Pickett v. Thomas J. Baird Investment Company

• Decision Date: 11 December 1911
• Citation: Pickett v. Thomas J. Baird Investment Company, 133 N.W. 1026, 22 N.D. 343 (N.D. 1911)
• Court: North Dakota Supreme Court

133 N.W. 1026

22 N.D. 343

PICKETT v. THOMAS J. BAIRD INVESTMENT COMPANY

Supreme Court of North Dakota

December 11, 1911

Appeal from District court, Nelson county; Templeton, J.

Action by W. N. Pickett against the Thomas J. Baird Investment Company.From a judgment for defendant, plaintiff appeals.

Affirmed.

Frich & Kelly, for appellant.

Scott Rex, for respondent.

OPINION

BRUCE, J.

Facts Defendant, the Thomas J. Baird Investment Company, which was located at Lakota, North Dakota, was authorized by plaintiff to collect $ 480 from one Radcliffe, at Larimore, and to transmit the same to plaintiff at Duluth.Radcliffe sent to the defendant, at Lakota, his personal check on a Larimore bank for the sum of $ 480, and defendant indorsed this check and deposited it to its own account and credit in the People's State Bank at Lakota.This check was soon after and on January 14th, collected by the People's State Bank from the Larimore bank, and about two weeks after the receipt of the Radcliffe check defendant sent its own check on the People's State Bank of Lakota to the plaintiff at Duluth.The check was in the ordinary form, but in addition contained the words "payable if desired in New York, Chicago, or Minneapolis exchange at par."It was received by the plaintiff at Duluth on January 17, 1910, and on January 19th plaintiff deposited it to his own account in the First National Bank of Duluth.It was, on January 19, 1910 indorsed by the Duluth bank: "Pay to the order of any bank, banker, or trust company.Jan. 19, 1910,"--and sent by such bank to the People's Bank of Lakota for collection.There is no testimony in the record as to exactly when it was sent, but the proof is positive that it was received by the People's Bank of Lakota on or before January 21st, on which day it was honored by the People's State Bank of Lakota, and a draft in payment thereof was sent by the said bank to the First National Bank of Duluth, drawn on the Security National Bank of Minneapolis.This draft was then sent to Minneapolis by the Duluth bank for collection, and presented for payment to the Minneapolis bank on January 25th.Payment was refused for lack of funds to the credit of the People's State Bank of Lakota, and the original check was charged back to the account of the plaintiff, Pickett, by the Duluth bank, and plaintiff brought this action against the defendant, the Baird Investment Company, to recover the $ 480 involved.

The evidence further showed that the People's State Bank of Lakota had been insolvent for six months previous to the issuance of the draft, and that it was closed by the bank examiner on January 27th, and six days after its issuance, and that "general depositors will receive little, if anything, in the way of dividends or otherwise from the said bank."It, however, did not appear in any way whether there were ever any funds deposited with the Minneapolis bank, or, if so, when those funds were exhausted; and it shows that the People's State Bank of Lakota remained open until January 27th, and, up to the close of business on January 26th, "was engaged in the transaction of its business and received deposits and made payments;" that, until closed on January 27th, it "was of general repute in the community, and the fact of its insolvency was concealed from and was unknown to the general public and to the defendant;" and "that during all of the times mentioned in the pleadings the defendant had on deposit and subject to check in said bank moneys more than sufficient to pay the check in question."The testimony also showed that there was another local bank, the National Bank of Lakota, to which the check might have been sent.It did not show, however, whether the People's State Bank of Lakota was a regular correspondent of the Duluth bank or not.There was some evidence tending to show that it was customary for the People's Bank to get checks from its correspondents and other banks, such as the one in controversy, sent direct to it for collection, and not through the agency of the other bank; and that it was customary for such bank to transmit the money therefor in the form of drafts.This evidence, however, rather proved the custom to be one of the People's State Bank than a general custom among bankers in the Northwest.In fact, it did not go far enough to prove this last point.The testimony also showed that when the People's State Bank received checks drawn on itself for collection from foreign banks, it was its custom to pay for such in drafts; but that when presented for payment by the other local bank, to pay such in "cash, or its equivalent."

The trial court found that the "plaintiff was negligent in causing the check in controversy to be forwarded for collection direct to the drawee thereof, and in accepting said draft in payment therefor; and that the defendant had been damaged by such negligence in the full sum of the face of the said check."In accordance with this finding, he dismissed the action, with costs against, but without prejudice to, the plaintiff.From this judgment, the plaintiff appeals to this court.

BRUCE, J.(after stating the facts as above).Two questions are before us for discussion: (1) Was appellant negligent in depositing and transmitting the check received from the Baird Investment Company; and (2), if negligent, was respondent damaged by such negligence, so as to be discharged from liability?Section 6488,Rev. Codes 1905, requires that a check be presented for payment within a "reasonable time" after its issue, and declares that if not so presented the "drawer will be discharged from liability thereon to the extent of the loss occasioned by the delay."On this subject of presentment, Bolles, in his work on Banking (vol. 2, p. 603), says: "As a check is not intended to circulate like money it should be promptly presented for payment.Indeed, the holder must observe very definite rules in presenting it; for if he does not his rights against the drawer may be impaired.First, when the holder and drawee live in the same place, a check must be presented on the same day or on the next after receiving it.Second, when they live in different places, the holder must send it forward, in a reasonably direct way, on the same day or the next, for presentation.Third, when there is a clearing house in the place of the drawer, a day longer may be given for collection through the medium of this institution.Fourth, on some occasions, for example, when the holder knows that the bank's failure is impending, he must make an immediate presentation, if possible, to prevent the drawer from loss.This rule is with less urgent reason denied.Fifth, when the last day for making direct presentation, or sending it away for this purpose, falls due on Sunday, the check is payable the following day."These statements are, no doubt, borne out in the main by the authorities.In order that negligence in presentment, however, shall preclude a recovery, it is necessary to prove that the defendant was injured thereby, and it is only the loss occasioned by the delay which can be used in avoidance of the original liability.Since, in the case at bar, the check was presented for payment before the suspension of the bank, and while it was still "enjoying a general good repute and paying out money," there is nothing in the evidence to show that the defendant was injured by this negligent delay, and the question of delay in the presentment of the check is, as far as this suit is concerned, immaterial.

But this is only part of the negligence claimed by the respondent to have been committed by the plaintiff.Its chief ground of complaint is that the plaintiff, Pickett, gave the check to the First National Bank of Duluth for collection, and that that bank acting as the agent of plaintiff, instead of sending the same to the other local bank, the National Bank of Lakota, for collection in cash, sent it to the drawee of the check, the People's State Bank.There can be no question as to the strength and conclusiveness of this contention.The law is well settled that a collecting bank "must not transmit its checks or bills directly to the bank or party by whom payment is to be made, with the request that remittances be made therefor.It is considered that no firm, bank, corporation, or individual can be deemed a suitable agent, in contemplation of law, to enforce, in behalf of another, a claim against itself."SeeDan.Neg. Inst. §§ 328a, 1599;National Bank v Johnson,6 N.D. 180, 69 N.W. 49;Drovers' Nat. Bank v. Anglo-American Packing & Provision Co.117 Ill. 100, 57 Am. Rep. 855, 7 N.E. 601;5 Cyc. 506;German Nat. Bank v. Burns,12 Colo. 539, 13 Am. St. Rep. 247, 21 P. 714;Western Wheeled Scraper Co. v. Sadilek,50 Neb. 105, 61 Am. St. Rep. 550, 69 N.W. 765;Pinkney v. Kanawha Valley Bank,68 W.Va. 254, 32 L.R.A.(N.S.) 987, 69 S.E. 1012, Ann. Cas. 1912B 115;Anderson v. Rodgers,27 L.R.A. 248, and note (53 Kan. 542, 36 P. 1067);Bank of Rocky Mount v. Floyd,142 N.C. 187, 55 S.E. 95;Winchester Mill. Co. v. Bank of Winchester,18 L.R.A. N.S. 441, and note (120 Tenn. 225, 111 S.W. 248);Minneapolis Sash & Door Co. v. Metropolitan Bank,76 Minn. 136, 44 L.R.A. 504, 77 Am. St. Rep. 609, 78 N.W. 980;First Nat. Bank v. Citizens' Sav. Bank,123 Mich. 336, 48 L.R.A. 583, 82 N.W. 66;R. H. Herron Co. v. Mawby,5 Cal.App. 39, 89 P. 872;Givan v. Bank of Alexandria,47 L.R.A. 270, 52 S.W. 923;Bedell v. Harbine Bank,62 Neb. 339, 86 N.W. 1060;Jefferson County Bank v. Hendrix,147 Ala. 670, 1 L.R.A.(N.S.) 246, 39 So. 295;Farley Nat. Bank v. Pollock & Bernheimer,145 Ala. 321, 2 L.R.A.(N.S.) 194, 117 Am. St. Rep. 44, 39 So. 612, 8 Ann. Cas. 370;Inter-state Nat. Bank...