Canterbury v. Bank of Sparta

Cassoday, C. J. It may be conceded that the vendor of negotiable paper has the right of stoppage im transitu to the same extent as the vendor of other species of personal property. Here the La Crosse bank discounted the plaintiff’s draft on W. E. Coats & Co., and forwarded the same to< the defendant for collection. The defendant was under no obligation to pay that draft,— especially as the account of W. E. Coats & Co. at the defendant bank was .then considerably overdrawn. Nevertheless, the defendant, on the request of the jnanaging agent of W. E. Coats & Co., whose authority is not questioned, made its own draft on the'Chicago bank for the amount, payable to the cashier of the La Crosse bank, and sent the same in a letter by mail to the cashier of the La Crosse bank “ in payment of draft on W. E. Coats & Co.,” and that letter, with the draft inclosed, reached La Crosse in the regular course of mail. Undoubtedly, the defendant, in making its draft on the Chicago bank, gave a corresponding credit to W. E. Coats & Co. on the faith of their solvency; but it did so voluntarily and for their accommodation and without being induced to do so by any fraud or mistake of fact. While the defendant retained the actual or constructive possession of that draft, it could, un [57] doubtedly, withhold its application in payment of the draft on W. E. Coats & Co.; but if, by sending the draft by mail to La Crosse, it parted with such possession and vested the title to the draft in the La Crosse bank, then, manifestly, it lost all rightful authority to take the same from the mail. In thus mailing and sending the draft the defendant acted as the agent of the La Crosse bank. Such mailing of the letter inclosing the draft was, in legal effect, a delivery of the draft to the La Crosse bank. 1 Eandolph, Comm. Paper, § 218; 1 Daniel, Neg. Inst. § 67; Buell v. Chapin, 99 Mass. 594; Kirkman v. Bank of Am. 2 Coldw. 397; Mitchell v. Byrne, 6 Rich. Law, 171: Sichel v. Borch, 2 Hurl. & C. 956; Bunk v. Lawson, 12 Ill. App. 229. The mere fact that after the draft was so sent by mail the defendant ascertained that W. E. Coats & Co. had failed, and hence that it had injudiciously given them further credit to the amount of the draft, did not authorize the defendant to stop payment of the draft or take it from the mail. The draft was not transmitted to W. E. Coats & Co., but was transmitted by them, through the defendant, to the bank at La Crosse. In support of the views expressed, see Boylston Nat. Bank v. Richardson, 101 Mass. 287; Pacific Bank v. Mitchell, 9 Met. 297; Pratt v. Foote, 9 N. Y. 463; Whiting v. City Bank, 77 N. Y. 363; Eaton v. Cook, 32 Vt. 58. By the Cowrt.— The judgment of the circuit court is reversed, and the cause is remanded with direction to enter judgment against the defendant for the amount of the verdict directed in favor of the plaintiff, with interest and costs. NewMAN, J., took no part.