L. Marks' Sons v. West Tennessee Grain Co.
| Decision Date | 31 March 1919 |
| Docket Number | 20545 |
| Parties | L. MARKS' SONS v. WEST TENNESSEE GRAIN CO. ET AL |
| Court | Mississippi Supreme Court |
WARRANTIES. Parties liable. Assignee of bill of lading.
Where a non-resident bank at two different times took assignments of drafts with bills of lading attached for two different shipments of grain sold to the same buyer by the same seller the bank was a co-warrantor with the seller in both transactions in warranting the soundness and merchantable condition of the grain, and the amount received by the bank upon the second draft could be attached in chancery by the buyer for a breach of warranty of soundness and merchantability of the grain in the first shipment.
HON JOE MAY, Chancellor.
APPEAL from the the chancery court of Coahoma county, HON. JOE MAY, Chancellor.
Bill by L. Marks' Sons against the West Tennessee Grain Company praying an attachment of certain funds alleged to be held in the Exchange Bank of Friars Point, Mississippi, and the Bank of Clarksdale, Mississippi, by amended bill the Commercial Bank of Obion, Tennessee, was made a party defendant as co-warrantor. Bill dismissed and complainants appeals. Judgment as to liability rendered and cause reversed and remanded for assessment of damages.
The facts are fully stated in the opinion of the court.
Case reversed and remanded.
Black & Mack, for appellants.
It is our contention and we have considerable confidence in our position that the Commercial Bank was only a collection agency, acting as an agent of the Grain Company, and that when the attachment writ was served on the exchange Bank that the funds in question were the property of the West Tennessee Grain Company; that it had full power to control said funds and that the Commercial Bank, and the Exchange Bank was merely its agents and did not and could not, in the absence of a special agreement to that effect, have become the owner of the funds attached, as against the West Tennessee Grain Company.
The General Rule is that the title to Commercial Paper placed with the bank for collection remains in the owner of the paper and the bank only performs a service as collecting agent. 5 Cyc. 493.
The endorsement for collection of a draft or check is not a transfer of the title to the endorsee, but merely constitutes it the agent of the endorser to present the paper, demand and receive payment and remit the proceeds. And this is true, although it appears that the endorser is credited and the endorsee is charged with the amount of such paper where it further appears that the endorsee does not become unconditionally responsible for such amount until the draft or check is actually paid. National Butchers & Drovers Bank v. Hubbell, 15 Am. St. Rep. 515.
In other words all of the circumstances point in the direction that this was simply a case of an endorsement by the Grain Company to the Commercial Bank of the paper for collection, the Grain Company was credited with an amount of the paper less the exchange charge and should the paper be turned down, then it was the understanding that the West Tennessee Grain Company would give the bank a check to take up the paper thus refused.
Merely crediting the amount of the paper to the West Tennessee Grain Company before collection would not transfer the title, as the bank had the right, if the check was turned down to charge same back on its books to the Grain Company thus cancelling the credit so made. See Note at page 307, and 308, 34 Am. Dec.
Again we find that the rule is well settled that the endorsement to a draft or check for the purpose of collection passes the legal title to said paper only to the extent as to enable the endorsee to demand, receive and sue for the money to be paid. The owner may still control the paper unless paid and may intercept the proceeds of it in the hands of the intermediate agent. Federal National Bank v. National Tube Works Co., 21 Am. St. Rep. 461.
It is also well settled that banks in taking paper for collection becomes agent of the owner of said paper and is bound to use only reasonable skill and ordinary diligence in handling said paper. 7 S. & M. 592; 7 Howard, page 648. From all of which we submit that the proof shows that the funds attached in this case were not the property of the Commercial Bank, but were the property of West Tennessee Grain Company and that if appellants proved that they sustained damages on account of the inferior grade of corn, then they should have had a decree for the amount shown, and should have been reimbursed out of the funds attached.
We desire to call the court's attention to the case of Russell v. Smith Grain Co., reported on 32 So., at page 287, and in 80 Miss. 688.
This case holds that where a bank buys a draft from the vendor of a car of corn, bill of lading attached, it becomes as to the buyer in the same situation, as its assignor stood and is liable to the buyer who paid the draft for breach of contract in the delivery and quality of corn.
This case is strikingly like the one now before the court, being an attachment in chancery for breach of warranty of quality of corn sold. We desire to call the court's attention also to the case of Exchange National Bank v. Russell, reported in 32 So. 314, 81 Miss. 169, which seems to be another suit by the same parties and in that case the court holds that where a bank purchases draft with bill of lading attached, for grain shipped and the consignees pay the draft, the bank is liable for damages for defects in quality and for shortage in quantity, of the corn covered by bill of lading but was not liable for damages for the consignor's failure to ship other grain to the consignees under a different contract.
However we think the question of the liability of the Commercial Bank of Obion to appellants as co-warrantors is clearly settled in the case of Mobile Automobile Co. v. R. W. Sturgis & Co., reported in 66 So. 205, 107 Miss. 848.
Not only this, but we think it also clear that even if it be conceded that the court had not acquired jurisdiction of the West Tennessee Grain Company for the reason claimed by the appellees and accepted by the Chancellor, still we think clearly the Commercial Bank of Obion has voluntarily come into court, made itself a party defendant to the whole proceedings and cannot take refuge behind the proposition that the court acquired no jurisdiction over the West Tennessee Grain Company.
In conclusion we desire to state that in our humble opinion the court below was in error in refusing relief to appellants, and dismissing their bill and that this cause should be reversed and decree rendered here for the amount shown by the proof that appellants sustained in damages on account of the shipment of corn made to them by the West Tennessee Grain Company in April, 1914.
J. W. Cutrer, for appellee.
The line of authorities, consisting of Russel v. Smith Grain Company, 80 Miss. 688; Exchange National Bank v Russell, 81 Miss. 169, and Mobile Automobile Company v. R. W. Sturgiss & Company, 66 So. 205, seem to support the proposition of counsel for appellant that a bank which purchases...
To continue reading
Request your trial