Streissguth v. National German-American Bank
| Decision Date | 24 February 1890 |
| Citation | 44 N.W. 797,43 Minn. 50 |
| Parties | Otto Streissguth and another v. National German-American Bank |
| Court | Minnesota Supreme Court |
Appeal by defendant from a judgment of the district court for Ramsey county, where the action was tried by Brill, J., who found the facts substantially as follows: During more than five years next before suit brought the defendant (a national bank) was accustomed to receive from its customers (including plaintiffs) for collection, and to collect for them, all drafts and checks left with it for collection, and, in collecting from persons living at remote places, to send them to its correspondents at or near such places. On November 13 1888, plaintiffs deposited with defendant for collection their draft for $ 137.52, on a mercantile firm doing business at Lake Crystal, Blue Earth county, in this state, about 100 miles from St. Paul. The defendant, on November 14th, sent the draft in due course of business, to its correspondent, a bank of good standing and credit at Lake Crystal, to which it was paid by the drawees on November 24th, and which became insolvent on November 28th, and has never paid over the amount collected. The draft was received by defendant in the usual course of business and without any express agreement. The defendant exercised ordinary care and prudence in selecting such bank as its agent to collect the draft. In the usual course of business a small charge for collection (called exchange) was made, -- in this case 52 cents, such exchange being retained by defendant's correspondent, and the defendant would pay plaintiffs the amounts collected from their drafts, less such exchange, plaintiffs not knowing who received the exchange. As conclusions of law the court held that defendant was liable for its correspondent's default, and ordered judgment for the amount of the draft with interest from November 30, 1888.
Judgment affirmed.
John B. & W. H. Sanborn, for appellant.
Young & Lightner, for respondents.
The single question presented by this appeal is whether a bank with which a customer has left for collection his draft upon a party residing at some distant point can be held responsible for the failure and default of a correspondent to whom the bank has forwarded the draft for collection. It must be admitted that there is apparently a great conflict of precedents upon this precise question, and it is possible that, as contended by the appellant, the weight of the authorities, numerically speaking, is with the proposition that when, under such circumstances, a bank has exercised ordinary care and prudence in the selection of a correspondent to whom it transmits a draft, bill, or note for collection, and remittance of the proceeds, its liability terminates, because, as it is necessary and customary, and in the usual course of business, for banks to collect through correspondents, of which necessity, custom, and course of...
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