First Nat. Bank of Chicago v. Bank of Whittier

• Decision Date: 17 April 1906
• Citation: First Nat. Bank of Chicago v. Bank of Whittier, 221 Ill. 319, 77 N. E. 563 (Ill. 1906)
• Parties: FIRST NAT. BANK OF CHICAGO v. BANK OF WHITTIER.
• Court: Illinois Supreme Court

221 Ill. 319

77 N.E. 563

FIRST NAT. BANK OF CHICAGO

v.BANK OF WHITTIER.

Supreme Court of Illinois.

April 17, 1906.

Appeal from Appellate Court, First District.

Action by the Bank of Whittier against the First National Bank of Chicago.From a judgment in favor of defendant, reversed by the Appellate Court, plaintiff appeals.Affirmed.Orville Peckham, for appellant.

Musgrave, Vroman & Lee, for appellee.

This is an action of assumpsit, brought in the superior court of Cook county in the summer of 1901 by the Bank of Whittier, appellee herein, against appellant, the First National Bank of Chicago, to recover the amount of a certificate of deposit for $1,650 issued by one D. F. Parsons, a banker, which certificate the appellant undertook to collect for appellee.The trial court rendered judgment in favor of the defendant below, appellant here, from which the plaintiff below, appellee here, appealed to the Appellate Court for the First District.The Appellate Court entered the following judgment, to wit: ‘And the court, upon the allegations and proofs in the record in this cause contained, doth find as a fact that the defendant and appellee, the First National Bank of Chicago, negligently authorized and directed the Citizens' Savings Bank of Detroit, Mich., to send the certificate of deposit mentioned in the declaration herein to D. F. Parsons, its maker, for collection, as charged in the declaration herein.And the court doth further find that the said appellant ought to have and recover of and from the said appellee its damages by it sustained herein, by reason of the premises, [and] doth assess the damages of said appellant against appellee for the amount of the certificate of deposit, September 6, 1898, to the sum of $1,688.50, with interest thereon at the rate of 5 per cent. per annum from September 6, 1898, to date, amounting in all to the sum of $2,315.44.’The present appeal is prosecuted from such judgment of the Appellate Court.

The appellee here, the plaintiff bank below, located in California, was the legal holder and owner of a negotiable certificate of deposit for $1,650, dated February 2, 1898, at Burr Oak, Mich., issued by D. F. Parsons, cashier, and in the following words, to wit: ‘This certifies that J. R. Wallace has deposited in this bank $1,650.00, payable to the order of himself in current funds on the return of this certificate.’The case in the court below was tried upon an agreed written statement of facts before the court without a jury; jury having been waived by agreement.

The following appears from such written stipulation of facts, to wit: After February 2, 1898, and before September 6, 1898, Wallace indorsed the certificate and delivered the same to appellee.Appellee delivered it for collection to the National Bank of California at Los Angeles, indorsing it as follows: ‘Pay to the order of National Bank of California, Los Angeles, Cal.-The Bank of Whittier, Cal.; W. Hadley, Cashier.’On September 6, 1898, the National Bank of California forwarded the certificate to appellant, the First National Bank of Chicago, its regular correspondent, for collection, and indorsed on the back of the same the following: ‘Pay to the order of the First National Bank, Chicago.-National Bank of California, Los Angeles, Cal.; A. Hadley, Cashier.’Appellant forwarded the certificate to the Citizens' Savings Bank of Detroit, Mich., for collection, indorsing the same as follows: ‘Pay to the order of Citizens' Savings Bank, Detroit, Mich. Sept. 6, 1898.-First National Bank, Chicago; R. J. Street, Cash.’The Citizens' Savings Bank of Detroit was not the regular correspondent of appellant.At the same time and in the same inclosure appellant delivered to said Citizens' Savings Bank the following letter: ‘Chicago, Ill., Sept. 6, 1898.Citizens' Savings Bank, Detroit, Mich.-Dear Sir: I enclose items as per statement below for collection and returns.Yours respectfully, R. J. Street, Cashier.

‘Protest all paper unless otherwise instructed.

‘Burr Oak, $1,650.00 and int. $38.50,-$1,688.50.’

Appellant at the same time and in the same inclosure forwarded and delivered to said Citizens' Savings Bank the following:

‘Citizens' Savings Bank, Detroit, Mich.: We send this C-D for $1,650.00 & int. to you for collection, as we note that you have a correspondent at Burr Oak, Mich. Please collect for us at your best rate of exchange, and oblige.First National Bank, A., Chicago. 9-6-'98.

‘Kindly take this ticket off before forwarding to Burr Oak.’

At the time appellant delivered said certificate and the writings aforesaid accompanying the same, there was no bank at Burr Oak except the bank of the said D. F. Parsons, the maker of said certificate, and appellant at said time knew said fact and knew that said bank of D. F. Parsons was the correspondent at Burr Oak of said Citizens' Savings Bank of Detroit.September 7, 1898, said Citizens' Savings Bank of Detroit indorsed on said certificate the words and figures following: ‘Pay any bank or order,’ etc., and sent the certificate by mail to said D. F. Parsons, at Burr Oak, for collection.Parsons received said certificate and the writing accompanying the same at Burr Oak, Mich., September 8, 1898.No part of the sum due on said certificate was ever paid, and on September 13, 1898, said Parsons made an assignment for the benefit of his creditors.His assets were not sufficient to pay more than 8 per cent. of his indebtedness.On September 16th the appellant bank wrote to the citizens' Savings Bank of Detroit as follows: ‘You state that the Burr Oak item was promptly received by you and forwarded to Burr Oak for collection.Please be kind enough to give us the date of receipt, date when you sent, and also state whether the item was sent direct to Parsons or through some other agency at Burr Oak.Your early reply will greatly oblige.Yours very truly, R. J. Street.C. Kastrup.’On September 19, 1898, the cashier of the Citizens' Savings Bank wrote appellant's cashier as follows: ‘In answer to your inquiry of the 16th inst. regarding the Burr Oak item forwarded for collection, I will say that we received the certificate Sept. 7, and sent it the same day direct to Parsons, as per your instructions on a ticket attached to same.Not receiving notice of its payment, I wrote Sept. 12 asking him to report payment and remit, which he failed to do.I telegraphed you immediately as soon as I heard of his assignment, as requested by the slip attached.Your instructions to us were that you sent it to us for collection, as you note that we have a correspondent at Burr Oak, and, there being no other bank there, we were obliged to send it to the only collection agency known to us, and which you knew also was the only one when you sent it to us.I have written the assignee regarding the matter, and will notify you as soon as I receive reply.’On September 21st the cashier of the appellant bank wrote in reply to the Citizens' Savings Bank as follows: ‘We have your favor of the 19th instant.In sending the item to you as we did, we supposed that it was intended to have the advantage of your knowledge of Parsons.We were aware that his was the only bank at Burr Oak, but we thought that you would know enough about him not to send to him an item on himself for $1,650.00, unless you had and were warranted in having considerable confidence in him.You say nothing on this point.Kindly let us know how you regarded Parsons.Our correspondent in Los Angeles is inquiring sharply of us to see if there is not some responsibility ‘somewhere’ for this loss.'To the above letter the Citizens' Savings Bank replied as follows, on September 23, 1898: ‘In answer to yours of the 21st inst., regarding the certificate sent to D. F. Parsons, of Burr Oak, who recently failed, I would say that we have had entire confidence in Mr. Parsons' integrity and ability to pay.We had heard nothing detrimental to his financial standing; his rating is from $30,000.00 to $35,000.00 in Dun's, and we were at the time carrying $4,000.00 of loans to him which was less than the original amount loaned him, and he had always been businesslike in his dealings with us.If he had wanted to borrow money, we should have loaned it to him, and we had no intimation whatever that there was anything wrong there.I have requested the assignee to return the certificate unless he would remit for same.’

Said certificate was not protested for nonpayment, and no notice or protest of nonpayment, except as appears from the foregoing correspondence, was given or attempted to be given to any of the indorsers thereof.J. R. Wallace, an indorser on the paper, was during all the time herein mentioned solvent and financially responsible for the said sum.Subsequently to the 13th day of September, 1898, the First National Bank of Chicago, appellant herein, commenced a suit in the circuit court of Wayne county, Mich., against the Citizens' Savings Bank of Detroit, Mich., to recover the amount of said certificate, and filed its declaration, to which the savings bank filed a plea of general issue.The cause was tried upon the issue so made, and judgment was rendered on September 29, 1899, by said circuit court in favor of appellant, the First National Bank of Chicago, and against said Citizens' Savings Bank of Detroit for $1,753.50, being the amount of said certificate, with interest thereon from the date thereof at the rate of 4 per cent. per annum.An appeal was taken by the savings bank from said judgment to the Supreme Court of Michigan, which is the court of last resort in that state.The Supreme Court of Michigan rendered a judgment reversing the said judgment of the circuit court of Wayne county, and filed an opinion found in 123 Mich. 336, 82 N. W. 66,48 L. R. A. 583.In the trial of the Michigan cause appellant's cashier testified, among other things, as follows, to wit: ‘Q.This red ticket states: ‘We note you have a correspondent at...