Bank of Shaw v. Ransom

Cook, P. J., delivered the opinion of the eonrt. The appellant is a hanking corporation, and was doing, a regular hanking business at Shaw. In the same town was another bank called the State Bank of Shaw. Appellee owned a plantation four miles south of Shaw, which he had leased to one T. B. Scott. On December 33, 1911, T. B. Scott was indebted to ap-pellee in the sum of two thousand five hundred and fifty dollars, and, having at that time more than that amount on deposit in the State Bank of Shaw, drew his check for that amount payable to appellee, and mailed same to appellee at Murfreesboro, Tenn. Ap-pellee received the check in due course of mail, and he placed the same with his home bank for collection. In the due course of business the bank at Murfreesboro forwarded the check to a Nashville bank for collection, and that bank in turn, forwarded the check to a New Orleans bank for collection, and the last-named bank forwarded same to the appellant bank on the 18th day of December. The appellant bank received the check for collection on the 19th or 20th of December, 1911. When this check was received by the appellant bank, the executive officers of the bank were advised that the State Bank, the drawee, was probably in financial straits; in fact, from the information in their hands, the appellant believed that the State Bank was hopelessly insolvent. It was the custom of the two banks of Shaw to make clearances each day. The debtor bank would then give to the creditor bank a check to cover the balance due on clearance. In this instance the appellant, it seems, was unwilling to take the check of the State Bank in settlement of the balance, but it nevertheless appears that the check in question was taken and was stamped paid by the appellant, but it was not delivered to the State Bank. The appellant’s defense seems to be that it refused to take the check of the [450] State Bank in payment, bnt merely received it to ascertain whether the Memphis Bank, on which the exchange was drawn, would pay it. The exchange was not forwarded to the Memphis bank, but the next day the appellant protested the check which is the subject of this controversy. The reason assigned for not protesting promptly was that the appellant hoped that the officers of the bank would come to the rescue of the insolvent institution. Mr. Ransom sued the appellant for the amount of the check, upon the theory that it was the duty of appellant to have protested the check when payment was refused, that the bank was charged with, the duty to get the cash, or, failing to do so, it was the duty of the bank to immediately protest same, bnt -if it chose to adopt another course, and receive the exchange tentatively, that the appellant thereby accepted the risk of this irregular procedure, and is liable to appellee for the full amount of the check. The appellant contended that Mr. Ransom was notified of the nonpayment of the check, long before he could have received notice of protest if the appellant had promptly protested the check; in other words, that the course adopted by appellant was the readiest means to advise Mr. ’ Ransom that the check could not be collected, -and 'the regular way, had it been followed, would not have afforded any way through which Mr. Ransom could have saved himself. The record shows that Mr. Scott, the drawer of the check, lived within four miles of the town of Shaw; that there were, two daily mails'between Mr. Scott’s post office and the Shaw office; that there was telephone connection between Mr. Scott’s home and the office of appellant; yet, with the check in its hands for collection, and with knowledge that the payee bank had not paid the check on presentation, and believing that the exchange accepted by it would most probably not be paid,'the collecting bank nevertheless failed to [451] protest and failed to take any steps to notify Mr. Ransom or Mr. Scott of the situation. The bank took th^ exchange and waited for results. M With these facts before the trial court, the jury wire peremptorily instructed to find a verdict for the plhiiP tiff, Mr. Ransom, against the defendant, and de£¿S®P ant appealed to this court. rroonoo The collecting hank is the agent of the dep5#t(ffg' of the claim for collection. 7 C. J. 54. It is ^tífe of the collecting ’ bank to collect in money, f 7 614, 615, and authorities there cited. g* ¿had The supreme court of West Virginia la^s ^ddlfifi-Nh-eT following rule controlling situations like the one mirrored by this record, viz.: “A collecting bank, knowing of the depressed financial condition of the debtor, is delinquent in its duty if it neglects to inform its customer of such vital condition, and fails to take vigorous methods under- the circumstances to secure paymenj;, fgjicL if rJoss occurs by its negligence to exercise that degree of skill, care, and diligence which the nature,xgfio^^vjindertaking calls for, with reference to the time, place, and circumstances surrounding the und^ftSSMg1, itiiC#iíl ifibilf'8 liability to its principal for the loss sustained." Pinkney v. Bank, 68 W. Va. 254, 69 S. E. 1012, 32 L. R. A. (N. S.) 987, Ann. Cas. 1912B, 115. A collecting bank canitét^lítéficht'kg3 t4a&%Gcf£B pfeyment. R 0 L - 5 Cvc 505 iJS °n sbíí 'ioUbus The authorities are tlfe effect that eolleetin^lDSSlá^fi^t^^lfi^ffihdé IJf6 4>ro- , , ,. , .Rratuoo ,ad}, now -lon.-isvos. srS Ycbefinoi ^ „ tect parties who ¿#55$ ataVoiW nMSW11 of commercial paper,ei^lm fdéffiPstaJíFitfeFwtaBQoWe do not deem it nece^Sk jffliBPqjt the obvious. b oí ‘'ill'tOXlllTB ort gfiíl 9ÍJ3Í8 9IÍÍ lo TOÍíJdJXB 9dT We have stated.i4fe4crc®g©aid!©di f<£fccésisa¡®i> feVoUalble to appellant as possible. Ttefti jpíUiwchiííc&¥áidqii@®T8lejs favorable -te&ife wateiffironifi-iHreioei @aÉ Jferepgmiañoiubt Ahat appellant°Wá§D ábgilIVfit^atfeV^ohcyb^olíl^etóbfed to [452] take chances by delaying the protest, but it is clear that its officers made no effort to protect the interest of Mr. Ransom. In conclusion we desire to say that the acceptance of the exchange under the circumstances was dangerously near a payment so far as appellee’s rights are concerned. It is unnecessary to go so far, however, as we think the judgment of the trial court was proper from the accumulated circumstances reflected in the record. This court has recently held that the collecting bank is the agent of - the holder. Mercantile Co. v. Armour Co., 109 Miss. 470, 69 So. 293. Affirmed.