Pac. 714; Anderson v. Rodgers (Kan.) 27 L. R. A. 248, and note, in which the authorities are carefully considered. The truth of the remark as to the unsuitability of the drawee of a check as the agent selected to enforce its collection, and what may be expected if the practice is upheld, is well illustrated by the facts now before us. As before stated, the check must, in due course of mail, have reached Mapleton on the morning of July 31. Had it been in the hands of a properly designated third party, it would [144] have been presented and paid that day. The proceeds would, if properly transmitted, have reached defendant on the morning of August 1 or 2. Even if the payment had then been made, as it finally was, in a check upon the Mankato bank, and defendant had pursued the course it did as to its collection, no loss would have resulted. .But instead of accounting for the Norton check, so that defendant would receive the proceeds as early as August 2, the Mankato check was made out on August 4, and came to defendant’s hands the next day. With sufficient funds in its hands to meet the check, the Mapleton bank postponed a remittance for three days, and then sent a check, which proved to be worthless when seasonably presented for payment. 2. We have stated the grounds upon which defendant attempts to justify. It did show that it was usual and customary for banks to send checks and drafts, payable by other banks at distant points, to the drawee direct, and by mail, provided there was no other bank of good standing in the same town, while plaintiff was allowed to prove that an express company, whose business it was to collect and transmit money, had offices in both places. We fail to see what possible effect upon a case of this kind the fact that the drawee is the only bank in good standing in the town can have upon the duty of a bank which undertakes a collection. Any reason for such a course is equally as sound where there are two or more banks in the town as where there happens to be but one. While the syllabus of one of the cases cited in support of counsel’s proposition (Western v. Sadilek, 50 Neb. 105, 69 N. W. 765) may justify him, the opinion does not. We cannot agree with counsel that the usage and custom here relied upon is a defense to the claim that defendant was negligent when forwarding this check to the Mapleton Bank for presentation and payment. As a general rule, usage and custom will not justify negligence. It may be admitted that such a course is frequently adopted, but it must be at the risk of the sender, who transmits the-evidence of indebtedness upon which the right to demand payment depends, to the party who is to make the payment. Such á usage and custom is opposed to the policy of the law, unreasonable and invalid. It was so decided in Drovers v. Anglo-American and Mer [145] chants v. Goodman, supra. Counsel for defendant has cited two cases from the English Law Eeports and three from the New York Court of Appeals as authority upon this question. An examination of these cases will show that this exact question was not decided. See 27 L. E. A. 248, note, supra. 3. Counsel for defendant also urge that plaintiff ought not to recover, because the result would have been the same had another correspondent been selected to present the check. This assumes that a third party would have waited until August 4 for payment, and then would have accepted a check upon the Mankato bank as payment, which would have been transmitted to defendant August 5. Such an assumption reflects seriously upon the ordinary methods of bank officers, and is without foundation. Primarily, the loss to plaintiff grew out of the fact that defendant negligently selected an unsuitable party, the payee, to present the check, to compel payment, or, in case of refusal, to protect its rights, as against Norton, by due protest and notice of nonpayment. We need not discuss the further contention that payment of the Norton check could only be made in money. The order refusing a new trial is reversed, and, on the findings of fact, judgment must be ordered in plaintiff’s favor in the court below, unless such court, in its discretion, grants a new trial.