St. Louis Carbonating & Mfg. Co. v. Lookeba State Bank
| Decision Date | 11 February 1913 |
| Docket Number | Case Number: 2400 |
| Citation | 35 Okla. 434,130 P. 280,1913 OK 122 |
| Parties | ST. LOUIS CARBONATING & MFG. CO. v. LOOKEBA STATE BANK. |
| Court | Oklahoma Supreme Court |
¶0 1. BANKS AND BANKING--Collections--Duties of Bank. It is the duty of a bank, which receives commercial paper for collection or other service in connection therewith, to do all reasonable acts necessary to secure its payment and secure the liability thereon of the parties thereto, and if it fails in this duty, and thereby causes loss to its principal, it becomes liable for such loss.
2. SALES--Transfer of Title--Bill of Lading. Where a merchant draws a draft for a part of the purchase price of goods consigned to a customer with notes and mortgage to be executed by him for the balance, and transmits the same, with bill of lading attached, to a bank with instructions to collect the draft and have notes and mortgage executed before delivering the bill of lading, this will be held sufficient evidence of consignor's intention to reserve the title and right of possession until the draft is paid and the papers executed.
3. BANKS AND BANKING--Collections--Negligence-- Measure of Damages. The measure of damages which a principal is entitled to recover of a collecting bank which has been negligent is the actual loss which he has suffered, which prima facie is the amount of the claim which has been placed with said bank for collection, if there is a reasonable probability that the entire debt would have been collected except for the bank's negligence, and the burden is on the defendant to reduce it.
Error from Caddo County Court; B. F. Holding, Judge.
Action by the St. Louis Carbonating & Manufacturing Company against the Lookeba State Bank. Judgment for defendant, and plaintiff brings error. Reversed and remanded, with instructions.
Pruett & Livesay and Gardner & Pickett, for plaintiff in error.
McKnight & Heskett, for defendant in error.
¶1 This case presents error from the county court of Caddo county. On February 18, 1910, plaintiff in error, as plaintiff, filed its petition in the said court against the defendant, in which it was alleged that it was a corporation organized under the laws of the state of Missouri and located in the city of St. Louis in said state; that on the 17th day of March, 1909, plaintiff forwarded by mail to the defendant a certain bill of lading from the plaintiff as consignor to Wade & Hadley, of Lookeba, Okla., as consignee, said bill of lading calling for a soda fountain and supplies, a sight draft on said Wade & Hadley and in favor of plaintiff, in the sum of $ 50, and twenty notes for $ 10 each made payable to plaintiff to be signed by said Wade & Hadley as makers, and also one chattel mortgage upon the merchandise so consigned. Accompanying the notes, chattel mortgage, and bill of lading, was a letter to the said Lookeba State Bank, as follows:
¶2 Plaintiff alleges that the instructions given the said bank in the foregoing letter were not followed, but that, contrary thereto, defendant did not collect said sight draft from the said Wade & Hadley and did not have the said Wade & Hadley execute and deliver the notes and mortgage, and delivered said bill of lading to Wade & Hadley without first collecting the said $ 50 and without securing the proper execution of the notes and mortgage; that, upon the delivery of the said bill of lading to Wade & Hadley by the defendant, the said Wade & Hadley secured the soda fountain and supplies and appropriated the same to their own use and benefit. Plaintiff alleges that, by reason of said negligent and wrongful delivery of the said bill of lading, it had been damaged in the sum of $ 250, for which sum it prays judgment with interest from April 1, 1909, and for costs.
¶3 Defendant answered by general denial, and the cause came on for trial before the court without a jury. Plaintiff established the averments of its petition by the deposition of its president, to which defendant filed a demurrer, which was by the court sustained, and the cause has been lodged in this court for review.
¶4 The question presented is whether the bank, acting in the capacity of agent for the plaintiff, having violated the instructions set out in the above letter, is liable, and, if so, in what amount. We think the rule as to the liability of the bank is well stated in Clark & Skyles on the Law of Agency, sec. 402d, as follows:
"It is the duty of an agent who receives negotiable paper for collection to do all acts necessary to secure and preserve the liability thereon of all the parties prior to his principal; and if he fails in this duty, and thereby causes loss to his principal, he becomes liable for such loss."
¶5 See, also, 2 Bolles on Modern Law of Banking, p. 572 et seq.; Bank of Big Cabin v. English, 27 Okla. 334, 111 P. 386; Chapman v. McCrea et al., 63 Ind. 360; Palmer v. Holland, 51 N.Y. 416, 10 Am. Rep. 616; Hoard v. Garner, 5 Hun 179; Bank of Washington v. Triplett et al., 1 Pet. 25, 7 L. Ed. 37; Tyson v. State Bank of Indiana, 6 Blackf. (Ind.) 225, 38 Am. Dec. 139; Mound City Paint & Color Co. v. Commercial Nat. Bank, 4 Utah 353, 9 P. 709; National Revere Bank v. Nat. Bank of Republic, 172 N.Y. 102, 64 N.E. 799.
¶6 Defendant argues that it is not made liable for the amount of the $ 50 draft by delivery of the bill of lading, for the reason that defendant had no right to retain the bill of lading from Wade & Hadley in accordance with plaintiff's instructions because the goods shipped were in effect delivered to Wade & Hadley on being consigned to them. On this identical proposition the Supreme Court of South Carolina, in the case of Greenwood Grocery Co. v. Canadian County Mill & Elevator Co., 72 S.C. 450, 52 S.E. 191, 2 L.R.A. (N.S.) 79, 110 Am. St. Rep. 627, 5 Ann. Cas....
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