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lection. There is recognized, too, in some jurisdictions the right of the collecting bank to take from the person upon whom the collection is, his check, and if the check is collected with due diligence the collecting bank incurs no responsibility, provided it does not surrender the paper,” and one case has so held even where the paper is surrendered." Presentment through the clearing-house has been held to be not negligence where the check or paper went to the bank on which it was drawn. But the owner may waive the default of the bank in collecting something other than money, and claim as owner whatever the bank has obtained for the collection. The collecting bank has no right to accept a partial payment. If the collection is a draft, accompanied by a bill of lading, the bank may surrender the bill of lading upon acceptance of the draft,10 unless it has agreed otherwise," and the burden is upon the drawer to show his instruction. But the fact that the bill of lading is drawn to the drawer and not to the drawee is persuasive evidence of such an instruction from the bill of lading itself." The bank has the right, according to an incorrect doctrine, to employ agents for the owner in making the collection, but it has no right to employ an attorney 15 or to bring suit with

4 Jefferson Co. Bank v. Comm. Nat. Bank, 39 S. W. R. 338.

5 St. Nicholas Bank v. State Nat. Bank, 128 N. Y. 26; Second Nat. Bank v. Cummings, 89 Tenn. 609; Citizens' Bank v. Houston, 98 Ky. 139. See note 7 to § 180, post. 6 Indig v. Nat. City Bank, 80 N. Y. 100.

7 Turner v. Bank of Fox Lake, 3 Keyes, 425.

8 German Am. Bank v. Third Nat. Bank, 5 Dill. 104, Fed. Cas. No. 5359. 9 Lowenstein v. Bressler, 109 Ala. 326.

10 National Bank of Commerce v. Merchants' Nat. Bank, 91 U. S. 92; Woolen v. New York Bank, 12

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Blatchf. 359; Moore v. Louisiana
Nat. Bank, 44 La. Ann. 99. See
Commercial Bank v. Railway Co.,
160 Ill. 401.

11 See cases last cited.

12 Second Nat. Bank v. Cummings, 89 Tenn. 609. See Addendum. 13 Case last cited; and see Security Bank v. Suttgen, 29 Minn. 363.

14 Planters' Bank v. First Nat. Bank, 75 N. C. 534; Dorchester Bank v. New England Bank, 1 Cush. 177. And see § 181, post.

15 Ryan v. Manufacturers' Nat. Bank, 9 Daly, 308; Crow v. Mechanics' Bank, 12 La. Ann. 692; Freeman v. Citizens' Nat. Bank, 78 Iowa, 150.

out previous instruction. The bank may also receive payment before maturity of the debt to be collected."7

§ 177. Liability of the bank in making collection.— The bank may incur a liability to the person from whom it collects. For example, a bank collected the amount of a note from the maker and delivered to him the wrong note, returning the right note to the holder, who collected it again from the maker. The maker at once returned the wrong note which had been given to him by the bank, and demanded the amount paid. The bank was compelled to pay, although during the interval the indorsers upon the latter note had become discharged and the maker was insolvent.' But the collecting bank is not the agent of the person from whom it collects, except when the paper is payable at that bank; and hence he cannot sue the bank for misappropriating the proceeds of the collection.2

$178. When collection complete.- As we have heretofore seen,' the collection does not become complete until the collection is made by the bank crediting to the owner the money realized as so much cash. This result may be arrived at either by the collecting bank receiving the money or re

16 If so instructed it must do so. Finch v. Karste, 97 Mich. 20.

17 Bliss v. Cutler, 19 Barb. 9. 1 Andrews v. Suffolk Bank, 12 Gray, 461. So as to raised paper. National Bank of Commerce v. Manufacturers' Bank, 122 N. Y. 367. But not liable where it acted as agent and has paid over proceeds by crediting. National Park Bank v. Seaboard Bank, 114 N. Y. 28; United States v. American Ex. Nat. Bank, 70 Fed. R. 232. If the bank has not paid the proceeds it may correct the mistake. Birmingham Nat. Bank v. Bradley, 103 Ala. 109.

2 Smith v. Essex Co. Bank, 22

Barb. 627. But one case holds that the drawee who gives a check to a collecting bank may sue it for failure to make timely presentment where he pays the collection again. Morris v. Eufala Nat. Bank, 106 Ala. 383.

1 See § 133, ante.

2 See § 133, ante, and Moore v. Meyer, 57 Ala. 20. This is as between the owner and the primary bank. But as between the payer and the owner the collection is complete when he makes payment to the collecting bank, whether it is the primary bank or not.

ceiving credit from another bank.3 If the collecting bank received something else than cash and credits the amount received as so much cash, the transaction is complete as to the owner of the collection. The collecting bank becomes liable to him as for so much money deposited. But the owner may claim the check or draft taken by the collecting bank as his own, a fact which has already appeared. If, however, the holder has instructed the collecting bank not to credit him upon collection, but to hold the amount and notify him so that he might withdraw it, some courts recognize that the holder becomes a special depositor, not a general creditor; and in reason this is the proper rule.' But where no specific instruction has been given or special agreement made, and where no special course of dealing has been had authorizing a different conclusion," the proceeds, as soon as collected and deposited to the credit of the owner of the paper, become a general deposit in the bank," but not until then.12 Being then a general deposit, it is subject to all rights which the bank has upon deposits by way of lien, although the bank had a lien upon the paper before.13

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3 Corn Ex. Bank v. Farmers' Nat. tion was to collect and remit. PeoBank, 118 N. Y. 443; Howard v. ple v. Merchants' Bank, 78 N. Y. Walker, 92 Tenn. 452; Briggs v. 269. The bank becomes merely a Central Bank, 89 N. Y. 182. substituted debtor.

4 National Comm. Bank v. Miller, 77 Ala. 168. And see § 176, ante. 5 See § 176, ante, note 5.

6 In re Johnson, 103 Mich. 109; State v. State Bank, 42 Neb. 896.

7See § 133, ante. This results from the fact that the question of special deposit or general deposit is either one of mere presumption or of actual agreement. If there is an actual understanding resulting from an instruction given, that controls any presumption that would otherwise arise. If, however, the instruction is to collect and hold until called for, a general deposit results, as it would if the instruc

8 Such instructions govern. See notes 6 and 7 to this section. 9 See last note.

10 See § 133, ante.

11 Anheuser-Busch Ass'n v. Clayton, 56 Fed. R. 759, 13 U. S. App. 295; In re Bank of Madison, 5 Biss. 515. See § 133, ante.

12 Evansville Bank v. Germ. Am. Bank, 155 U. S. 556; Levi v. National Bank, 5 Dill. 104; First Nat. Bank v. Bank of Monroe, 33 Fed. R. 408; First Nat. Bank v. Armstrong, 36 Fed. R. 59. In this latter case the court's holding as to mingling is pure dictum.

13 See § 175, ante. There are nu

§ 179. Liability of the bank for failure.-The collecting bank may be the bank upon which the paper is drawn or another bank. The duties of the banks in such cases are not wholly similar. The collecting bank may itself collect the paper or may send the paper to another bank for collection. It may be guilty, if itself doing the act of collecting, of negligence in presenting the paper or in what it takes for payment, or in taking proper steps to hold the parties liable upon the paper. If the bank, in collecting, finds it necessary to employ a notary, the notary may be guilty of negli gence. The bank to which it sends the paper may be guilty of negligence in collecting, or after collecting may hold the proceeds as against the first bank, or may become insolvent. In all such cases the rules applicable will be examined, and then the forms of action upon such negligence and the measure of recovery will be set forth so far as the decisions upon banking cases are applicable.

§ 180. Liability for its own negligence. The general law applicable to presentment for acceptance and payment, demand, notice of non-payment and protest will be assumed for the present. The matter will be found fully considered under the head of "Exchanges," at section 205, post, et seq. The primary duty imposed upon a bank by taking paper for collection is to present it at the proper time, if presentment is necessary, and to demand payment at the proper time.1 But banking law permits some modification in some jurisdictions to the effect that banking customs may vary the rules otherwise applicable. Thus, the owner of paper has

merous other cases which can be cited in support of the text, and it is believed that no court would now hold otherwise. The principle applies between banks as if the transmitting bank were holder and the corresponding bank the primary collecting agent.

1 Bank of Washington v. Triplett, 1 Pet. 25; McKinster v. Bank of

Utica, 9 Wend. 46; Capitol State Bank v. Lane, 52 Miss. 677; American Exp. Co. v. Pinckney, 29 Ill. 392; Fabens v. Mercantile Bank, 23 Pick. 330. It must follow instructions if any are given (Cent. Ga. Bank v. Cleveland Nat. Bank, 59 Ga. 667), and otherwise it may follow the course of business. Ide v. Bremer Co. Bank, 73 Iowa, 58.

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been held bound by a banking custom to hold the paper for a few days after promise of payment. If no demand for payment be made, the bank makes the paper its own and becomes liable therefor. It will be assumed, in the absence of proof, if the paper is not protested for non-payment, that the drawers are solvent. Ordinarily it will be held for the amount of the paper if it takes something else than money;" yet its own certificate of deposit may be taken for money if such was the custom. Some courts permit the taking of a check as provisional payment, and exonerate the bank if it uses due diligence in collecting the check.' The bank's ignorance of the law is no defense. In addition to making presentation of the paper, the bank must use all the ordinary legal means to secure payment. If it has secured the acceptance of a draft, and fails to present it for payment as required by law, it will be none the less liable.10 It must take proper steps to ascertain the place of residence of the party liable on the paper whom it is seeking to charge." It has no authority to engage an attorney to bring suit,12 yet if so instructed it must do so.13 Being a fiduciary it cannot

2 Sahlien v. Bank, 90 Tenn. 221. A full collection of cases upon this subject may be found in 21 L. R. A. 441. They are generally upheld as against those who know of them and those who ought to be held to have known.

12

Co., 149 Ill. 343. One case, by a divided court, applied this rule to a draft. Indig v. City Nat. Bank, 80 N. Y. 100. But the usual mode of payment is to credit the remitting bank. In the particular case it is difficult to see what difference

3 See cases cited in note 1 to this there would have been between section.

crediting the amount and sending

4 Capitol State Bank v. Lane, 52 the draft. Miss. 677.

5 See § 176, ante.

6 British Mort. Co. v. Tibbals, 63 Iowa, 468. And some courts apply this rule to a check taken. Citizens' Bank v. Houston, 98 Ky. 139. See Second Nat. Bank v. Cummings, 89 Tenn. 609.

See § 176, ante. Contra are Essex Bank v. Bank of Montreal, 7 Biss. 193; Bank of Antigo v. Union Trust

8 Ivory v. State Bank, 36 Mo. 475.

9 Huff v. Hatch, 2 Disn. 63. 10 Mound City Co. v. Comm. Nat.. Bank, 4 Utah, 353.

11 Louisiana Ins. Co. v. Louisiana State Bank, 3 Mart. (N. S.) 610. But if otherwise uninformed may follow the address on note. Chapman v. Union Bank, 32 How. Pr. 95. 12 See § 176, ante, notes 12 and 13. 13 Finch v. Karste, 97 Mich. 20. It

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