First Nat. Bank v. Fourth Nat. Bank

• Citation: 56 F. 967
• Decision Date: 08 June 1893
• Docket Number: 21.
• Parties: FIRST NAT. BANK OF EVANSVILLE v. FOURTH NAT. BANK OF LOUISVILLE.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

56 F. 967

FIRST NAT. BANK OF EVANSVILLE v. FOURTH NAT. BANK OF LOUISVILLE.

No. 21.

United States Court of Appeals, Sixth Circuit.

June 8, 1893

Statement by SAGE, District Judge:

On the 8th of May, 1888, the plaintiff in error sent by mail to the defendant in error, for collection, a certificate of deposit of which the following is a copy:

'Banking House of M. M. Pool & Co., Shawneetown, Ill., February 8 1888.

'Dr. Wm. N. Warford has deposited in this bank twenty-six hundred and sixty-six and 66-100 dollars for three months, payable to the order of himself on return of this certificate, properly indorsed. Interest at five per cent. per annum from date until maturity.

'No. 1158.

M. M. Pool & Co.'

The certificate was received by the Louisville bank on May 9, 1888, credited by it to the Evansville bank as $2,700, and so entered on the account current mailed to that bank June 1, 1888.

M. M. Pool & Co., who issued the certificate, were then bankers in good credit at Shawneetown, Ill., near to plaintiff and remote from defendant.

They continued in good credit and active business until some time after January 1, 1889, when they failed.

Warford, who assigned and indorsed the certificate to the plaintiff, was a man of wealth. By the law of Illinois he was liable as indorser only upon condition that the holder of the certificate should bring suit against Pool & Co. at the then next term of the circuit court of Gallatin county, Ill., (in which county Shawneetown is located,) being the term of September, 1888, and prosecute them to insolvency.

It does not appear from the record that the certificate was indorsed to the defendant, but it is averred in the complaint, and not denied in the answer, that Wardford, before the maturity of the certificate, indorsed it to the plaintiff; and in a letter written by the counsel for the Louisville bank to the Evansville bank on the 14th of August, 1889, and put in evidence by the plaintiff, the certificate is referred to as indorsed by Warford to the plaintiff. The record does not show that any instruction or authority was given defendant to bring suit upon the certificate.

The defendant, on the day on which it received the certificate, sent it by mail to Pool & Co., requesting them to remit. On the 1st of June, 1888, having heard nothing from Pool & Co., although it made repeated inquiries after the certificate, defendant wrote to plaintiff as follows:

'Dear Sir: On May 9th we received from you a certificate of deposit for $2,700, issued by M. M. Pool & Co., bankers, Shawneetown, Illinois. We sent the item for collection and returns, but so far have heard nothing from them, notwithstanding we have sent several inquiries after it. Will you kindly see the indorser, and have him investigate it, and either obtain us a duplicate of it or have them remit to us for it?'

Not receiving any answer to that letter, the defendant, on June 22, 1888, mailed another letter to plaintiff, of which the following is a copy:

'We charge your account $2,700 for item on Shawneetown, Illinois, in yours of May 8th. We have written repeatedly for the item, but can get no returns. We also wrote you for a duplicate several weeks ago, but have not received one as yet. We hope you can settle this matter without further trouble.'

On Monday, July 2, 1888, plaintiff having made no objection to the course suggested in the letter of June 22d, the defendant mailed to plaintiff its account current for June, in which the Shawneetown item of $2,700 was charged back as stated in the letter of June 22d.

Monthly accounts current were duly sent for every month thereafter up to and including the account mailed April 1, 1889, for March, 1889. Each of these accounts omitted the Shawneetown item. No objection to the omission, nor to what had been done by defendant, was made until April 24, 1889, but in the meantime Warford had been released,--in September, 1888,--and Pool & Co. had failed in January, 1889. With reference to the receipt of the letters of June 1 and June 22, 1888, and of the account current of July 1, 1888, it appears from the evidence that the mail was brought to plaintiff's bank by a letter carrier, and there came into the hands of Mr. Schor, general bookkeeper of the bank, whose duty it was to open and distribute mail matter received. He had been guilty of certain irregularities, not, it is said, 'involving any moral turpitude;' that is to say, he took no money belonging to the bank, but, falling behind in his work, concealed letters and communications, including the above, and they did not come to the actual knowledge of the officers of the bank until after April, 1889, when the letter of June 1, and the account current mailed July 2, 1888, were found among Schor's papers, he having suicided upon the discovery of his irregularities. The letter of June 22d was not found. The trial judge properly charged the jury that if the letters and accounts were received by Schor they were, in law, received by the bank; and the jury found that they were so received. The plaintiff's action is based solely upon the alleged neglect and failure of the defendant to discharge its duties touching the collection of said certificate of deposit. The verdict and judgment of the court below were for nominal damages for the plaintiff, and the case is before this court upon the plaintiff's exceptions.

Humphrey & Davie and Garvin & Cunningham, for plaintiff in error.

Walter Evans, (Barnett, Miller & Barnett, of counsel,) for defendant in error.

Before JACKSON and TAFT, Circuit Judges, and SAGE, District Judge.

SAGE District Judge, (after stating the facts as above.)

The assignments of error set forth in the record are embodied in the propositions relied upon by counsel for appellees in their brief.

Their first proposition is that the transmission by the defendant in error of the certificate of deposit to M. M. Pool & Co. the makers, for collection, was negligence, which made the defendant in error responsible for any loss resulting. They cite Bank v. Burns, 12 Colo. 539, 21 P. 714; Drovers' Nat. Bank v. Anglo-American Packing & Prov. Co., 117 Ill. 100, 7 N. E. Rep. 601; Bank v. Goodman, 109 Pa. St. 424, 2 A. 687. The court below took this view of the law, and approved the cases above cited in overruling a general demurrer to the answer. See, also, Farwell v. Curtis, 7 Biss. 162; Indig v. Bank, 80 N.Y. 100; and Briggs v. Bank, 89 N.Y. 182. The jury were charged that the defendant violated its duty as an agent by sending the certificate to the makers of it for collection, and that it was liable for the damage resulting from that violation of duty. So far, therefore, the plaintiff in error has no ground for complaint. The court went on to state to the jury that the real question in the case was whether the damage claimed was the result of the negligence complained of. Calling attention to the letters of June 1 and June 22, 1888, and to the charging back of the amount of the certificate in the July account, the court referred to the fact that there was no conflict of evidence, and instructed the jury that those letters and the charging back amounted to a renunciation of the defendant's agency, so far as the defendant could renounce it. But the court added that the defendant could not, by its renunciation, put an end to the agency, as the facts then were, and relieve itself from liability, without the consent, express or implied, of the plaintiff, and that such consent would be implied from the silence of the plaintiff after being informed of the renunciation. The court added that, if the plaintiff made no objection to the renunciation, the defendant was not liable for damage thereafter, resulting from events subsequent, and not from the sending of the certificate to Pool & Co. for collection. Counsel for plaintiff in error undertake to escape this conclusion by citing Bank v. Morgan, 117 U.S. 96, 6 S.Ct. 657, in support of their contention that the receipt of the letters and statements of account by Schor was not a receipt by the plaintiff, nor was his knowledge of their contents to be imputed to the plaintiff. The citation is not a fortunate one for them. In that case the clerk of Cooper, a depositor with the bank, had raised various checks, the signatures to which were genuine. Those checks were paid, and charged to Cooper's account. Cooper sent in his pass book from time to time between the 1st of October, 1880, and the 20th of January, 1881, and it was written up and returned to him with the paid checks, including those that had been raised. The balances were struck as determined by the genuine and the raised checks. It appeared from the evidence that Cooper was in the habit of examining his check book from time to time, but in a casual way, and he did not discover the forgeries until March 1 or 2, 1881. The supreme court held that he was bound personally, or by an authorized agent, and with due diligence, to examine the pass book and vouchers, and to report to the bank without...