Pollak Bros. v. Niall-Herin Co.

• Decision Date: 11 October 1911
• Citation: 72 S.E. 415,137 Ga. 23
• Parties: POLLAK BROS. v. NIALL-HERIN CO.
• Court: Georgia Supreme Court

72 S.E. 415

137 Ga. 23

POLLAK BROS. v. NIALL-HERIN CO.

Supreme Court of Georgia

October 11, 1911

Syllabus by the Court.

Where a bank sends an accepted draft to a correspondent for collection, who receives in payment the check of the acceptor on itself in the regular course of business, the acceptor being a depositor with the collecting bank and having on deposit a sum in excess of the check, and the collecting bank surrenders the draft to the acceptor and remits its own check to the initial bank, which check is not paid because of the failure of the remitting bank, such transaction constitutes a payment of the draft as between the drawer and the acceptor although the collecting bank may have been insolvent at the time; its insolvency not being known to its officials or the depositor.

Error from Superior Court, Fulton County; J. T. Pendleton, Judge.

Action by Pollak Bros. against the Niall-Herin Company. Judgment for defendant, and plaintiffs bring error. Affirmed.

Anderson Felder, Rountree & Wilson, for plaintiffs in error.

Candler Thomson & Hirsch, for defendant in error.

EVANS P.J.

Pollak Bros. sold to the Niall-Herin Company, a corporation, a certain quantity of matting, and the action is on account to recover the purchase price. The defendant admitted the purchase of the goods at the price stated and pleaded payment. The case was tried before the judge without a jury upon an agreed statement of facts, which may be condensed as follows: Plaintiffs drew a draft on the defendant for the purchase price of the matting, payable six months after sight to the order of the Hongkong & Shanghai Banking Corporation. The draft was duly accepted by the defendant on June 21, 1907, and on the day of its maturity, to wit, December 21, 1907, the draft was presented to the defendant by the Neal Bank, to the order of which bank the draft had been made payable by the indorsement of the Hongkong & Shanghai Banking Corporation. At the time of its presentation the defendant had on deposit with the Neal Bank a sum of money largely in excess of the amount of the draft. Upon the presentation of the draft the defendant gave to the Neal Bank its check on the Neal Bank and against its deposit account therein for the amount of the draft. This check was given in payment of the draft, and the draft was marked "Paid" and surrendered to the defendant. The Neal Bank was the collection agent of the Hongkong & Shanghai Banking Corporation, and immediately upon receiving the check upon itself given by the defendant it passed the amount of the check upon its books to the credit of the Hongkong & Shanghai Banking Corporation. On the same day the Neal Bank received the defendant's check it mailed to the Hongkong & Shanghai Banking Corporation, who were the agents of the plaintiffs, its check for $2,176.70, drawn on the Fourth National Bank of New York, less its collection charge of $2.17. Three days later the check was presented to the Fourth National Bank of New York, and payment thereof was refused; the Neal Bank having failed in the meantime, and a receiver having been appointed for it. At the time of the foregoing transaction the Neal Bank was insolvent, but this fact was unknown to the defendant or to the officers of the bank. It was further agreed that the Hongkong & Shanghai Banking Corporation intervened in the receivership case, alleging that the defendant had paid the draft, that the Neal Bank in collecting the draft was acting as its agent, and prayed that the amount collected upon the draft by the Neal Bank be decreed to be trust funds in the hands of the receiver, to be specially accounted for to the Hongkong & Shanghai Banking Corporation. Its intervention, in the light of the answer of the receiver and the admitted facts upon the hearing, was denied, upon the ground that the draft referred to was paid only by the check of the defendant against its own deposit in the Neal Bank, the collecting agent of the Hongkong & Shanghai Banking Corporation. Upon the foregoing facts the court rendered judgment for the defendant, and the plaintiffs except.

The plaintiff in error contends that these facts are insufficient to constitute payment because an agent to collect can only accept money in payment of his principal's debt....