Lord v. Hingham Nat. Bank

• Decision Date: 22 June 1904
• Citation: 186 Mass. 161,71 N.E. 312
• Parties: LORD et al. v. HINGHAM NAT. BANK.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

186 Mass. 161

71 N.E. 312

LORD et al. v. HINGHAM NAT. BANK.

Supreme Judicial Court of Massachusetts, Suffolk.

June 22, 1904

COUNSEL

Wiggin & Wiggin, for plaintiffs.

Thos H. Buttimer, for defendant.

OPINION

BARKER J.

1. The defendant concedes that in case of drafts or other negotiable paper intrusted to a bank for collection where, from the necessity of the case, some other agent must be employed, the collecting bank is agent of the owner of the paper. See Fabens v. Mercantile Bank, 23 Pick. 330 34 Am. Dec. 59; Phipps v. Millbury Bank, 8 Metc. 79, 82. Its first contention is that the plaintiffs had no legal title to the draft either as drawn or by any indorsement, and that, because they could not sue on the draft, they have no action against any party to whom it was transmitted for collection. But in the present case the Second National Bank of Boston, in whose favor the draft was drawn, was content to receive the draft, and to attempt its collection for the benefit of the plaintiffs, and so became their agent in the matter. This distinguishes the case from Allen v. Ayers, 3 Pick. 298, and other cases cited for the defendant. There was the same privity between the plaintiffs and the defendant which is found wherever a contract turns out to have been made by one of the contracting parties as an agent for an undisclosed principal.

2. While the draft was accompanied by a slip specially requesting that it should not be protested, the letter of instructions also said: 'Return at once all items unpaid at maturity. They must not be held for the convenience of parties.' The nonprotest slip was not inconsistent with and did not waive these instructions. While the evidence tended to show that it was the practice of some banks to retain no protest items even when accompanied by instructions like those quoted, it also showed that it was not the practice of all banks, and the presiding justice found that the evidence offered did not prove a custom. This made it competent for him to find that a failure to return the draft at once when it was not paid at maturity was negligence on the part of the defendant in dealing with the draft. The evidence abundantly justified a finding that the defendant both failed to return the draft as directed and held it for the convenience of the drawee, in direct violation of instructions.

3. It cannot be said as matter of law that the plaintiffs' damages are remote. The...