First Nat. Bank v. Citizens' Sav. Bank

• Decision Date: 13 March 1900
• Citation: First Nat. Bank v. Citizens' Sav. Bank, 82 N.W. 66, 123 Mich. 336 (Mich. 1900)
• Parties: FIRST NAT. BANK OF CHICAGO v. CITIZENS' SAV. BANK OF DETROIT.
• Court: Michigan Supreme Court

82 N.W. 66

123 Mich. 336

FIRST NAT. BANK OF CHICAGO v. CITIZENS' SAV. BANK OF DETROIT.

Supreme Court of Michigan

March 13, 1900

Error to circuit court, Wayne county; Willard M. Lillibridge Judge.

Action by the First National Bank of Chicago against the Citizens' Savings Bank of Detroit.From a judgment for plaintiff, defendant appeals.Reversed.

Barbour & Rexford, for appellant.

Bowen Douglas & Whiting, for appellee.

LONG J.

On September 6, 1898, the plaintiff bank received for collection from the National Bank of California, at Los Angeles, a certificate of deposit for $1,650, and interest thereon issued to the order of J. R. Wallace by D. F. Parsons, a private banker at Burr Oak, Mich., under date of February 2 1898.The certificate was indorsed and made payable by Wallace to the order of the Bank of Whittier, Cal., by it to the National Bank of California, and by it to the First National Bank of Chicago.On September 6th, the day of its receipt, the First National Bank of Chicago indorsed and made it payable to the order of the defendant bank, and forwarded it by mail to that bank at Detroit, with the following instructions:

The First National Bank of Chicago.

Chicago, Ill., Sept. 6, 1898.

Citizens' Savings Bank, Detroit, Mich.--Dear Sir: I inclose items as per statement below for collection and returns.

Yours, respectfully.

R. J. Street, Cashier.

Protest all paper unless otherwise instructed.

Burr Oak. 1650 and Int.

38.50

1688.50

Telegraph if not honored (rubber-stamped).

Do not hold any of our collections after due for any reason whatever, except upon special instructions from us.Return at once if not paid.

Accompanying the above letter, and pinned to the certificate of deposit, there was a red slip, as follows:

Citizens' Savings Bank, Detroit, Mich.:

We send this C-D for $1650.00 and 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.

Also, accompanying the certificate, and pinned to it, were two slips, of which the following are copies:

608.

Telegraph if not honored.If telegraphing, communicate only with the First National Bank of Chicago, Ill. (giving date of their indorsement stamp), who will give instructions direct.

First National Bank, Chicago.

Collection.No. 8.

Ac'ct Nat'l Bank of Cal., Los Angeles, Cal.

Date, Sept. 6, 1898.

Burr Oak, $1650.

Int.,

T. N. P.

8-3.

Do not write or mark or stamp on this ticket.

Protest.

Return promptly if not paid.

The agent of the First National Bank of Chicago, who forwarded the certificate to defendant, testified on cross-examination that 'the certificate was sent to the defendant bank (a bank, as a rule, we never send anything to).We sent it to them for the simple reason that we presumed that they knew all about this D. F. Parsons, having had his account for several years, and we didn't know anything about him.He was a private banker in Burr Oak, Mich. I had sent items to Parsons for a number of years previous to this,--small items; but had never sent him as much money as that.I had no sufficient knowledge of him to send him more.Q.This red ticket states: 'We note you have a correspondent at Burr Oak.'Do you know who that correspondent was that you noted at that time?A.There being only one bank at Burr Oak, there could not be any question about it.He was D. F. Parsons.'It appears that the defendant bank, on receipt of the certificate of deposit from plaintiff, which was September 7, 1898, sent it forward to D F. Parsons, Burr Oak, Mich., stating that it was inclosed for collection, and asking him to report promptly.Parsons received this certificate, and on the 12th of September handed it to his clerk, and told him to give the Citizens' Savings Bank of Detroit credit for it.The clerk testified that, according to the books of D. F. Parsons, there was a balance in the Citizens' Savings Bank due Mr. Parsons of about $28,000.The clerk testified, further, that it was the custom of business that when the Citizens' Savings Bank sent collections to Mr. Parsons, if it was a certificate, they merely gave the bank credit on the books.If it was a check or draft for collection, they would collect it before they gave credit; that business had been conducted in this way for over five years.The witness further testified: 'We would remit to the Citizens' Savings Bank every day, or twice a day, or once in two or three days.If our books showed a balance to the Citizens' Savings Bank in our favor, we would remit just the same.We would remit to the Citizens' Savings Bank for a draft or check drawn on our bank.The Citizens' Savings Bank had never sent anything on our bank for collection before that was drawn on us, and I didn't notice this until afterwards.My father made an assignment for the benefit of creditors on the night of the 13th of September, 1898.Mr. Himebaugh, the assignee, has the statement the Citizens' Savings Bank rendered.On September 15, 1898, I did not know anything about my father's indebtedness to the Citizens' Savings Bank.What I have learned about it since is what has been told me.Within ten days or two weeks after his assignment, my father left Burr Oak, and does not live there now.'The cashier of defendant bank testified that he received this certificate of deposit on September 7th, and on the same day he forwarded it on regular collection letter head to Parsons, with instructions to remit.The witness was then asked: 'Q.What construction did you place upon Exhibit 3?'(Exhibit 3 is the letter to the defendant bank in which it was said: 'We send this C-D for $1650.00 and Int. to you for collection, as we note that you have a correspondent at Burr Oak, Mich.')This was objected to, and objection sustained.'Q.How did you regard Mr. Parsons at that time financially?'This was objected to; and the court said: 'It seems to me that this is not the point.If they thought that he was responsible, didn't they assume the risk?Here is a note one of us has made for a large amount.We all know the usual practice of sending a note for collection is not to send it to the maker of the note.While in a good many instances it would be safe to send a note to the maker of it, does not the bank always take the chances as a matter of law?'Counsel for defendant: 'It does unless its instructions are to the contrary.I do not claim here without instructions we were justified in sending this to Parsons; but what I claim is the instructions were positive to send it to him, and I wish to show that Mr. Tillotson (the cashier of defendant bank) so construed it, and that was his honest intention of the memorandum.Further, we have a letter from the First National Bank of Chicago in which they acknowledge that to be the construction.'The Court: 'I have ruled, in effect, that that memorandum is not susceptible to that construction.You have an exception to that.'Counsel: 'Your honor holds that that is not instruction to the Citizens' Savings Bank to send it direct to Parsons?'The Court: 'Yes.'The defendant bank, not having heard from Parsons, on the 12th of September wrote him to send funds sufficient to meet the certificate.Nothing further was heard from Parsons on the subject.He failed and left the state, and his estate as reported by his son was not worth eight cents on the dollar.The cashier of defendant bank was interrogated further in reference to his good faith in sending the certificate direct to Parsons, and the testimony ruled out.He further...