National Bank of Commerce v. American Exch. Bank

• Citation: 52 S.W. 265,151 Mo. 320
• Parties: NATIONAL BANK OF COMMERCE OF KANSAS CITY v. AMERICAN EXCH. BANK OF ST. LOUIS.
• Decision Date: 15 June 1899
• Court: United States State Supreme Court of Missouri

52 S.W. 265

151 Mo. 320

NATIONAL BANK OF COMMERCE OF KANSAS CITY v. AMERICAN EXCH. BANK OF ST. LOUIS.

Supreme Court of Missouri, Division No. 2.

June 15, 1899.

TRIAL — PEREMPTORY INSTRUCTION — BANKS AND BANKING — ACCEPTANCE OF WORTHLESS CHECKS — USAGES — DELAY IN NOTIFICATION OF RECEIPT OF WORTHLESS CHECKS — MISTAKE AS TO SOLVENCY OF MAKER OF CHECK.

1. Every reasonable intendment in favor of a party is to be drawn from the evidence, and, where he is entitled to recover on the whole case, it should not be withdrawn from the jury by a peremptory instruction.

2. Where a bank accepts a check on another bank in payment of a draft in its hands for collection, and surrenders the draft, it makes the check its own, and its liability is the same as if cash had been received.

3. That a bank receiving a worthless check in payment of a draft regarded the check as its own is shown by the commencement of attachment suits against the maker of the check; and this, though it notified the bank from which the check was forwarded, and to whom it had sent the proceeds shortly after the commencement of the attachment suits, that it would hold such bank liable for the amount.

4. A usage of banks, in collecting drafts, to surrender them to the drawees by taking checks for their payment, is unreasonable.

5. That the drawer of a draft sustained no loss by delay of a bank to which the draft was sent for collection, of 24 to 36 hours, in notifying him of the insolvency of the drawee, is not shown by the fact that upon receipt of notice he instituted attachment suits for the collection of other claims against the drawee, as he might possibly have found other property upon which to levy if notice had been promptly given.

6. The rule that money paid by one joint agent to another through mistake, which has not been forwarded by the latter to the principal at the time of notice, may be recovered back, has no application to a bank accepting a worthless check in payment of a draft, and remitting cash to its forwarding joint agent, where the collecting bank has treated the check as its own.

7. A bank may not excuse its acceptance of a worthless check in payment of a draft on the ground of a mistake of fact, as it has no right to act upon mere guesses and surmises.

Appeal from St. Louis circuit court.

Action by the National Bank of Commerce of Kansas City, Mo., against the American Exchange Bank of St. Louis. Judgment for defendant, and plaintiff appeals. Affirmed.

Elijah Robinson, for appellant. Thos. E. Ralston, for respondent.

BURGESS, J.

This is an action to recover the sum of $9,000, the amount of a draft sent by the Hide & Leather National Bank of New York to the defendant, at St. Louis, for collection, and by it forwarded to plaintiff at Kansas City, Mo., for collection and return. The action is predicated upon its alleged justifiably mistaken belief with respect to the solvency of the drawee, one Frank E. Tyler, who was doing business under the name of Benj. McLean & Co., because of which plaintiff took his check on another bank for the draft, and delivered the draft to him, and on the same day sent its draft to defendant for the amount, supposing the check to be good, and that it would be paid on presentation in the usual course of business. But the check proved to be worthless. The case was tried by the court, a jury being waived. There was a judgment for defendant, and plaintiff appeals.

For several years prior to April 21, 1893, Frank E. Tyler had been doing business in Kansas City, New York, and a number of other places, under the name of Benj. McLean & Co. On the 17th day of April, 1893, his New York representative, in the name of Benj. McLean & Co., drew a draft upon him in favor of the Hide & Leather National Bank, of that city, for $9,000, on Benj. McLean & Co., Kansas City, Mo., which was on the same day delivered to the Hide & Leather National Bank, and by it placed to the credit of the drawers. On the same day that the Hide & Leather National Bank received said draft, it forwarded it, together with some other collections, to its correspondent, the defendant bank, for collection; at the same time, according to its custom, charging the same to defendant, which, upon their receipt by defendant, were credited to the Hide & Leather National Bank. The defendant received the draft on the 19th day of April, 1893, and on the same day sent it by mail to the plaintiff for collection, by whom it was received at the opening of the bank for business on the following morning. Tyler's place of business was at Armourdale, Kan., some five or six miles from the National Bank of Commerce; and upon receipt of the draft the plaintiff bank informed him by telephone that it held it for collection, whereupon Tyler promised to send over and pay the same. This was the customary way of making collections from Tyler. But in this instance there was evidence upon the part of the defendant which tended to show that the draft upon Tyler was accompanied by a letter from it containing the following, to wit: "Caution. Protest all paper, and deliver no bills of lading without payment of draft, unless otherwise instructed. Wire nonpayment items over $500. Return promptly all unpaid items." Upon the part of plaintiff, however, there was evidence tending to show that this letter was never received by it. At the same time plaintiff received the draft in question from the defendant, it also received from the St. Louis National Bank, for collection, another draft on Tyler, for $1,283.20, to which there was a bill of lading attached. About 3:30 in the afternoon of the day upon which Tyler was notified by plaintiff that it had the $9,000 draft for collection, he sent to plaintiff his check on the Metropolitan National Bank of Kansas City for the amount of both of said drafts; and upon the receipt thereof the plaintiff surrendered to him both of said drafts and the said bill of lading, and remitted to defendant the amount of the $9,000 draft. At that time Tyler's financial standing seems to have been unquestioned. When Tyler's check was received by plaintiff, it was after banking hours, but the next day, the 21st, it was placed in the clearing house for collection. The taking of the check, and placing the same in the clearing house the next day for collection, seem to have been in accordance with the prevailing custom among the banks of Kansas City in regard to such collections. The Metropolitan Bank refused payment of the check, of which the plaintiff was notified about 3 o'clock in the afternoon of the 21st, and that evening plaintiff's assistant cashier notified defendant by wire of its nonpayment, and requested it not to remit the amount to the Hide & Leather National Bank; but the telegram was not received by defendant until the morning of the 22d, when defendant wired the Hide & Leather National Bank that plaintiff claimed to have remitted through mistake, and asked it to cancel the charge made against defendant's account, which it refused to do. Tyler was indebted to said Hide & Leather National Bank on a note in the sum of $10,000, which was independent of this $9,000 transaction; and on the 24th of April it began suit against him in New York on said note, and attached everything he had in that state, and realized out of the attached property about $7,000. In the evening of the 21st, Mr. Schwitzgeble, plaintiff's assistant cashier, caused a suit to be brought against Tyler in the district court of Kansas City, Kan., and a writ of attachment to be issued, which was levied on some property supposed to belong to him. There was never any personal service, but he was notified by publication, and on July 12, 1896, judgment by default was entered in this case. The property levied upon under the writ of attachment in this case was covered by a prior lien — a mortgage — for a great deal more than its value, and also by a prior attachment in favor of the Metropolitan National Bank, and nothing was ever realized out of this suit. On the morning of the 22d of April the plaintiff wired to several different places where Tyler was supposed to have property, directing the bringing of attachment suits. A small quantity of property was found and levied upon at El Paso, Tex., and also at Albuquerque, N. M.; but soon thereafter an agreement was made between plaintiff and Tyler whereby the proceeds of this property, less...