Downey v. Nat'l Exch. Bank

• Decision Date: 14 November 1911
• Docket Number: No. 7,309.,7,309.
• Citation: 52 Ind.App. 672,96 N.E. 403
• Parties: DOWNEY v. NATIONAL EXCH. BANK.
• Court: Indiana Appellate Court

52 Ind.App. 672

96 N.E. 403

DOWNEY

v.NATIONAL EXCH. BANK.

No. 7,309.¹

Appellate Court of Indiana, Division No. 2.

Nov. 14, 1911.

Appeal from Circuit Court, Madison County; J. F. McClure, Judge.

Action by Jacob F. Downey against the National Exchange Bank. From a judgment for defendant, plaintiff appeals. Affirmed.

Megee & Kiplinger and Austin Retherford, for appellant. Kittinger & Diven, for appellee.

LAIRY, C. J.

Appellant brought this action for the proceeds of a check. After all of the pleadings were in, the issues thus formed were tried by the court without the intervention of a jury. The court made a special finding of facts and rendered conclusions of law thereon in favor of appellee, and judgment was rendered against appellant.

The facts set out in the special finding, so far as material to a decision of this case, are in substance as follows: John W. Jones executed his individual check, in the sum of $1,225, drawn upon the Citizens' Bank of Anderson, Ind., and made payable to Jacob F. Downey, appellant herein, and dated December 12, 1905. Appellant came into possession of said check and deposited it in the Bank of Arlington, Ind., receiving credit therefor. The Arlington Bank forwarded it to the Capitol Bank, at Indianapolis, Ind., for collection, and received credit thereof, and said Capitol National Bank, of Indianapolis, forwarded said check to the National Exchange Bank, of Anderson Ind., and charged same to said National Exchange Bank, the appellee herein. The check came into the hands of appellee bank at Anderson, Ind., on the morning of the 16th day of June, 1905.

There are several banks in Anderson, Ind., and, by an arrangement among them, about 10 o'clock on each morning a clerk of each bank meets with the clerks from each of the other banks and the checks held by them drawn upon any other of said banks cashed the day before, or coming for collection to each of said other banks, are taken by said clerks and summed up, the checks drawn on each delivered to the clerk so representing it, and the difference in the amounts of the checks settled later in the day. The checks on each bank are then taken by the representative therefrom and turned over to the proper officer or cashier thereof, to be passed on, honored if proper, or if not proper to be returned to the bank which held them on the same day.

Prior to June 16, 1905, and after said check had been signed by said John W. Jones, the said John W. Jones had stopped payment on said check, and ordered said Citizens' Bank not to pay it. On June 16, 1905, the clerks of said banks of Anderson, Ind., met and exchanged checks and summed up the amounts thereof; the appellee bank turned over to the clerk representing the Citizens' Bank said check drawn by said John W. Jones for $1,225, and the same was included in the amounts cast up by said clerks, and later in the day the differences in said amounts were settled by said banks. The officers of said Citizens' Bank on said June 16, 1905, which was Friday, in examining the checks drawn on it and turned over to it by the clerk of appellee bank as aforesaid, by inadvertence and mistake overlooked the check drawn by John W. Jones for $1,225, in looking over the large number of checks to be examined that day, and the check reached the bookkeeper without being noticed. The same was then discovered late on Saturday. On Monday, June 19, 1905, said the Citizens' Bank of Anderson returned said check to the National Exchange Bank, at the time representing to said appellee that the check had been received by inadvertence and mistake, and that payment thereof had been stopped by said John W. Jones, and that the Citizens' Bank had no right to and no intention of paying it; thereupon requesting appellee bank to correct said mistake, receive back the check, and give the Citizens' Bank credit for said amount in their settlement, which was done.

Appellee, the National Exchange Bank, thereupon returned said check to the Capitol National Bank of Indianapolis, as not paid, and the Capitol National Bank received the same and credited the amount thereof to appellee. The Capitol National Bank thereupon returned the check to said Arlington Bank, as unpaid, from which it had received the same, and the Arlington Bank received the check and credited the Capitol National Bank therewith. The Bank of Arlington thereupon returned the check to appellant as unpaid, and appellant received and accepted the same and gave the Arlington Bank credit for the amount thereof. Appellant has ever since had and still retains possession of the check. He has demanded of the appellee the payment of said check, and said demand has been refused.

The appellant excepted to the conclusions of law and also filed a motion for a new trial, which motion was overruled by the court. The errors assigned for reversal are that the court erred in its conclusions of law and also erred in overruling appellant's motion for a new trial.

Appellant's theory of his right to recover against the appellee is that the check drawn in his favor by Jones was placed in the bank of Arlington for collection, and that, when said check was transmitted to the Capitol National Bank of Indianapolis and by that bank transmitted to the National Exchange Bank of Anderson, each of the banks named held the check for collection as agents of appellant. If, under the facts disclosed by the special finding, each of the banks named became successively the agent of appellant, then a privity of contract existed between appellant and each one of the banks named, whereby a duty arose to use reasonable care and diligence in the collection of said check, and, if either of said banks were guilty of negligence or misconduct resulting in the loss of the debt, it would be liable to appellant. First National Bank, etc., v. First National Bank, 76 Ind. 561, 40 Am. Rep. 261.

It is the theory of appellee that the facts found by the court disclose that the check was not placed in the bank at Arlington for collection, as claimed by appellant, but that the transaction which occurred amounted to a sale of the check by appellant to said bank; that the title to the check passed to the bank at the time of said indorsement, and the bank's indebtedness to appellant was increased by the amount of the credit which he received at the time; that thereafter the bank at Arlington, being the owner of the check, had the sole right to control its collection; that the banks to which it was subsequently transmitted were either owners of the check by purchase or held it for collection as agents of the Arlington Bank; and that, in either event, such banks were not agents of appellant. If the facts disclosed by the special finding show that appellant was not the owner of the check at the time it was paid to the...