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35; Allen v. Suydam, 20 Wend. 321; Walker v. Bank of the State of New York, 5 Seld. 582; Goodall v. Dolley, 1 T. R. 712; Bayley on Bills (2d Am. ed.), 213.

"Moreover, the owner of a draft payable on a day certain, though not bound to present it for acceptance in order to hold the drawer and indorser, has an interest in having it presented for acceptance without delay, for it is only by accepting it that the drawee becomes bound to pay it, and on the dishonor of the draft by non-acceptance, and due protest and notice, the owner has a right of action at once against the drawer and indorser, without waiting for the maturity of the draft; and his agent to collect the draft is bound to do what a prudent principal would do. 3 Kent's Com. 94; Robinson v. Ames, 20 Johns. 146; Lenox v. Cook, 8 Mass. 460; Ballingalls v. Gloster, 3 East. 481; Whitehead v. Walker, 9 M. & W. 506; Walker v. Bank of the State of New York, 5 Seld. 582.

"In view of these considerations, it is well settled that there is a distinction between the owner of a draft and his agent, in that, though the owner is not bound to present a draft payable at a day certain for acceptance, before that day the agent employed to collect the draft must act with due diligence to have the draft accepted as well as paid, and has not the discretion and latitude of time given to the owner, and, for any unreasonable delay, is responsible for all damages sustained by the owner. 3 Kent's Com. 82; Chitty on Bills (13th Am. ed.), 272, 273."

Where a bank receives a collection with instructions, it must discharge its duties, follow the instructions, if reasonable, and exercise reasonable diligence and care. As to what is reasonable diligence, is a question of fact to be determined by the jury.17

Whre the draft is lost through negligence, the measure of damages prima facie is the amount of the bill.18

$271. Bank suing in its own name.

Rule. The statute of the State, where suit is brought, controls. The general rule is, that if the indorsement upon the instrument is in blank, the bank can sue in its own name. The blank indorsement implies title to the instrument.

17 National Bank v. City Bank,

18 Allen r. Suydam, 20 Wend. 319. 103 U. S. 668.

The rule is carried further in many of the States and it is held that the bank as an "indorsee for collection " may sue in its own name.

The States of California, Rhode Island, Oregon, Georgia, Nebraska, Missouri, Illinois, Tenessee, Florida, Michigan, and New York hold that a transfer of a note to a bank for collection gives it such an ownership thereof that it can sue the maker in its own name.

The States that have adopted the new negotiable instrument laws enlarge the rule and confer upon the bank receiving collections, the right to sue in its own name upon a restrictive indorsement.

Where a statute provides that an action shall be prosecuted in the name of the real party in interest, an agent cannot be for the purpose of collection, the real party in interest.

In the State of California, the code provides that every action must be prosecuted in the name of the real party in interest, except that an executor or administrator or trustee of an express trust or person expressly authorized by statute, may sue without joining with him, the persons for whose benefit the action is prosecuted.

A real party in interest is defined by the court, in the case of Giselman v. Starr, 106 Cal. 651, as follows:

The court says:

"But where the plaintiff shows such a title as that a judgment upon it satisfied by defendant, will protect him from future annoyance or loss; and where, as against the party suing, defendant can urge any defenses he could make against the real owner, then there is an end of the defendant's concern and with it of his right to object; for, so far as he is interested, the action is being prosecuted in the name of the real party in interest."

In the case of Lanier v. Nash, 121 U. S. 404, it is held that a bank holding a note and mortgage as trustee for collection for another, may sue to foreclose in its own name.

For a leading case denying the right of a bank to sue in its own name, see First Nat. Bank of Evansville v. Fourth Nat. Bank of Louisville, 56 Fed. Rep. 967.

The court says, in discussing the question that the authorities are decidedly in favor of the law as given, but under special circumstances as where delay to bring suit (the collecting bank being the indorsee) would operate to discharge a surety, and there was not time to wait for advises from the owner of the paper, it would be the duty of the collecting bank to bring suit.

§ 272. When bank may renounce its authority to collect.

A bank is not permitted to renounce its authority or refuse to make a collection after the collection has been received and accepted by it from the owner.

The bank must take all the steps necessary and imposed upon it by law to enforce the collection.

A draft, however, which has been by the collecting bank, presented for acceptance after dishonor, may be returned to the owner within a reasonable time, and the act will be considered and construed as a renunciation of authority and the bank will be relieved of liability. But the return of the instrument must be done promptly.

The retention of a dishonored draft for any length of time, which, during the time, if in the hands of the owner, collection could have been made, would make the bank liable for the loss sustained.

In the case of Paint Company v. National Bank, 4 Utah, 353, where:

"The defendant bank received from the plaintiff, for collection, a sight draft on B. & S., the draft was accepted and the plaintiff notified thereof; the defendant, without further notification or taking any steps to collect the draft, held it for forty-seven days and then returned it as uncollectible. During all this time B. & S. were known by defendant to be insolvent, but had property worth more than the amount of the draft which was covered by an invalid deed of trust.

"Two days after the return of the draft, B. & S. made an assignment for the benefit of creditors to L. The vice-president and a director of the defendant, preferring a debt due defendant; held, that defendant was guilty of such neglect of duty in respect to the draft as to render it liable for the amount thereof."

The rule fixing the liability, attaches to the bank when it receives the collection; if received and before any loss may occur to the owner, it may renounce its authority by an immediate return of the collection.

If, however, the bank receives the collection, and undertakes with its depositor to collect for him the collection, and, upon indorsement thereof by the owner, the bank gives him credit for the amount upon his pass-book, it cannot then arbitrarily return the draft but must use reasonable diligence to collect the same.

The credit and entry in the pass-book operates as a closing of the transaction and implies a contract upon the part of the bank to make the collection.20

§ 273. Duty of collecting bank - Care - Diligence.

The general rule is again stated that the bank in receiving a collection must use ordinary care and diligence toward its collection.

The diligence and care required depends largely upon the circumstances arising in each case.

A bank may contract against liability for negligence of its agents or correspondents, especially so if the agent or correspondent is known to and accepted by the owner of the collection. But this rule is not good where the bank selects a correspondent without the consent or knowledge of the owner that proves to be irresponsible and incompetent.

When the collecting bank assumes the responsibility, its duty is to employ responsible correspondents.21

The Supreme Court of the State of Illinois, in the case of Fay v. Strawn, 32 Ill. 295, has held that a bank has the right to stipulate against ordinary liabilities of collecting paper.

The opinion of the court is very interesting and instructive upon this question.

Opinion of the Court.

"It is insisted that the finding of the jury is clearly against the weight of the evidence, and that the court below erred in not granting a new trial. The witness, Fay, testified that appellants, when first applied to, positively refused to undertake 20 Kirkham v. Bank of America, 165 N. Y. 132.

21 Fay v. Strawn, 32 Ill. 295.

the collection of the draft. That when they were applied to a second time for the same purpose, they only agreed to send the draft forward, upon the condition that they were to incur no liability. That it was agreed it should be sent to Burch & Co., for presentation, and when paid to be sent to appellants by express. That the draft was thus sent with these instructions. This evidence stands uncontradicted by any other testimony in the record. It was, however, attempted to destroy its force by proving the usual course of business of this and other banks of Ottawa. And much stress was placed upon the fact that when collected, Burch & Co. placed the money to the credit of appellants.

"If a special agreement was entered into at the time, the usage of this or other banking-houses could not in the least affect the liability of appellants. Proof of usage can only be received to show the intention or understanding of the parties in the absence of a special agreement. The parties have the right to stipulate against the ordinary liabilities of the business, and appellants did clearly provide by express agreement against any supposed liability growing out of their undertaking. When the draft was sent forward by appellants to Burch & Co., in accordance with the agreement, they became the agents of appellee for the collection of the money. We are unable to see anything in the evidence that overcomes Fay's testimony.

"It appears from appellant's letter remitting the draft to Burch & Co., that they gave directions to collect and at once to send the money by express, as it had been agreed between appellants and appellee.

The clerk of Burch & Co. testified that when the money was collected it was by mistake passed to the credit of appellants and against their instructions. Nothing can be inferred against appellants from this act, done without their sanction or consent. And it will be remembered it was not by their agents, but those of the appellee.

It is also urged that appellants were guilty of negligence in sending the draft to an irresponsible banking-house for collection. The evidence shows that in Chicago, where Burch & Co. did business, their character for solvency was good. It, however, appears that Warner had suspicions of their solvency

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