Hazlett v. Commercial N. Bank

• Decision Date: 03 February 1890
• Docket Number: 319
• Citation: 132 Pa. 118,19 A. 55
• Parties: SAMUEL HAZLETT v. COMMERCIAL N. BANK
• Court: Pennsylvania Supreme Court

19 A. 55

132 Pa. 118

SAMUEL HAZLETT v. COMMERCIAL N. BANK

No. 319

Supreme Court of Pennsylvania

February 3, 1890

Argued January 13, 1890

APPEAL BY PLAINTIFF FROM THE COURT OF COMMON PLEAS NO. 2 OF PHILADELPHIA COUNTY.

No. 319 January Term 1889, Sup. Ct.; court below, No. 602 December Term 1885, C.P. No. 2.

On January 29, 1886, Samuel Hazlett brought assumpsit against the Commercial National Bank of Philadelphia. Issue.

At the trial on November 19, 1888, it was shown that on Monday, May 19, 1884, the plaintiff, a banker at Washington, Pa., mailed to the defendant bank at Philadelphia, with which he had an account of two years' standing, his check or draft for $5,000, of that date, on the Penn Bank at Pittsburgh, Pa drawn by himself to his own order and indorsed, to be placed to his credit. The draft was received by the defendant bank on Tuesday, May 20th. Credit was given to the plaintiff for $5,000 as cash, and the draft was transmitted by the defendant bank directly to the Penn Bank, Pittsburgh. The Penn Bank received the draft on the morning of May 21st marked it "paid," charged the amount of it to the account of Mr. Hazlett in that bank, and forwarded to the defendant bank its own check or draft on the National Bank of the Republic, its Philadelphia correspondent. About noon on May 21st, the Penn Bank suspended payment. The check of that bank on its Philadelphia correspondent reached the defendant bank on May 22d, and on presentation payment was refused when the defendant wired the plaintiff the same day: "We have received from Penn Bank, in return for your check, their draft on Bank of Republic, which is not good, which we hold subject to your orders." On the same day, a letter was written to plaintiff, informing him of the telegram and stating: "Since this, we have received a telegram from a Pittsburgh bank that they will resume to-morrow (Friday) morning, which we hope will prove correct." To the telegram, the plaintiff replied by letter the same day as follows: "Your telegram was duly received and contents noted. The Penn Bank is all right; and their draft, as mentioned, will be paid in a day or two. Please hold for a few days and if not honored return it to me." The draft of the Penn Bank, several times presented at the National Bank of the Republic, remained unpaid. The Penn Bank opened for business on May 24th, and closed finally on May 26th. Other correspondence followed. On June 2d, when the defendant's statement of account for May was received by plaintiff, showing that the Penn Bank draft was charged to the plaintiff, the latter wrote: "When you first wrote me in relation to the draft you had received from the Penn Bank, in return for my check on them, I was under the impression that my draft had been returned unpaid; hence I wrote what I did. I therefore decline having anything to do with the draft in question." The plaintiff subsequently brought this suit.

At the close of the testimony, the court, HARE, P.J., charged the jury as follows:

The plaintiff had a large account in the Penn Bank of Pittsburgh having had on deposit there at least $50,000. He also had an account with the Commercial National Bank of this city. On Monday, May 19, 1884, he sent by mail to the Commercial N. Bank a check on the Penn Bank of Pittsburgh, for collection. This was not a new thing. Such a course of dealing, I believe, had been pursued for nearly two years; and in nearly every instance, I believe in every instance, the Commercial N. Bank had collected those checks by sending them by mail to the Pittsburgh bank, and receiving in payment the checks of the Pittsburgh bank on other banks. In this case the check, which was forwarded by the Commercial N. Bank on the 20th, reached the Pittsburgh bank on the morning of the 21st. That bank was on the eve of failure, but still had it in its power to pay the check, if insisted upon. In point of fact, what they did was to return through the mail another check on the Bank of the Republic of this city, to the order of the Commercial N. bank, following the same course which they had often taken previously. Unfortunately, the Penn Bank of Pittsburgh, on which the check was drawn, and which had given its check in payment, was tottering and on the verge of failure, and in the course of the same day it failed. It suspended payment, and, as the result shows, was hopelessly insolvent. As a consequence, the Bank of the Republic, on which the Penn Bank of Pittsburgh had drawn, refused to honor the check when it was presented to them on the succeeding day; that is, on the 22d.

It is contended that, owing to the failure of the plaintiff to present the check personally, or through an agent, to the bank at Pittsburgh on the morning of the 21st, while it was still solvent, the defendants are answerable. [Whether the result would have been at all different if they had taken the other course, and had sent the check to the Fort Pitt bank of Pittsburgh and had it presented by them, instead of presenting it through the mail, is a question of fact which is by no means clear to my mind, because it might have been that the Penn Bank, which perhaps had its own reasons for not wanting to pay out any more money that morning than it could avoid, would, even if the check had been presented at the counter of that bank, have said, "We have always paid these drafts, as our books will show, by checks on Philadelphia on the Bank of the Republic, and we will pursue that course now, and will give you such a check." Or, it might have been that the Fort Pitt bank would have put the check in the clearing-house for collection; in which case, as settlement would not have been made until the close of the day, and the Penn Bank would have failed before the day was out, they would have got nothing, neither the check nor anything in its place.]

But, however that may be, I think that under the rule of law, [an agent who is intrusted with a check for collection upon a bank which is at the moment solvent, although it may become insolvent subsequently, and who, instead of presenting the check and demanding the money, thinks fit to take a draft upon any other bank, or any other person, becomes answerable if the principal chooses to hold him for the amount.] That is to say, [it is the right of the principal under such circumstances, to say, "You might have insisted on payment; you have chosen to take a draft; I do not know with certainty that you would have got the money, but it was your duty at least to ask for it, and if you had asked, presumably it would have been paid. You have deviated from the strict rule of business, and I will hold you answerable."] Such would be the case where a draft was presented, and a check taken therefor instead of money. It would be equally the case, if the bank should take stocks or anything else instead of money.

But, on the other hand, [where an agent has acted on behalf of his principal, and has gone outside of the strict letter of his instructions, meaning for the best, and taking a course which he had been pursuing previously, with no intentional negligence on his part, it is for the principal to say whether he will accept or decline.] [It is the duty of the agent to promptly inform his principal of what has been done, and then it is the duty of the principal to answer unequivocally whether he objects or assents. If the principal, upon being informed of what the agent has done outside of his authority, is silent; if, instead of saying, as he should say, to the agent promptly: "You have exceeded your instructions, or you have deviated from them, and consequently I hold you answerable, and this thing which you have taken for me I will not have," -- if he is silent, that is evidence of ratification or acquiescence.] You need not, however, consider that question here. I am merely stating it by way of illustration. Because in this case there was an answer.

[Information was communicated by the agent] promptly on the very day on which the true state of the case became apparent; that is, on the day following the day on which the bank at Pittsburgh had forwarded the check of the Bank of the Republic here. The defendants stated what they had done, and received an answer and [the question...