Eufaula Grocery Co. v. Missouri Nat. Bank

• Decision Date: 05 November 1898
• Citation: 118 Ala. 408,24 So. 389
• Parties: EUFAULA GROCERY CO. v. MKISSOURI NAT. BANK.
• Court: Alabama Supreme Court

24 So. 389

118 Ala. 408

EUFAULA GROCERY CO. v. MKISSOURI NAT. BANK.

Supreme Court of Alabama

November 5, 1898

Appeal from circuit court, Barbour county; John R. Tyson, Judge.

The appellant, the Eufaula Grocery Company, a corporation brought the present suit against the appellee, the Missouri National Bank, to recover for money had and received. As ancillary to the suit, the plaintiff sued out a writ of garnishment, which was served upon the Eufaula National Bank. The cause was tried on the plea of the general issue. On the trial of the cause, the plaintiff introduced evidence tending to show that on July 30, 1895, it purchased a car load of hay from J. A. Brubaker & Co., of Kansas City, Mo.; that said Brubaker & Co. shipped the car load of hay to the plaintiff and drew on it for the price of said hay, with bill of lading attached to the draft. This draft was in words and figures as follows: "Kansas City, Mo., Aug. 1st, 1895. On arrival of car of hay, pay to the order of R. D. Covington, cashier $131.50 (one hundred and thirty-one and 50/100), value received, and charge to my account, with exchange. To Eufaula Grocery Co. [Signed] J. A. Brubaker & Co., Eufaula Ala." Said draft was indorsed as follows: "For collection account of Missouri National Bank. Aug. 3, 1895. Kansas City, Mo." This draft, with bill of lading attached, was sent by defendant to the Eufaula National Bank, at Eufaula, Ala., for collection. The plaintiff paid the draft to the Eufaula National Bank, and took possession of the hay. On inspection, it was discovered that the hay was molded, decayed, and unmerchantable. Thereupon the plaintiff notified Brubaker & Co. of the condition of the hay, and demanded a return of the money. Upon Brubaker & Co. making no reply to such demand, the plaintiff instituted the present suit, and garnished the Eufaula National Bank. It was shown that the garnishment was sued out and served on the Eufaula National Bank, before it had remitted the money, and while the money was in its possession. The defendant introduced the depositions of R. D. Covington, its cashier, and J. A. Brubaker, V. B. Martin, and A. Harding. These witnesses severally testified that the Missouri National Bank did not buy said draft from Brubaker & Co., but that it was simply indorsed by said Brubaker & Co. to said bank for collection. The plaintiff objected to this testimony. The court overruled the objection, and to this ruling the plaintiff duly excepted. There was other evidence for the defendant tending to show that, at the time the hay was shipped to the plaintiffs, it was in good condition. Upon the introduction of all the evidence, the court, at the request of the defendant, gave to the jury the general affirmative charge. The plaintiff duly excepted to the giving of this charge. There were verdict and judgment for the defendant. The plaintiff appeals, and assigns as error the several rulings of the trial court to which exceptions were reserved. Reversed.

S. H. Dent, Jr., for appellant.

A. H. Merrill, for appellee.

HEAD J.

It is a principle maintained by many of the courts that when the owner of a security deposits it, for collection, in a bank located remotely from the place of payment, he thereby impliedly gives the bank authority to employ another reputable bank, located at or near the place of payment, to make the collection; and in such case the collecting bank becomes the agent of the owner, and the receiving bank rests under no liability to the owner unless and until the money comes actually to its hands. Losses, in respect of collection, resulting from the defaults or failures of the collecting bank, fall upon the owner. The doctrines of some of the states, notably New York and Ohio, are to the contrary. For a full presentation of both views of the question, and collection of authorities, see 3 Am. & Eng. Enc. Law (2d Ed.) pp. 809-813. The case of Guelich v. Bank, 56 Iowa, 434, 9 N.W. 328, 41 Am. Rep. 110, gives a valuable discussion of the subject, and the authorities pro and con. Of course, under neither rule is the collecting bank, receiving a paper apparently belonging to its correspondent,-another bank,-under such obligations to the real owner as would prevent it dealing with its correspondent, as owner, until it receives notice from the real owner of his rights. We are not aware that the disputed question above noted has ever been the subject of consideration or decision in this court, and we deem it unnecessary to be decided in this case. In either view of it, we are of opinion that the action in this case was maintainable; and will therefore assume, for the purposes of the cause, that the rule as first above stated is the true one, that being the more favorable to the defendant. Applying it, then, to the present case, the Missouri National Bank, of Kansas City, Mo., receiving the draft from Brubaker & Co. for collection, was authorized to send it to the Eufaula National Bank, or Eufaula, Ala., where the debtor resided, and it was payable, for collection; and no cause of action arose, or could arise, in favor of Brubaker & Co., against the Missouri National Bank, for the money, until it actually received it, notwithstanding the collection had been made by the Eufaula Bank. So that, at the time this suit was brought, the money in question was not to be regarded as being in the hands of the defendant, the Missouri Bank, so far as any rights of Brubaker & Co. in reference thereto were concerned. But the question here is whether, under the circumstances of this case, the principle has any application to the suit of the present plaintiff, who, for Cause, rescinded the sale of the hay, for the price of which the draft was drawn, and now seeks to reclaim the money paid, suing the Missouri National Bank for money had and received, depending upon the collection and custody of the money by that bank's supposed agent,-the Eufaula National Bank.

The general proposition cannot be well denied that where a person, as authorized agent of another, receives and holds money which ex æquo et bono belongs to a third, the latter may elect to hold either the principal or the agent responsible (the latter by giving him notice of the election before he pays the money over to the principal), and maintain an action for money had and received against the party so elected to be held. 2 Greenl. Ev. (15th Ed.) 125, and authorities there cited; Story, Ag. 266-268, 300, 301; Paley Prin. & Ag. (by Lloyd) pp. 388-394; Kennedy v. Insurance Co., 6 Am. Dec. 499; 2 Enc. Pl. & Prac. 1021. The case of Cook v. Cook, 28 Ala. 660, is also directly in point. An election to hold the one is a renunciation of all remedy against the other. If the principal be...