Schaap v. State Nat. Bank
Decision Date | 09 December 1918 |
Docket Number | (No. 26.) |
Citation | 208 S.W. 309 |
Parties | SCHAAP v. STATE NAT. BANK OF TEXARKANA. SAME v. FIRST NAT. BANK OF FT. SMITH. |
Court | Arkansas Supreme Court |
Appeal from Circuit Court, Miller County; Geo. R. Haynie, Judge.
Appeal from Circuit Court, Sebastian County; Paul Little, Judge.
Separate actions by John Schaap against the State National Bank of Texarkana and against the First National Bank of Ft. Smith. From a judgment directed for defendant State National Bank, plaintiff appeals; and from a judgment for plaintiff against defendant First National Bank, for part of the relief prayed, both parties appeal. Reversed and remanded in each case.
John Schaap brought suit in the municipal court of Texarkana, Ark., against the State National Bank of Texarkana, to recover on certain checks which he alleges belonged to him, and which were collected by the bank and held by it after demand made by him for the amounts so collected. John Schaap also brought suit against the First National Bank of Ft. Smith before a justice of the peace to recover upon certain checks of which he was the holder which had been collected by the bank and payment refused to him.
The material facts in each case are nearly the same, and the issues of law raised by the appeal in No. 5549 will be decisive of case No. 5486. Therefore the cases were consolidated for the purpose of being briefed on appeal, and one opinion will suffice for both cases. Each case was appealed to the circuit court. The facts upon which the cases were tried in the circuit court are substantially as follows: John Schaap resides in Ft. Smith, Ark., and has there conducted for 35 years a wholesale drug business under the name of John Schaap & Sons Drug Company. E. H. Slates was employed by him as a traveling salesman from October, 1914, to March, 1916, inclusive. His duties were to sell drugs and collect past-due accounts from customers; but he had no authority to indorse checks given in payment of accounts or other indebtedness to the drug company. During the course of his employment, Slates received checks to the amount of over $3,000 which customers had given him, and for which they had received no credit on the books of the drug company. Slates received many other checks given him by customers in payment of accounts due the drug company, and he sent in these checks to the drug company. He also collected cash, and remitted it to the drug company. His collections amounted to about $500 or $600 per week. During the latter part of March, 1916, John Schaap discovered that Slates had collected a check drawn in his (Schaap's) favor in payment of a drug account, and had appropriated the proceeds to his own use. As soon as this was discovered, Slates left the country, and his present whereabouts are unknown. Prior to that time Slates was indorsing checks given to him by customers in payment of their accounts, and collecting them and appropriating the proceeds to his own use. The extent to which Slates had done this was ascertained by investigation upon the part of Schaap after Slates had fled the country in the latter part of March, 1916.
In case No. 5486 the record shows that Slates at various times took checks given by seven different customers of the drug company in payment of their accounts to local banks and cashed them. These banks then sent the checks to the State National Bank of Texarkana for collection, and bank collected them and appropriated the proceeds to its own use. Each of these checks was drawn to the order of John Schaap & Sons Drug Company, or John Schaap & Sons, and each was indorsed John Schaap & Sons Drug Company or John Schaap & Sons, "per E. H. Slates."
In case No. 5549, the record shows that Slates received checks for various amounts from 16 customers of John Schaap in payment of their accounts to his drug company. Each of these checks was drawn in favor of John Schaap & Sons Drug Company, or John Schaap & Sons, and each was indorsed John Schaap & Sons Drug Company, or John Schaap & Sons, "per E. H. Slates." Slates presented 5 of these checks at different times to the First National Bank of Ft. Smith, and the bank paid to Slates the several amounts for which these checks were drawn, and he appropriated the money to his own use. The bank officials collected the amounts of these checks from the banks on which they were drawn. The remaining 11 checks were sent to the defendant bank for collection by other banks which had cashed them for Slates, and which had sent them in to the defendant bank.
In case No. 5486 the court directed a verdict for the defendant bank, and the plaintiff has appealed.
In case No. 5549, a jury was impaneled to try the case, and the foregoing evidence was introduced before it. After the taking of the evidence was completed, counsel for both parties agreed to withdraw the case from the jury, and to submit it to the court sitting as a jury. The plaintiff requested the court to make declarations of law which the court refused to make. The defendant also requested the court to make certain declarations of law, which the court refused to make. The court rendered judgment for the plaintiffs for the amount of the 5 checks which the bank had cashed for E. H. Slates, and afterwards collected from the banks on which they were drawn, and rendered judgment in favor of the defendant as to the amounts collected by the defendant bank on the 11 checks sent to it by other banks, which checks it had collected and accounted for to the banks which had sent them. This case is also here on appeal.
Winchester & Martin, of Ft. Smith, for appellant.
William H. Arnold, of Texarkana, and Harry P. Daily, of Ft. Smith, for appellees.
HART, J. (after stating the facts as above).
The record shows that Slates had authority to sell drugs for the plaintiff and to collect past-due accounts, either receiving payment therefor in money, or in the checks of customers drawn in favor of his principal. Slates indorsed the checks by writing his principal's name across the back thereof, followed by the words, "per E. H. Slates." The indorsement "per E. H. Slates" did not purport to be his own indorsement, but was notice to the defendant that Slates had acted for the plaintiff. See our Negotiable Instrument Act (Acts of 1913, p. 260) and section 21 thereof.
But it is earnestly insisted by counsel for the defendant that the authority to collect past-due accounts, either in money or by checks, carried with it the authority to indorse the checks received by him in payment of the accounts. The main purpose had in view was the collection of the accounts. This was accomplished when Slates had received the various checks payable to his principal. When Slates received them in payment of a debt due his principal, his duty as collector ceased except to transmit the checks to his principal. The indorsement of the checks was not a necessary incident to the collection of the accounts and his power of receiving checks, instead of cash, did not confer power to indorse the checks. It has been uniformly held that the fact that an agent authorized to make collections in checks as well as in money does not enlarge his authority to indorse checks so taken in the name of his principal. Daniel on Negotiable Instruments (6th Ed.) vol. 1, §§ 290, 291; Jackson v. Bank, 92 Tenn. 154, 20 S. W. 802, 18 L. R. A. 663, 36 Am. St. Rep. 81; Deering v. Kelso, 74 Minn. 41, 76 N. W. 792, 73 Am. St. Rep. 324; Jackson Paper Mfg. Co. v. Commercial National Bank, 199 Ill. 151, 65 N. E. 136, 59 L. R. A. 657, 93 Am. St. Rep. 113; Hamilton National Bank v. Nye, 37 Ind. App. 464, 77 N. E. 295, 117 Am. St. Rep. 333; Dispatch Printing Co. v. National Bank of Commerce, 109 Minn. 440, 124 N. W. 236, 50 L. R. A. (N. S.) 74; New York Iron Mine v. First National Bank of Negaunee, 39 Mich. 644; Grayham v. U. S. Savings Institution, 46 Mo. 186. In Jackson v. Bank, supra, the court said:
This court has recognized the desirability of having uniformity in the decisions of the courts of last resort in the various states on the subject of negotiable paper. The question of whether the payee of the check may recover its proceeds from the bank which has cashed it, or which has collected it on an unauthorized indorsement, is...
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