Farmers' State Bank of Des Lacs v. Union National Bank of Minot
| Decision Date | 01 July 1919 |
| Docket Number | 1915 |
| Citation | 173 N.W. 789,42 N.D. 449 |
| Court | North Dakota Supreme Court |
Appeal from the District Court of Ward County, Leighton, J.
Plaintiff appeals from a judgment and from an order denying a motion for a new trial.
Affirmed.
McGee & Goss, for appellant.
Section 6956, C. L. "Where it is payable on demand, presentment must be made within a reasonable time after its issue." Pickett v. Baird Inv. Co. 22 N.D. 343, 2 N. & C.C.A 722.
The principle of law, that a bank is liable for the negligence of correspondents selected by it, seems to have been originally established in the English case: Van Wert v. Wooley, 3 Barn. & C. 349.
The above rule has been adopted in the following cases Downer v. Madison County Bank, 6 Hill, 646; Montgomery County Bank v. Albany City Bank, 7 N.Y 459; Commercial Bank v. Union Bank, 19 Barb. 391; McBride v. Illinois Nat. Bank, 138 A.D. 339, 121 N.Y.S. 1040; Second Nat. Bank v. Bank of Alms, 99 Ark. 386, 138 S.W. 472; Reeves v. State Bank, 8 Ohio St. 468; American Exp. Co. v. Haire, 21 Ind. 4; Martin v. Hiberin, 127 La. 301, 53 So. 572; Simpson v. Waldby, 63 Mich. 439, 30 N.W. 199; Titus v. National Bank, 36 N.J.L. 558; Streiesguth v. National German American Bank (Minn.) 44 N.W. 497; Ft. Dearborne Nat. Bank v. Security Bank (Minn.) 91 N.W. 257; Harter v. Bank of Brunson, 92 S.C. 440, 74 S.E. 366; City Nat. Bank v. Cooper, 91 S.C. 91, 75 S.E. 696; California Nat. Bank v. Utah Nat. Bank, 190 F. 318; Exchange Nat. Bank v. Third Nat. Bank, 113 U.S. 278, 28 L.Ed. 722; Commercial Nat Bank v. Red River Valley Nat. Bank, 8 N.D. 362.
The contrary doctrine, in that a bank receiving a draft or bill of exchange in one state for collection in another state from a drawee residing there is liable for neglect of duty occurring in its collection whether arising from the default of its own officers, or from that of its correspondents in the other state, or an agent employed by such correspondent, in the absence of any express or implied contract varying such liability, is established by decisions in New York: Allen v. Bank, 22 Wend. 215; Bank v. Smith, 3 Hill, 560; Montgomery Co. Bank v. Albany City Bank, 7 N.Y. 659; Commercial Bank v. Union Bank, 11 N.Y. 203; Ayrault v. Bank, 47 N.Y. 570; Titus v. Bank, 6 Vroom, 598; Wingate v. Bank, 10 Pa. 104; Reeves v. State Bank, 6 Ohio St. 463; Tyson v. State Bank, 6 Blackf. 226.
It has been so held in the second circuit, in Kent v. Bank, 13 Blatchf. 237; and the same view is supported by Taber v. Perrot, 2 Gall. 565, and by the English cases of Van Wert v. Wooley, 3 Barn. & C. 439, and Mackery v. Banamys, 9 Clark & F. 818.
Greene & Stenersen, for respondent.
The principle that whosoever appoints an agent to do something which obviously and from its inherent nature can only be done by a substitute must be deemed to have accepted and authorized the employment of a substitute by the agent is clearly depended upon to support the Massachusetts rule. In the cases where that rule has been adopted and applied it is asserted or assumed that the collection, through the agency of a local bank, of an out-of-town check, bill of exchange, certificate of deposit, or promissory note, is, in each instance, a transaction in which the necessity for the bank to employ a correspondent or agent other than its own officers and immediate servants inheres in the very nature of the undertaking. Note to Brown v. People, 52 L.R.A.(N.S.) 608.
The general rule of law is that an agent is not responsible for the negligence or want of skill of a subagent employed by him, where such employment was necessary to the transaction of the business intrusted to him, and he has used reasonable diligence in his choice as to the skill and ability of the subagent. Barnard v. Coffin, 141 Mass. 37, 55 Am. Rep. 443, 6 N.E. 364, in which case the court said:
The doctrine of these cases is also embodied in the statutory law of this state. Rev. Codes, § 4348.
It therefore clearly appears that this court not only repudiates the New York doctrine, but expressly adopts what is called the Massachusetts rule, and cited the Code of our own state as an expression of the latter rule. Davis v. King (Conn.) 50 Am. St. Rep. 104; Givan v. Bank of Alexandria (Tenn.) 47 L.R.A. 270; Beddel v. Harbine Bank (Neb.) 86 N.W. 1060; Bank v. Sprague, 15 L.R.A. 498; Fanset v. Garden City Bank (S.D.) 123 N.W. 686; Guelick v. National State Bank (Iowa) 9 N.W. 328; Mechem, Agency, §§ 332, 1314; Brady, Bank Checks, §§ 203, 204; 5 Cyc. §§ 502-504.
The controversy before us involves the liability of the defendant upon a check which it received from the plaintiff for collection in the ordinary course of banking business. The material facts are not in dispute. It appears that on or about September 8, 1913, the Blaisdell-Bird Company received a check from C. R. Verry, for the sum of $ 324.35, drawn on the Farmers & Merchants Bank of Park River. On September 11, 1913, the Blaisdell-Bird Company delivered the check to the plaintiff bank for deposit, and its checking account in said bank was duly credited with the amount of the check. The plaintiff bank in due course forwarded the check to its correspondent, the defendant bank. It was received by the defendant on September 13, 1913. And the defendant promptly forwarded it in due course to its correspondent, First National Bank of Fargo. The First National Bank of Fargo sent it to the City National Bank of Duluth. The City National Bank of Duluth sent it to the Northwestern National Bank of Minneapolis. The evidence shows that the Farmers & Merchants Bank of Park River on September 18, 1913, received a remittance letter from the Northwestern National Bank of Minneapolis, which purported to accompany the check in controversy. The Farmers & Merchants Bank of Park River claimed, and the testimony of its cashier tended to show, that the check was not inclosed with the remittance letter, and that that bank has never received the check. The account of Verry became exhausted by checks presented against it on September 18, 1913; but the cashier of the Farmers & Merchants Bank of Park River testified that if the check in controversy had been inclosed with the remittance letter it would have been paid. The trial court found "that said check was never paid nor returned to the plaintiff or the defendant, and was lost while in the possession of either the Farmers & Merchants Bank of Park River, on which it was drawn, or while in the possession of the Northwestern National Bank of Minneapolis." That finding is in accord with the evidence.
The evidence shows, and the trial court found, that the defendant had been plaintiff's correspondent for many years prior to September 13, 1913, and still remained such correspondent at the time of the trial. The undisputed evidence also shows that it was the uniform custom of the defendant bank to acknowledge the receipt of checks and other items, received by it for collection from the plaintiff and other correspondent banks, by means of a written receipt, which contained the following provision: Upon receipt of the check in controversy the defendant bank, in accordance with its uniform custom and practice, acknowledged receipt thereof by means of a receipt containing the provision hereinabove set forth. The evidence clearly shows that the defendant bank in forwarding the check to the First National Bank of Fargo followed the usual custom, and did exactly what the plaintiff might reasonably have expected it to do. In fact the vice president of the plaintiff bank in his testimony expressly admitted that the defendant bank had not violated any custom or usage of banking in so forwarding the check.
The Blaisdell-Bird Company brought suit against the plaintiff and recovered judgment. The plaintiff thereupon brought this action. The case was tried to the court without a jury, and resulted in a judgment in defendant's favor for a dismissal of the action. Plaintiff has appealed from the judgment and from the order denying its motion...
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