Gerhardt v. Boatman's Saving Inst.

• Decision Date: 31 March 1866
• Citation: 38 Mo. 60
• Parties: JULIUS H. GERHARDT, Appellant, v. THE BOATMAN'S SAVING INSTITUTION, Respondent.
• Court: Missouri Supreme Court

38 Mo. 60

JULIUS H. GERHARDT, Appellant,

v.THE BOATMAN'S SAVING INSTITUTION, Respondent.

Supreme Court of Missouri.

March Term, 1866.

Appeal from St. Louis Circuit Court.

Gray, for appellant.

I. Plaintiff, in accordance with the custom of defendant to collect notes for its customers, deposited his note with defendant, and received it and undertook to collect it, or to take the proper steps to fix the endorser.

On general principles of bailment, defendant was bound to give notice to the endorser of the note, if it undertook the business even as a gratuity--Edw. Bail. 112; Sto. Bail. 171, c., p. 181, 4th ed.; 3 Cow. 683-4; 11 Wend. 475; 1 Arn. 403; 6 Mass. 58.

II. But it was not a gratuity; the use of plaintiff's money was a consideration that required of the defendant a faithful execution of the business undertaken--20 J. R. 372; Edw. Bills, 402-4; 3 Sandf. 179; Ivory v. Bk. of Mo., 36 Mo. 475; 6 Blackf., Ind. 225; 1 Ala. 148; 23 Pick. 330; 3 Ala. 206.

III. The fact that defendant gave the note to a notary public for collection, demand, protest, &c., does not release or protect defendant.

1. The notary was defendant's agent, of its own selection, and defendant was responsible for his acts. There is a conflict of authorities on this point, but the courts of Ohio, New York, Indiana and South Carolina, and perhaps of other States, hold a bank liable for the acts of a notary--22 Wend. 215; 6 Hill, N. Y. 648. This last case is precisely in point--3 Seld. 459; 1 Kern. 203. This last case says it is no longer an open question in New York--1 Kern. 211; 21 Ind. 4; 3 Hill, S. C. 77; 8 Ohio, 465.

2. Plaintiff could have no recourse on the notary. The notary was not acting for plaintiff. There was no privity between them--6 Taunt. 147-8.

3. The defendant itself, by taking bond with security from the notary in ten thousand dollars, made him its employee to all intents and purposes.

4. Defendant refused to trust to his official character, or bond, but employed him by the year, to do all its business entrusted to him by it; took a bond, covering just the neglect the notary was guilty of in this case, and have a remedy on said bond.

5. The employment of a notary was not necessary to fix the liability of the endorser. It was a domestic note, and presentment, demand, and notice of dishonor, to the endorser, were all that was needed to fix the liability of the endorser--3 Hill, S. C. 77. The employment of a notary was not necessary; a private person could have made the demand and given the notice of dishonor just as well and effectively.

In the conflict of authority on this point in the different States, it should be the duty of the court to make that decision that will insure fidelity on the part of banks, and secure the best interest of the business public.

Lackland, Cline & Jamieson, for respondent.

The only question involved in this case is, in what light shall the acts of a notary of a bank be regarded; that is, shall he be deemed, in a case of this character, as the agent of the bank, or as an independent officer, discharging the duties and obligations resting on him as such?

In this case, as the custom of banks was known, which was to hand over to a notary in the afternoon the notes that were not paid during banking hours, if the depositor desired any special measures to be taken, he should have made a special contract, and not having done so, the bank is discharged, as it did just what was customary under the implied contract for it to do. That is, it handed the note over to a cempetent notary, to be protested. The leading case for the doctrine which exempts the bank from liability is Bellemire v. The U. S. Bk., 1 Miles, 173, decided by the District Court of Philadelphia in 1836, and affirmed by the Supreme Court of Pennsylvania in 1839, 4 Whart. 105. We will further refer the court to the following cases--Mechanics' Bank v. Earp, 4 Rawle, 385; Wingate v. Mechanics' Bk., 10 Barr, 104. In this case the court held the bank was liable, on the ground that there was an express contract to collect the note, but that it would be otherwise if the note was merely transmitted to the bank for collection--East Haddam Bk. v. Scovil, 12 Conn. 32; Lawrence v. Stonington Bk., 6 Conn. 521; Fabens v. Mercantile Bk., 23 Pick., Mass. 330; Dorchester Bk. v. New England Bk., 1 Cush. 177; Warren Bk. v. Suffolk Bk., 10 Cush. 582; Jackson v. Union Bk., 6 Harr. & Johns., Md., 146; Citizens' Bk. v. Howell et al., 8 Md. 530; Tiernan v. Commercial Bk., 7 How. Miss. 648; Agricultural Bk. v. Commercial Bk., 7 Smead & Marsh. 592; Bowling v. Arthur, 34 Miss. 41; Hyde et als. v. Planters' Bk., 17 La. 560; Baldwin v. Bk. of Louisville, 1 La. 13; Bank of Washington v. Triplett et als., 1 Pet. 25.

WAGNER, Judge, delivered the opinion of the court.

The facts in this case are mainly these : The plaintiff kept his regular deposit account with defendant, and in accordance with a uniform custom, delivered to it a negotiable promissory note for collection. The note was for $2,500, made by Henry L. Clark, payable sixty days after date to the order of Lewis V. Bogy, and by Bogy endorsed to plaintiff, who endorsed the same and delivered it to defendant for the purpose above stated. The note not being paid at maturity, was delivered by defendant to a notary public for protest, and to give notice of presentment, demand, and refusal to pay, to the endorser. The notary was appointed by the defendant to do all its notarial business, and it had required him to give bond in the sum of $10,000 for the faithful discharge of his duties. He proceeded to protest the note for non-payment, but, through his negligence and carelessness in giving notice the endorser was discharged. The maker was insolvent, and this suit is now brought to charge defendant for the negligence of the notary it employed, and through whose instrumentality recourse was lost against the endorser.

The sole point here is, whether the defendant is liable for the negligence, inefficiency and carelessness of the notary, acting as its agent. The question has often been determined in other courts, but the decisions are so conflicting and contradictory, that it cannot be said that any rule can be positively deduced from the weight of authority.

It is not doubted that it is the usual custom of banks, in receiving notes on deposit for collection, to hand them over to a notary to make demand and protest against the maker, and give notice to the endorser, in default of payment at maturity. And therefore it has been held that, where a party, cognizant of this custom, deposits a note for collection, and payment is not made when the same becomes due, and it is regularly delivered to a notary, and he omits to give notice to the endorser of non-payment, the bank, having discharged its entire duty, will not be responsible, but the remedy will be against the notary.

The best considered case that we have met with, holding the banks exempt from liability, is Bellemire v. Bk. of U. S., 1 Miles, 173, affirmed on appeal, in 4 Whart. 105. It was there said that the bank should be regarded as having undertaken to collect the note in the customary mode, and that the holder of the note must be understood to have consented to the arrangement; consequently, on default of payment by the maker, it became the duty of the bank to call to its aid the notary, and entrust to him the performance of whatever was necessary to secure the responsibility of the endorsers. And it was moreover declared that the notary being a public officer, he and his securities on his official bond as notary, were liable to the parties injured by his neglect, but not the bank or person who directly employed him. And this decision has been followed in many cases, though not always for precisely the same reasons-- East Haddam Bk. v. Scovil, 12 Conn. 303; Warren Bk. v. Suffolk Bk., 10 Cush., 582; Citizens' Bk. v. Howell et al., 8 Md. 530; Bowling v. Arthur, 34 Miss. 41; Hyde v. Planters' Bk., 17 La. An. 560.

But, on the other hand, the bank is held liable for all the acts and omissions of the notary or other agent to whom it delivers the notice. The leading case on this side of the question is Allen v. Merchants' Bk., 22 Wend. 215, in the New York Court of Errors and Appeals, where the whole subject is most elaborately considered, and discussed with masterly ability by Senator Verplanck. In the course of his opinion, that learned jurist said:

“It is well settled in this State that there is an implied undertaking by a bank or banker...