Bank of Indian Territory v. First National Bank

• Decision Date: 28 November 1904
• Citation: 83 S.W. 537,109 Mo.App. 665
• Parties: BANK OF INDIAN TERRITORY, Appellant, v. FIRST NATIONAL BANK, Respondent
• Court: Kansas Court of Appeals

83 S.W. 537

109 Mo.App. 665

BANK OF INDIAN TERRITORY, Appellant, v. FIRST NATIONAL BANK, Respondent

Court of Appeals of Missouri, Kansas City

November 28, 1904

Appeal from Buchanan Circuit Court.--Hon. Henry M. Ramey, Judge.

REVERSED (with directions).

Cause reversed.

Brown & Dolman for appellant.

(1) When defendant bank received the drawee's check on the Stock Yards Bank, in payment of the draft of plaintiff's bank on them and surrendered to drawees the draft, it made the check its own and its liability to the plaintiff bank became fixed, as much so as if it had received the cash. Bank v. Bank, 151 Mo. 320-330, and cases cited. (2) The effect of receiving the draft and giving the drawer credit for the amount on the books of the plaintiff bank as so much money deposited, against which the drawer could immediately check, made the plaintiff bank a bona fide holder and purchaser for value and the absolute owner thereof. Dymock v. Bank, 67 Mo.App. 103; Kavanaugh v Bank, 59 Mo.App. 540; Ayers v. Bank, 79 Mo 421; Bullene v. Bank, 79 Mo. 426. (3) The defendant bank became the agent of plaintiff, the owner of the draft in making the collection. Bank v. Bank, 71 Mo.App 421; Daly v. Bank, 56 Mo. 94; Herider v. Loan Assn., 82 Mo.App. 427. As such agent it had no authority to receive anything but cash. Bank v. Bank, supra; Lingerfelder v. Leshen, 134 Mo. 55; Thompson v. Chappell, 91 Mo.App. 294. (4) Had the defendant received the cash instead of the check it would have constituted payment to its principal, and it could not, without authority from its principal, pay back the amount to Kemper, Bowman, Hillix & Company, without rendering itself personally liable to plaintiff. Abers v. Bank, 85 Mo. 173; Bank v. Griffin, 113 Cal. 795, 45 P. 985; Bank v. Bank, 107 Mo. 402; Bank v. Allen, 59 Mo. 310; Stout v. Benoist, 39 Mo. 277; Goddard & St. John v. Bank, 2 Sand. 247, s. c. 4 Comst. 147; Hoffman v. Bank, 12 Wall. 181; Goetz v. Bank, 119 U.S. 551. (5) The court erred in refusing to render judgment on the pleadings in favor of plaintiff, and also erred in overruling plaintiff's motion for judgment in its favor, notwithstanding the verdict. Emmert v. Myer, 65 Mo.App. 609; Bank v. Stone, 93 Mo.App. 295; Hunt v. Ford, 142 Mo. 283; Hoffman v. Bank, 11 Wall. 181; Goetz v. Bank, 119 U.S. 551. (6) If both are equally innocent and equally ignorant, the loss should remain where the chances have placed it. Stout v. Bensoit, 39 Mo. 277, and cases cited; Bank v. Allen, 59 Mo. 310; Bank v. Bank, 107 Mo. 402; Crippen v. Bank, 51 Mo.App. 508. Bank v. Bank, 151 Mo. 321; Klapper v. Levi, 33 Mo.App. 322; Grumbach v. Hirsch, 43 S.W. 1031; Tile Co. v. Bank, 23 A. 423; Hoffman v. Bank, 12 Wall. 191, 192; Goetz v. Kansas City, 119 U.S. 551.

Culver, Phillip & Spencer for respondent.

(1) If an agent receives for collection a draft drawn upon a person (not a bank) who has not accepted it, and is in no way obligated to pay it, and the drawee, under a mistake of fact, believing that he owes the debt for which the draft is drawn, pays and receives the draft, and afterwards learns of his mistake, notifies the agent, tenders back the draft and demands the return of his money from the agent before the latter has remitted to its principal, and the agent in those circumstances returns the money paid by mistake and receives the draft uncancelled, can the principal hold the agent responsible for the amount of money which he collected from and returned to the drawee? (2) That money paid under mistake of fact, affecting the liability of the payor, can be recovered back is too well settled to require the citation of authority. 22 Am. and Eng. Enc. of Law (2 Ed.), 621. The mistake need not be mutual; it is sufficient that the payor alone was mistaken. 22 Am. and Eng. Enc. of Law (2 Ed.), 625. (3) The drawee, until he has accepted, is under no obligation to pay the bill, can not be sued upon it and is not even a party to the bill. 1 Daniels, Neg. Ins. (3 Ed.), sec. 480. When he accepts the bill his relation to the paper, his rights and liabilities change. 1 Daniels, Neg. Ins. (3 Ed.), secs. 531, 532, 533. (4) It is difficult to construe payment as an acceptance under any circumstances. Bank v. Whitman, 94 U.S. 347. (5) The drawee could become an acceptor only in the manner provided for by our statute and this it did not do. R. S. 1899, sec. 443. (6) Let us assume now that the commission company had accepted the draft and then paid it under the mistake that it had funds belonging to the drawers. In such circumstances, if neither the plaintiff nor the drawee were to blame, the law would allow the loss to remain with the acceptor. But if the loss was occasioned by the act or neglect of the plaintiff, then it and not the innocent acceptor should bear the loss, and the acceptor could recover the amount paid. Stout v. Bensoit, 39 Mo. 297. (7) There is not a scintilla of evidence in the record either that the plaintiff was the holder of the draft or that the defendant was its agent to collect it. On the contrary, the undisputed evidence is that the First National Bank of Kansas City was the holder and that it sent the draft to defendant to collect. (8) Had the endorsement been "for collection" it would not have passed title to the endorsee, except only so far as to enable the indorsee, as agent, to demand, receive and sue for the money to be paid, and the plaintiff would have remained the owner. Eaton & Gilbert, Commercial Paper, 329; Bank v. Hubbell, 117 N.Y. 384; Best v. Bank, 76 Ill. 608; Lock v. Silk Co., 37 Mich. 479; Bank v. Hollister, 21 Minn. 385. But the endorsement is a general endorsement, the effect of which is to take the entire title out of the plaintiff and make the First National Bank of Kansas City the holder and owner. Eaton & Gilbert, Commercial Paper, 327.

OPINION

BROADDUS, J.

The facts of the case are as follows: On the 24th day of February, 1903, one H. H. Hagan, of Guthrie, Oklahoma Territory, drew a sight draft on Kemper, Bowman & Hillix payable to the order of plaintiff for the sum of seven hundred dollars. On the same day, plaintiff received the draft at Guthrie, where it did business, and credited Hagan with the full amount of $ 700, and indorsed and forwarded it through its correspondents to defendant bank in St. Joseph, Missouri, for presentation and payment. On March 3, defendant presented the draft to the drawers, who gave their check for its payment. Defendant at the same time accepted the check, stamped the draft paid and surrendered it to the drawees, and gave the Union National Bank of Kansas City, from whom they received the draft, credit for its amount. On the next morning--March 4--the drawees informed defendant bank that a newspaper had reported that morning that the drawer, Hagan, had killed himself, and they asked defendant if it could do anything to help them to hold the money, and stated that they had not received the cattle on which the draft had been drawn. Whereupon, defendant's agent told the drawees that it would assist them in the matter, and did telephone to Kansas City in reference to its payment. The defendant then presented the check it had received in payment of the draft to the Stock Yards Bank, upon which it was drawn, and payment was refused, the drawees in the meantime having stopped its payment. Afterwards, on the same day, defendant surrendered the drawees' check, took back the draft, protested it for non-payment, and returned it to plaintiff. The drawees were live stock commission merchants at St. Joseph. Hagan had on prior occasions shipped them cattle and drawn drafts upon them which they had paid. Upon the occasion in controversy he wrote them a letter stating that he had shipped two cars of steers and had made a draft on them for $ 700. On the day the draft was paid they wrote Hagan as follows: "Your draft came in to-day, but no cattle in sight. We paid your draft as we thought the cattle had been delayed some way. If the cattle are not in to-morrow we will make sight draft on you for amount, but think certainly will get in to-morrow," etc. On March 4 Hagan died without having shipped any cattle to drawees. The plaintiff paid out on checks drawn by Hagan against the credit for said draft $ 674.42. There was evidence to the effect that the president of plaintiff bank had some suspicion of Hagan's honesty and called the attention of its other officers to that effect, but it appeared that he was absent on the day the draft was made, and Hagan got credit. The judgment and finding were for the defendant from which plaintiff appealed.

The conceded rule of law is that, if a bank receives a draft for collection and takes in payment a check from the party who is bound to pay such draft, and surrenders the same to him, such collecting bank is liable to its principal for the amount of the check, as an agent authorized to receive money has no implied power to receive a check in payment. [Bank v. Bank, 151 Mo. 320, 52 S.W. 265.] And it is admitted that if the drawees had accepted the draft they would have been liable, for the effect of an acceptance is to constitute the acceptor the principal debtor; and if the drawees were liable plaintiff was entitled to recover. 1 Daniels on Neg. Inst., secs. 480, 532, 534.

But respondent insists that there is a difference between the payment and acceptance of a bill; and that payment never operates as an acceptance--that the effect of the former is to extinguish the bill and the latter is an admission that the drawee has in his hands funds of the drawer. To support the theory that a payment never operates as an acceptance we are cited to the case of Bank v. Whitman, 94 U.S 343, 24 L.Ed. 229. It was there held that "a payment to a stranger upon an unauthorized indorsement does not...