Security Savings & Trust Co. v. King

• Decision Date: 10 February 1914
• Citation: 138 P. 465,69 Or. 228
• Parties: SECURITY SAVINGS & TRUST CO. v. KING.
• Court: Oregon Supreme Court

138 P. 465

69 Or. 228

SECURITY SAVINGS & TRUST CO. v. KING.

Supreme Court of Oregon

February 10, 1914

Department 2.

Appeal from Circuit Court, Multnomah County; Robert G. Morrow Judge.

Action by the Security Savings & Trust Company against Charles B King. From a judgment for defendant, plaintiff appeals. Reversed and rendered.

Joseph Simon, of Portland (Dolph, Mallory, Simon &amp Gearin and Hall S. Lusk, all of Portland, on the brief), for appellant. John B. Cleland, of Portland, for respondent.

McNARY J.

Asserting that defendant overdrew his account on deposit to the amount of $394.63, plaintiff brings this action to recover judgment for a corresponding sum with interest. On September 27, 1911 defendant deposited with plaintiff for collection a check drawn by one H. O. Dempster on the Imperial Bank of Canada, Vancouver, B. C., payable to cash for $585, upon the following conditions thereon indorsed: "In receiving checks, drafts or other paper on deposit payable elsewhere than in Portland this bank assumes no liability for the failure of any of its direct or indirect collecting agents whether the collecting agent be the person or concern on which the check for collection is drawn or not, and shall only be held liable when proceeds in actual funds or solvent credits shall have come into its possession. Under these provisions items previously credited may be charged back to the depositor's account. In making this deposit the depositor hereby assents to the foregoing conditions." Concurrently, defendant deposited $144.35 which, together with the check, was credited to the account of defendant. On the same day Dempster notified the Imperial Bank of Canada not to pay the check, employing the following words: "I find it imperative for me to ask you to cancel check to cash indorsed by Charles King, for which value has not been received to the extent of $585, and on which I am making other arrangements with Mr. King. This check is to be deposited at the city of Portland, and herewith I will assume all responsibility of the same, or any actions, etc." Upon the deposit of the check, plaintiff immediately forwarded the check to the Northern Crown Bank, its correspondent at Vancouver, B. C., which institution, upon receipt of the check and in the forenoon of September 30, 1911, presented it to the Imperial Bank of Canada for payment. At the time the check was presented, the latter bank by the proper officer certified and returned the check to the Northern Crown Bank, and charged the account to the drawer, forgetting that payment had been stopped. The Northern Crown Bank, upon receipt of the certified check, charged the account to the Imperial Bank and remitted to plaintiff out of its own funds the amount of the check. In the evening of September 30, 1911, the Imperial Bank of Canada discovered the error it had committed in overlooking the stop order and certifying the check, and immediately notified the Northern Crown Bank of the true situation; the notice being received, however, after remittance had been made to plaintiff. Thereupon the Northern Crown Bank telegraphed plaintiff the following message: "Item $585, in your list Sept. 27, unpaid and remitted for by us today in error by our New York Draft 1 No. 13931. Shall we protest, wire prompt. The Northern Crown Bank." This intelligence was received by plaintiff on October 1, 1911. On the day of the receipt of this information, plaintiff exhibited to defendant the contents of the telegram; whereupon defendant left for Vancouver, B. C., from which point on October 4th defendant telegraphed plaintiff in substance that, it if would return the check to him, he would make collection. Failing in this, defendant subsequently returned the check to plaintiff. During the intervention of time from September 27, 1911, to October 4, 1911, defendant drew checks upon the plaintiff amounting to $539.55, and which were paid by plaintiff. On October 4, 1911, the day the draft arrived, plaintiff remitted to the Northern Crown Bank the amount of the check. In his answer defendant alleged that, of the sums of money deposited by him with appellant, $190.37 is unlawfully withheld, and sought judgment therefor, which the trial court entered in his behalf.

The rule is well established that, where a check or other negotiable paper is deposited with a bank for the purpose of collection, the relation of principal and agent is thereby created between the depositor and the bank. Nat. Revere Bank v. Nat. Bank, 172 N.Y. 102, 64 N.E. 799; Midland Nat. Bank v. Brightwell, 148 Mo. 358, 49 S.W. 994, 71 Am. St. Rep. 608; Jefferson County Savings Bank v. Hendrix, 147 Ala. 670, 39 So. 295, 1 L. R. A. (N. S.) 246; Michie on Banks and Banking, vol. 2, § 156.

Counsel for defendant argues, and we think correctly, that, as a general rule, after a bank effects the collection of a check, intrusted to it for that purpose, it becomes a simple contract debtor for the amount, less any commission which may be charged. Morse on Banks and Banking, vol. 1 (3d Ed.) § 248; Jockusch v. Lowsey, 51 Tex. 129.

In a consideration of this case, the mind must keep before it the terms of the contract had between plaintiff and defendant, as their contractual relations were not left to custom or general rules, but were founded upon an express contract which provided that plaintiff "should only be held liable when proceeds in actual funds or solvent credits shall have come into its...