Carpenter v. National Shawmut Bank

• Citation: 187 F. 1
• Decision Date: 01 May 1911
• Docket Number: 879.
• Parties: CARPENTER v. NATIONAL SHAWMUT BANK.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

187 F. 1

CARPENTER v. NATIONAL SHAWMUT BANK.

No. 879.

United States Court of Appeals, First Circuit.

May 1, 1911

In Error to the Circuit Court of the United States for the District of Massachusetts.

Action at law by Charles H. Carpenter against the National Shawmut Bank. Judgment for defendant, and plaintiff brings error. Affirmed. Samuel W. Emery, for plaintiff in error.

Thomas Hunt (Gaston, Snow & Saltonstall, on the brief), for defendant in error.

Before COLT and PUTNAM, Circuit Judges, and ALDRICH, District Judge.

PUTNAM Circuit Judge.

It is convenient to call the plaintiff below, who is the plaintiff in error, merely the plaintiff.

In accordance with the practice allowable in Massachusetts, this suit was described in the writ as an action of 'contract or tort.' Whichever way it may be described, the result is the same. In the Circuit Court Judge Lowell directed a verdict for the defendant. Thereupon the plaintiff sued out this writ of error.

The declaration contained two counts, of which the first is as follows:

'Count 1. And the plaintiff says that on February 6, 1903, he was the owner and holder of two negotiable promissory notes copies of which are hereunto annexed and marked 'A' and 'B,' respectively, and the maker and indorser were one and the same person, and on said day plaintiff procured and caused the Pittsfield National Bank of Pittsfield, in the state of New Hampshire, to forward and transmit said notes for him, the said plaintiff, to the National Shawmut Bank of Boston to be collected by said National Shawmut Bank for him, the said plaintiff, and as his agent, and on said day the said the Pittsfield National Bank, acting as agent to transmit said notes, did, as requested by the plaintiff, transmit and forward for collection to the said National Shawmut Bank the said notes, and the said National Shawmut Bank on said February 6, 1903, received said notes as the plaintiff's agent and undertook to collect the same for a reward to be paid to it by the plaintiff for collecting, and the said John E Cassidy & Son, makers of said two notes hereinbefore mentioned, had on said February 6, 1903, and thence continually until the end of business hours on February 9, 1903, that last day being the day of the maturity of said notes, a deposit in said defendant bank of a greater sum of money than was necessary to pay the said notes belonging to the plaintiff, to wit, a deposit of $12,000, which was available to pay the said notes, but said National Shawmut Bank then and there neglected to collect said notes and after bank hours of said February 9, 1903, the said John E. Cassidy & Son, composed only of John E. Cassidy, made an assignment of all their property for the benefit of their creditors to Thomas Hunt, Esq., and to James H. Vahey, Esq., and the plaintiff's said notes could not thereafterwards be collected, and have not been collected, but are, as against the makers and indorsers, valueless to the damage of the plaintiff, and the plaintiff says this count is in contract.'

It will be observed that this count alleges that the Shawmut Bank 'undertook to collect' the note; but there was no such duty undertaken, unless these words are especially limited as we will show. The plaintiff reiterates in strong terms that the bank was to use reasonable efforts in the performance of its duty, which is, of course, correct; but the first thing is to ascertain the extent of its duty. None of the cases relied on by the plaintiff aids the solution of this question. The first is Bank of Commerce v. Merchants' Bank of Memphis, 91 U.S. 92, 23 L.Ed. 208, which relates simply to the question whether the collecting bank was authorized to surrender the bill of lading attached to a draft on the acceptance of the draft, without awaiting its maturity. The next is Exchange Bank v. Third National Bank, 112 U.S. 276, 5 Sup.Ct. 141, 28 L.Ed. 722, which only raised the question whether the primary bank was liable for the defaults of a third bank to which it remitted the draft in question for collection. Another case cited is Wadsworth v. Adams, 138 U.S. 380, 11 Sup.Ct. 303, 34 L.Ed. 984, which, so far as we can discover, has no relation whatever to the topic before us, and in no way concerns the duty of a collecting bank. The same may be said as to every other case relied on by the plaintiff.

We apprehend no question whatever as to the extent of the duty of the Shawmut Bank. The notes in this case were payable at 'any bank in Boston.' Therefore the entire duty of the Shawmut Bank was to present them for payment to some bank in Boston, including its own counter, and, in case they were not paid, to require them to be properly protested either by its own officers or by a notary-- ordinarily by a notary. Whether the bank, or its notary, was required to notify any party except the bank or person from whom it received the notes for collection, or, at any rate, to notify anybody except the first indorser, varies according to local rules in different states. However, there is no indorser here in the sense in which we use the word; so no question of notice, except to the bank from whom the Shawmut Bank received the notes, could arise, and that notice was given with legal promptness.

The usage and the law have always been so clearly settled that, perhaps, we need not go farther with reference to the general proposition. In Bank of Washington v. Triplett, 1 Pet. 25, 30, 7 L.Ed. 37, Chief Justice Marshall spoke of the custom of transmitting notes for collection, as in this case, as a common usage of great public convenience, 'the effect of which is well understood. ' It is in the light of that suitable observation that we discuss this question so far as it needs discussion. We are not called on to cite particular decisions in which this precise question was involved, because the duty of the Shawmut Bank was so well defined, as said by Chief Justice Marshall, that observations of various judges in the general course of their opinions are sufficient. In Phipps v. Milbury Bank, 8 Metc. (Mass.) 79, 84, where the defendant bank was a collecting bank like the Shawmut Bank in the case before us, the opinion in behalf of the court says:

'Acting as such agents, they were bound to make a legal demand of payment of the promissors, and, upon nonpayment, to give due notice of the dishonor to the Suffolk Bank, the holders, to enable them to give notice to such parties on the note as they intended to look to for payment. This I consider to be all their duty; and, to bind them to give notice to all the indorsers, there must be some special agreement between them.'

This not only states in a general way the entire duty of the collecting bank, but, in observing that that bank was not required to notify all the indorsers, the conclusion positively negatives the proposition that the collecting bank had any general duty to collect the note. Likewise, in Ward v. Smith, 7 Wall. 447, 451, 19 L.Ed. 207, the opinion in behalf of the court observes in the same way that when the instrument is lodged with the bank for...