Planters' Mercantile Co. v. Armour Packing Co. of Louisiana, Ltd.

Smith, C. J., delivered the opinion of the court. This is a suit by appellee upon an open account commenced before a justice of the peace, appellant’s defense being payment. On appeal to the court below a jury was waived, and the cause submitted to the judge alone, and from a judgment rendered by him in favor of appellee this appeal is taken. In addition to the facts disclosed in the agreement of counsel, which the reporter will set out in full, it appears from the evidence that the Citizens’ Bank of Wilkinson county was open for business on the 17th and 18th days of January; that after the 18th, which was Saturday, it did not again open its doors for the transaction of business. On Monday, the 20th of January, it had on hand less than one hundred dollars in cash, and was due by other banks about ten thousand and five hundred dollars. Its checks for practically all of this amount were given on Monday to the sheriff of Wilkinson county as part payment for public funds deposited with it. Whether the bank was a county or state depository does not appear. [477] It seems to be settled by the great weight of authority that: (1) The bank to which a check is sent for collection is the agent of the holder thereof for the purpose of'making the collection, and that payment of the check to such bank absolves the drawer from further liability thereon. (2) If a check is sent for collection to the bank on which it is drawn and such bank charges the amount thereof on its books to the drawer, he is discharged from further liability thereon, provided (generally, though not always) he has sufficient funds then on deposit with the bank to pay the check, and the bank itself is solvent. (3) This result follows, notwithstanding such bank may fail to pay over the money to the person from whom the check was received for collection. ■ (4) The bank on which a check is drawn is not a proper agent to which it may be sent for collection, and so to do is negligence. (5) When a check is received for collection by the bank on which it is drawn, and the drawer then has sufficient money on deposit with it with which to pay the check, he will be discharged from further liability thereon, although the bank fails to pay the amount of the check to the person from whom it was received, notwithstanding the bank may be then insolvent, provided the bank was then open for business, and it does not appear that in event the check had been presented at its counter by another .collecting agent it would not have been paid. Since in the case at bar it appears that the Citizens’ Bank of Wilkinson county was open for business on the 17th and 18th of January after its receipt of the check, and it does not appear that if the check had been presented on either of those days at its counter by another collecting agent it would not have been paid, we must presume that it would have been paid, and therefore appellant, on this evidence, must be held to be re [478] leased from further liability thereon. To hold otherwise would be to absolve appellee from the consequences of its, or, to be more accurate, from the consequences of its forwarding agent’s negligence, and visit such consequences upon appellant, who is in no respect responsible- therefor. The judgment of the court below will be reversed; and, since it may be that appellee will be able to show on another trial that no harm resulted to appellant by reason of the cheek having been forwarded for collection to the bank on which it was drawn, final judgment will not be entered here, but the cause will be remanded. Among the authorities examined by us, in addition to those cited in the briefs of counsel, which bear either directly or indirectly upon the question here involved, are: 2 Bolles, Modern Law of Banking, 548; 1 Daniel on Negotiable Instruments (5 Ed.) sec. 328a; Anderson v. Rogers, 53 Kan. 542, 36 Pac. 1067, 27 L. R. A. 248; Wagner & Bro. v. Crook, 167 Pa. 259, 31 Atl. 576, 46 Am. St. Rep. 672; Smith v. Mitchell, 117 Ga. 772, 45 S. E. 47, 97 Am. St. Rep. 217; Drover National Bank v. Anglo-American, etc., Co., 117 Ill. 100, 7 N. E. 601, 57 Am. Rep. 855; Merchants’ National Bank v. Goodman, 109 Pa. 422, 2 Atl. 687, 58 Am. Rep. 729; Schafer v. Olson, 24 N. D. 542, 139 N. W. 983, 43 L. R. A. (N. S.) 762; Pinkney v. Kanawha Valley Bank, 68 W. Va. 254, 69 S. E. 1012, 32 L. R. A. (N.S.) 987, Ann. Cas. 1912B, 115; Winchester Milling Co. v. Bank of Winchester, 120 Tenn. 225, 111 S. W. 248, 18 L. R. A. (N. S.) 441; Farley National Bank v. Pollok & Bernheimer, 145 Ala. 321, 39 So. 612, 2 L. R. A. (N. S.) 194, 117 Am. St. Rep. 44, 8 Ann. Cas. 370; Bank v. Byrne, 97 Mich. 178, 56 N. W. 355, 21 L. R. A. 753, 37 Am. St. Rep. 332. Reversed and remanded.