Bank of the United States v. Goddard

STORY, Circuit Justice. I lay out of the case all consideration of the fact, that the note belonged to the Branch Bank at Portsmouth, and was remitted to the Branch Bank at Boston for collection, both these branches being but the agents of the Bank of the United States, the real holder- of the note. In the first place, it is admitted, that the known course of business in each of the branches is, in respect to all notes transmitted from another branch, to deal with them in the same manner as if transmitted by a stranger bank, and to return their notes back, upon their dishonour, to the branch, from which they have been received. In the next place, the branches being established by the parent bank for its own particular purposes, their agency may be limited and controlled according to the pleasure of the parent bank. So that the present case does not at all differ from that of a private principal, who employs different agents indifferent cities to transact business, or negotiate, and discount, and collect, notes there upon his account. No distinction was pointed out at the argument, as growing out of this circumstance, differing the case from the common case of holder and agent, or holder and banker; and none is believed to exist. The case may, therefore, for all the purposes of this suit, be considered as if the Portsmouth Branch were the real holder of the note, and wholly unconnected with the Branch in Boston, and employing the latter as its agent to collect the note when “due. The question, then, is, whether notice of the dishonour ought to have been given by the Branch Bank at Boston to the defendant, or whether the notice sent by the Branch Bank at Portsmouth to the defendant was in due time, and sufficient in point of law. It is admitted, that there is no objection to the notice on the account of the delay of its arrival to the defendant until the 8th of March, when it ought regularly to have arrived on the 7th. The snow-storm sufficiently accounts for that; and the notice was given as early by the holder, as, under the circumstances, it could or ought to be. The case is narrowed down, then, to the consideration, whether by law the defendant was entitled to notice directly from the agent in Boston, which, by due inquiry and diligence, he might have given on the 6th of March; or whether a circuitous notice through the holder was sufficient. The argument of the defendant’s counsel is this. The agent is bound to give notice of the dishonour, to a prior indorser, who is intend [697] ed to be charged, if his residence is known to him, or if, upon reasonable inquiry, it can be ascertained, and it is in fact nearer to his own, than that of the indorser, and a notice will thereby reach him earlier than from the principal holder. Reasonable diligence is in all cases sufficient in giving notice; but what is such must be judged of by all the circumstances of each case. If the agent may in all cases omit to give notice to the indorser, then, although he resides in the same city with the indorser, and the principal holder resides at a great distance, the indorser would be held, although a circuitous notice from the holder might not reach him for a week or a month, which would be unreasonable. And it is said, that there is no case, which justifies such a doctrine. If there be no such case, then the question must be considered upon principle. Now it is very clear, that if the Boston Branch had been the holders of the note, they would, under the circumstances, have been entitled to recover against the defendant, since he received due notice from the prior holders, to whom due notice was sent by them, and to whom, upon payment of the note, the defendant would have been answerable over. It is laid down in Bayley, Bills, (4th Ed.) 103. and better authority can scarcely be, that “though a holder or any other party gives no notice but to the person, of whom he took the bill; yet if notice is communicated without laches to the prior parties, he may avail himself of such communication, and sue any of such prior parties. It is no objection, in such case, that there was no notice immediately from the plaintiff to the defendant.” And this doctrine is fully supported by decided cases. Jameson v. Swinton, 2 Camp. 373; Wilson v. Swabey, 1 Starkie, 34; Stanton v. Blossom, 14 Mass. 116; and Stafford v. Yates, 18 Johns. 327,—are in point. The reason seems to be, that as the notice is sufficient to charge the defendant with the payment in favour of the person who gives it, it ought to charge him in favour of all subsequent parties, because he sustains no injury from want of notice. It is, as to him, due notice. If, then, as holders, they might affect the defendant with responsibility by such circuity of notice, what is the reason, why, as agents, they may not give their principal the same right? If there be any, it must be upon the ground, that the agent is in all cases bound to give direct notice to the indorser intended to be charged, in the same way. and within the same time, and in the same manner, as his principal ought, if there were no agency, and the bill remained in his hands. Such a proposition has never yet been maintained, as far as I know, by any court of justice. And in the argument it was admitted, that if the domicil of the party, to whom notice is to be given, be unknown to the agent, he is not bound to give any notice. And it has been decided, that when a holder transmits a note for payment to his agent, he is not bound to inform the latter where the prior parties live, so as to enable the agent to give them notice. But how is it established, that in any case an agent to receive payment of a note is bound to give notice to any person, but his principal, of the dishonour? The nature of the transaction does not necessarily imply it. The authority to receive payment may be complete, without any incidental authority to give such notice. It is certainly competent for the holder to authorize his agent to do no more than to demand payment, and give him notice of the dishonour. If the agent actually gives notice in due time to the antecedent parties, that may be good in favour of his principal. If the latter requires his agent to give such notice, and he neglects to do it, he may be chargeable with any loss sustained by such neglect. But the question is not, what the agent may do, or ought to do, as between himself and his principal; but whether the other parties, to be charged upon notice, have any right to such notice from him, so as to be discharged by his neglect. As I understand the doctrine of law upon this subject, it is, that an agent, upon the dis-honour of a note remitted to him to procure payment, is bound to give notice of the dishon-our to his principal, and transmit to him the proper evidence of it; but he is not bound to give any notice to other parties on the note. That was manifestly the doctrine of the court in Haynes v. Birks, 3 Bos. & P. 599, 601, where a bill had been remitted to bankers, as agents of the holder, to procure payment; and the argument there was, that in such a case the bankers, being agents of the holder, the defendant (the indorser) was entitled to the same notice, as if the bill had remained in the plaintiff’s hands. But the court overruled the objection; and said that it was the banker’s business only to acquaint his principal of the dishonour. The same doctrine was held in Tunno v. Lague, 2 Johns. Cas. 1. That case is very strong, for the defendant, who was sought to be charged, lived in the city of New-York, the bill being drawn by him at Jeremie (N. J.) in favour of the plaintiffs, upon a house in New York, and dis-honoured by the latter. The notice was not sufficient in the opinion of the court, having been given at New-York, long after the dis-honour, if the party giving the notice had been the holder; but being an agent only, it was held, that the notice was sufficient, because it was earlier than the defendant would have had it, if the bill had been sent back to the plaintiffs, and notice had been sent directly by them. And the court said, that the duty of the agent extended no farther than to give notice to his principal. The same doctrine is also asserted in Colt v. Noble, 5 Mass. 167. The bill was drawn in New South Wales, in favour of the defendant, and by him indorsed at Madras to the plaintiffs, who sent it to their agent in London, where [698] it was dishonoured by the drawees. The defendant resided in Portsmouth, N. H. and the agent might have sent notice to the defendant at Portsmouth in three months; hut he merely transmitted the bill and protests to his principal at Madras, who sent notice from thence to the defendant, who did not receive it until more than a year after the dishonour. The court held the notice sufficient. And Mr. Chief Justice Parsons, in delivering the opinion of the court, said, “A person appointed a factor to cause a bill to be presented is entrusted with no other powers, and it is his duty to notify his principal.” It is true, that in that case it did not appear, that the agent knew the defendant’s domicil; but that consideration was not relied on. And the court decided generally, that the holder was not bound to give information of the domicil of the indorser to his agent; nor was the latter bound to give notice to the indorser of the dishonour; and that it made no difference, whether the bill was remitted to the factor to procure acceptance, or in payment of a debt due to him. The case would seem, therefore, to travel on all-fours with the present. It appears to me, also, that the cases, in which it has been holden, that a banker, who as agent receives the bill of a customer, is only bound to give notice of its dishonour to his customer, in like manner as if he were himself the holder, and his customer were the party next entitled to notice, confirm the doctrine. The legal effect of these cases is, that the customer has the like time to communicate such notice, as if he had received it from a holder; and therefore by placing a bill or note in the hands of a banker, the number of persons, from whom notice must pass, is increased by one. So it is laid down in Bayley, Bills, (4th Ed.) 173, and the cases of Haynes v. Birks, 3 Bos. & P. 599; Scott v. Lifford, 9 East, 347; and Langdale v. Trimmer, 15 East, 291,—fully support the position; and it has also been recognized in the recent case of Firth v. Thrush, 8 Barn. & C. 387. In all these cases, the bankers were agents; and if they were bound to give notice at all, they might have given it a day earlier than it was received from their principals. But the court treated the cases exactly as if the agents were holders, and necessarily repudiated the notion, that either as holders or as agents, they were bound to give notice to any other person than their principal. But it is said, that in neither of these cases did it appear, that the bankers knew the residence of the parties, to be charged by notice; or that the banker’s residence was nearer to ’the parties, than that of the principals. If that be admitted, it is still a sufficient answer, that neither of these facts was treated as material; and the judgment of the court proceeded upon a principle, which comprehended all such cases. If the sufficiency of the notice depended upon the fact, whether the agent had no knowledge of the residence of the parties, or lived farther from them than his principal, that fact ought to have come from the plaintiff as part of his case; for the onus was upon him to show due notice. I am not satisfied, however, that the case in 3 Bos. & P. 599, was not a case, where the banker lived nearer to the indorser than to the holder. The latter lived at Knights-bridge, and both of the former lived in London. But it seems to me, that there is a far stronger reason for requiring that the banker should give notice, where he and the principal live in the same town, or at least that notice in such cases should be given as early, as the principal might give it, if the note were in his own hands, than where the principal resides' in a different town, since the communication between them is so much more easy. It appears to me, that the question now before the court has been closed by authorities; if not by direct adjudication, at least by necessary inference. The doctrine is laid down, without any exception, that the agent is not bound to give notice; and if any exception had existed, it could not for so long a period have been overlooked. But if it were otherwise, and there were no authority in point, my own judgment would be the same. It appears to me, that an agent is not bound to give notice to the indorser of the dishonour of any note; and that his agency does not naturally include such a duty. If he contracts with his principal to give such notice, that is a mere private contract between the parties, with which the indorser has nothing to do. It neither enlarges, nor limits his rights. It may be inconvenient for him to receive a circuitous notice; but that is not sufficient to change the law. I think it would be far more inconvenient to establish the doctrine now contended for in the de-fence. All that is required by law, is, that the holder should give notice to the indorser in a reasonable time after he has knowledge of the dishonour, and that there should be no laches in getting that knowledge, if an agent has been employed. This view of the case renders it unnecessary to consider the point, whether, under all the circumstances, the defendant was entitled to notice, he having received security, originally supposed to be sufficient to meet the payment; as well as some other points suggested in the argument at the bar. Judgment must therefore be entered for the plaintiffs, according to the verdict. Judgment accordirigly.