First National Bank of Manning v. German Bank of Carroll County

• Decision Date: 06 February 1899
• Citation: 78 N.W. 195,107 Iowa 543
• Parties: THE FIRST NATIONAL BANK OF MANNING, Appellant, v. THE GERMAN BANK OF CARROLL COUNTY et al
• Court: Iowa Supreme Court

78 N.W. 195

107 Iowa 543

THE FIRST NATIONAL BANK OF MANNING, Appellant, v. THE GERMAN BANK OF CARROLL COUNTY et al

Supreme Court of Iowa, Des Moines

February 6, 1899

Appeal from Carroll District Court.--HON. Z. A. CHURCH, Judge.

THE plaintiff purchased of Farneman a draft indorsed by him drawn by the Bank of Kirkman, November 7, 1892, on the First National Bank of Carroll, on November 8th, and sent it for collection to the Valley National Bank of Des Moines, which on the following day, forwarded it to the defendant for collection. It was received and presented to the drawee for payment before ten o'clock on the tenth day of November and payment refused. The draft was at once placed in the hands of W. A. Arts, a notary public, and also assistant cashier of the defendant bank, with instructions to protest for nonpayment. He made no inquiry for the residence of Farneman, who was engaged in the chicken business at Carroll but a short distance from the bank, but inclosed notice to him with those to other indorsers to the Valley National Bank of Des Moines. The plaintiff has been denied recovery in an action against Farneman. See Bank v. Farneman, 93 Iowa 163. This action is for the amount of the draft and the expenses and costs incurred in that case. Trial to court, and judgment for the defendant. The plaintiff appeals.

Affirmed.

F. M. Powers for appellant.

M. W. Beach for appellee.

OPINION

LADD, J.

That the draft was sent to the defendant bank for collection, and was presented to the drawee for payment, in apt time, admits of no doubt. Hamlin v. Simpson, 105 Iowa 125, 74 N.W. 906. The exercise of prudence in the selection of a notary public is not questioned. The very gist of the action is that the defendant is chargeable with the negligence of that officer in failing to learn of Farneman's residence, and notifying him of the dishonor of the draft. But a notary is a public officer, appointed by the chief magistrate of the state, is under bond for the faithful performance of his duties as such, and keeps a public record of his acts, certified copies of which may be received in evidence. Code, section 373 et seq. He is not a mere agent of the bank, but a public officer sworn to properly discharge his duties to the public. As such officer, the bank may not control his acts, nor dictate in what manner he shall perform his duties. If guilty of malfeasance in the performance of an official act, he, and not the bank, is responsible. That this notary was also an employe of the bank can make no difference. When acting as such officer, he was not discharging his duties as servant. The positions were distinct, and his acts in the capacity of an officer of the state had no connection with the services he owed the bank. Again, the defendant was a mere agent for the collection of the draft, and, owing to its dishonor, deposited it with a notary for protest. "A subagent is accountable, ordinarily, only to his superior agent, when employed without the assent or direction of the principal. But, if he be employed with the express or implied assent of the principal, the superior agent will not be responsible for his acts. There is, in such a case, a privity between the subagent and the principal, who must, therefore, seek a remedy directly against the subagent for his negligence or misconduct." Guelich v. Bank, 56 Iowa 435, 9 N.W. 328. In making such collections it is usual to employ a notary, and, in forwarding the draft, there was an implied direction to do so, if necessary. See Mount v. Bank, 37 Iowa 457. If the defendant exercised prudence in making the selection, its responsibility ended. This is all it could have done had the draft been its own, and surely it will not be held to a higher degree of care when acting for others. Baldwin v. Bank, 1 La.Ann. 13; Bank v. Howell, 8 Md. 530; Hyde v. Bank, 17 La. 560; Tiernam v. Bank, 7 Howard 648; Bellemire v. Bank, 4 Whart. 105; Britton v. Niccolls, 104 U.S. 757, 26 L.Ed. 917; Warren Bank v. Suffolk Bank, 10 Cush. 582; Stacy v. Bank, 12 Wis. 629; May v. Jones, 88 Ga. 308 (14 S.E. 552); Agricultural Bank v. Commercial Bank, 15 Miss. 592, 7 S. & M. 592; Bank v. Butler, 41 Ohio St. 519; Mechem Agency, section 514. While there is a conflict in opinion, the rule announced is sustained by the weight of authority and the better reason. See collection of cases in 3 Am. & Eng. Enc. Law (2d Ed.) 808, and note to Isham v. Post (N. Y. App.) 38 Am. St. Rep. 775 (s. c. 35 N.E. 1084); also Allen v. Bank, 22 Wend. 215.

The distinction between a foreign and an inland bill of exchange should not be overlooked. To charge the makers and indorsers the former must be protested. Not so with the latter. All that is required is a demand, and, on refusal to pay, notice of dishonor, in order to fix liability of the indorsers of an inland bill; and these may be made and given by the holder, or any one acting in his behalf. By the law merchant, giving notice of dishonor is no part of a notary's official duty, and when he does so he is merely acting as agent of the holder. Swayze v. Britton, 17 Kan. 625; Allen v. Bank, 22 Wend. 215; Daniels Negotiable Instrument, section 960. But it is customary for him, in protesting a bill, to give the proper notice of dishonor. Proffiatt Notice, sections 142, 143. And in many of the states the law merchant is so modified that he is required to give notice. Formerly his certificate might not be received as proof of the protest of an inland bill. Case v. Heffner, 10 Ohio 180. By section 378 of the Code, "every notary public is required to keep a true record of all notices given or sent by...