German Nat. Bank of Denver v. Burns

• Decision Date: 03 May 1889
• Citation: 12 Colo. 539,21 P. 714
• Parties: GERMAN NAT. BANK OF DENVER v. BURNS.
• Court: Colorado Supreme Court

21 P. 714

12 Colo. 539

GERMAN NAT. BANK OF DENVER v. BURNS.

Supreme Court of Colorado

May 3, 1889

Appeal from superior court of Denver.

Charles Burns, the plaintiff below, in January, 1884, deposited in the First National Bank of Leadville the sum of $3,300, and received from said bank its certificate of deposit payable to said Burns, or his order, upon return of the certificate properly indorsed. Plaintiff, then having a bank-account with the German National Bank of Denver, defendant below, indorsed and sent the certificate to said defendant bank, with a letter as follows: 'Leadville, Jan. 15th, 1884. W. I Jenkins, Cashier German Nat. Bank--Dear Sir: 'I inclose to you a certificate of deposit for thirty-three hundred indorsed to your bank. Please credit my account with the same, and oblige, yours, truly, CHARLES BURNS. $3,300.' The defendant bank acknowledged the receipt of said certificate by a letter as follows: 'German National Bank. Denver, Colo., Jan. 17th, 1884. Chas. Burns, Esq. Leadville--Dear Sir: Your favor of the 15th received, with inclosures, as stated. You have credit, _____. Yours, very truly, W. I. JENKINS, Cashier. I inclose _____.' This letter was on a printed form, and the words, 'You have credit,' in print, were followed by a blank line, to be filled up if credit was actually given; otherwise not. The defendant thereupon deposited a letter in the United States post-office at Denver, containing said certificate of deposit, with two other items, duly addressed to the said First National Bank at Leadville, or to the president thereof, duly stamped, with notice printed on the envelope to return in five days to the defendant if not called for. The letter was as follows: 'The German National Bank. Denver Colo., Jan. 17th, 1884. F. W. De Walt, Esq., President, Leadville: I inclose for collection and credit, No, 51,262, Rice; protest, $800.63; you no protest, $3,300; you no protest, $3,092. Yours, truly, W. I. JENKINS, Cashier.' Not having received any response thereto on the 21st day of January, defendant sent inquiry by telegram, and on the same day received answer: 'No such remittance received,' signed, 'THE FIRST NATIONAL BANK;' whereupon defendant then reported the same to plaintiff by letter addressed to him at Leadville, directing him to go to the Leadville bank, and get a duplicate certificate, which letter was not received by plaintiff until after the Leadville bank had failed. The Leadville Bank continued to meet its obligations until January 22, 1884, when it failed. The affairs of the bank were wound up by the receiver appointed by the comptroller. The president of the bank, who was its manager, previous to and at the time of the failure, was convicted and sentenced to the penitentiary for unlawful acts in connection with said bank, and was there confined at the time this case was tried. The receiver and the teller of the bank gave their testimony, from which it appears that they had no knowledge of the certificate, nor of the two items sent with it; that the books of the bank showed the issuance of the certificate, but no entry of the receipt or payment thereof by the bank. It also appears from the evidence that there were two mails per day from Denver to Leadville, arriving at Leadville about 12 hours after leaving Denver; and that there were ample funds on hand in the Leadville bank, up to January 22, 1884, for the payment of said certificate; and that it would have been paid had it been presented to the paying teller of said bank, and payment demanded thereon, at any time prior to said day. Upon learning of the failure of the Leadville bank, plaintiff demanded that defendant should pay the amount of said certificate of deposit, which being refused he brought this action. The amended complaint states the cause of action in two ways: The first, upon the theory that defendant, according to its custom in such matters, had accepted the certificate as a deposit in favor of plaintiff, and had given or was bound to give him unconditional credit therefor; the second, upon the theory that defendant had received the certificate for collection, and that by reason of its negligence and want of care in that behalf plaintiff had lost the proceeds of said certificate. The answer denied the custom, the unconditional credit, alleged that it received the certificate for collection only, and traversed the allegation of negligence.

Patterson & Thomas, for appellant.

L. C. Rockwell, for appellee.

ELLIOTT J., ( after stating the facts as above.)

The plaintiff, by letter, had requested defendant to credit his account with the amount of the certificate of deposit inclosed. The reply to this letter by its literal terms indicated compliance with this request, but the credit was not actually given; and the trial court held that the evidence under the circumstances did not warrant the plaintiff's claim to such unconditional credit, so the first cause of action was dismissed. The trial court seemed to consider plaintiff's letter transmitting the certificate of deposit as equivalent to a request from plaintiff to collect of the Leadville bank, and to credit plaintiff with the proceeds of the collection. This view was certainly favorable to defendant. Under such circumstances defendant was bound to use all reasonable diligence to protect the interests of plaintiff. Its duty was to send the certificate in due season to be promptly presented for payment. If there was negligence on the part of defendant in this behalf, and loss resulted to plaintiff in consequence thereof, plaintiff undoubtedly has a cause of action against defendant for such loss. Morse, Bank. 354. Thus far the authorities are agreed; but in some respects they are in conflict upon this subject. Some courts have held that a bank undertaking the collection of commercial paper is responsible, not only for any loss occasioned by the negligence of its own immediate servants and agents, but also for the neglect or default of any intermediate agent or correspondent to whom it intrusts such paper for collection in the regular course of business; and that this responsibility continues notwithstanding the collecting bank has exercised all reasonable care and diligence in the selection of such intermediate agents. Other decisions are to the effect that this responsibility extends only to collections to be made in the same place where the...