Opinion
No. 29593.
December 14, 1931. Suggestion of Error Overruled January 11, 1932.
1. BANKS AND BANKING.
Depositor's direction in letter to send check direct justified bank's interpretation that depositor desired check sent direct to drawee.
2. BANKS AND BANKING.
Collecting bank receiving check on another bank from drawee of check deposited became obligated to present check for payment within reasonable time.
3. BANKS AND BANKING.
Where collecting bank received check in payment of deposited check on Saturday, presentation on Monday was within reasonable time.
4. BANKS AND BANKING.
Collecting bank had no duty to deal with check deposited as if drawee bank were about to fail because financial conditions were bad.
5. BANKS AND BANKING.
That depositor requested that check be sent direct to drawee did not put on collecting bank duty of dealing with check as if drawee were about to fail.
APPEAL from circuit court of Hinds county. HON.W.H. POTTER, Judge.
Alexander Alexander, of Jackson, for appellant.
It is well settled that a customer who selects a bank with which to transact business is charged with knowledge of its bank's customs and usage, and is held to deal with such bank with regard to such usages.
Bank v. Triplett Neale, 7 L.Ed. 41; Planters Bank v. Markham et al., 5 How. 397; Morse, Banks Banking (6 Ed.), section 9; Harper v. Calhoun, 7 How. 203, 215; Cohea v. Hunt, 2 S. M. 227; Security, etc., Savings Bank v. So. Trust Commerce Bank, 241 P. 945; Turner v. The Bank of Fox Lake, 3 Keyes (N.Y.) 420; Cattaruza v. First National Bank of Williamson, 146 S.E. 393 (1929).
The rule of due diligence, is as follows: "Where the payee's check is on a bank which is located in the town or city in which the payee lives, the check should be presented for payment within banking hours on the day following its receipt."
Magee on Banks Banking, page 343.
Where custom as to handling and collection of drafts by banks as shown by evidence was valid, notorious, and generally known, one depositing a draft was charged with knowledge of it, and presumed to have dealt with reference to it without any showing that he had notice of it, and evidence thereof was properly admitted when it was not attacked as unreasonable.
Humble Oil Refining Company v. Wichita State Bank T. Co., 11 S.W.2d 644.
One making bank agent for collection of check or draft is charged with knowledge of general custom of banks to accept drawee bank's draft or check instead of money.
U.S. Fidelity Guaranty Co. v. Forest County State Bank, 227 N.W. 27.
The rule is, that where the payee or holder is in the same town where the bank is located, the check should be presented the next secular day after it is received and during banking hours.
Magee on Banks Banking (3 Ed.), page 509.
Appellee's special instructions to appellant in regard to handling the deposited item constitute the Yazoo City Bank the agent of appellee.
Virginia Carolina Chemical Company v. Steen, 55 So. 47.
May, Sanders, McLaurin Byrd, of Jackson, for appellee.
Evidence of usage is not admitted to contradict or vary express stipulations restricting or enlarging the exercise or enjoyment of the customary right. Omissions may be supplied in some cases, by the introduction of such proof, but it cannot prevail over or nullify the express provisions and stipulations of the contract. So, where there is no contract, usage will not make one, as it can only be admitted either to interpret the meaning of the language employed by the parties in the absence of express stipulations, or where the meaning is equivocal or obscure.
Thompson v. Riggs, 18 L.Ed. 704; Bliven v. N.E. Screw Co., 23 How. 431 ( 64 U.S. 513); Add. Con., 853; Greenl. Ev., Sec. 292.
Usage contrary to law, or inconsistent with the contract is never admitted to control the general rules of law or the real intent and meaning of the parties.
The Reeside, 2 Summ. 569; Dykers v. Allen, 7 Hill, 499; Woodruff v. Merch. Bank, 25 Wend. 674; Wheeler v. Newbould, 16 N.Y. 395; Bowen v. Newell, 8 N.Y. 194; 23 R.C.L., pages 1404 and 1405; Dewitt v. Berry, 33 L.Ed. 896; Moore v. U.S., 49 U.S. (L.Ed.) 428.
When commercial paper is delivered to a banker for collection the banker becomes the customer's agent to make collection, and he undertakes the duty of an agent for all the purposes of making the collection. As in case of other collecting agents, the bank is required to use ordinary or reasonable diligence and care in making the collection; and if from its failure to do so loss results to its customer it is liable to him in damages therefor.
3 R.C.L., page 610.
Where a bank receives a check in payment thereof a delay of presentment for a day, or for any time beyond that within which, with proper and reasonable diligence, it can be presented, is at the peril of the collecting bank.
3 R.C.L., p. 618; Morris v. Eufaula National Bank, 25 So. 499, 82 Am. St. Rep. 95; 2 Morse on Banks and Banking, sec. 240; 2 Daniel on Negotiable Instruments, sec. 1590.
The collecting bank is the agent of the depositors of the claim for collection. It is the duty of the collecting bank to collect in money.
Bank of Shaw v. Ransom, 73 So. 280.
A bank taking the draft of another person and surrendering to the other person a check or draft instead of the money makes the check so taken by it in lieu of the draft its own and if it is not paid the loss falls on the bank and not on the depositor.
Capital State Bank v. Lane, 52 Miss. 677; Noble v. Daughton, 3 L.R.A. (N.S.) 1167.
The appellee recovered a judgment in the court below against the appellant for damages sustained by her because of the alleged negligence of the appellant in failing to collect a check which she deposited with it for collection. The case was tried by the court without a jury.
The case disclosed by the record is, in substance, as follows: On December 12, 1930, the appellee wrote the appellant as follows: "Enclosed find check for one thousand seven hundred fifty dollars on Savings Department of the Citizens Bank Trust Company of Yazoo City, Mississippi, which I kindly ask that you put in for collection upon receipt and place to my credit in your bank as attorney for R.G. Fowler. Also send me a check book, as this money is placed with me to loan and I will have to check upon the same at various times."
Because of a clerical error in the check referred to and inclosed in this letter, the appellee drew another on the same bank, and mailed it to the appellant, inclosed in the following letter: "Since sending you the check for one thousand seven hundred fifty dollars I have placed one hundred fifty dollars of this money so now send you a check for one thousand six hundred dollars. I also send signed card with my address. Thanking you to send this check direct, and send me a deposit slip."
This check was received by the appellant on Thursday, December 18, 1930, was placed to the appellee's credit, and forwarded by the appellant direct to the Citizens' Bank Trust Company of Yazoo City for collection and remittance to it. The check was received by the Citizens' Bank Trust Company the next day, December 19th, which charged the amount thereof to R.G. Fowler, whose name was signed thereto by the appellee as his attorney in fact. On the same day, December 19th, the Citizens' Bank Trust Company mailed a check to the appellant at Jackson, Mississippi, its place of business, for one thousand six hundred dollars, less a collection of the fee of one dollar and sixty cents, on the Merchants' Bank Trust Company of Jackson, Mississippi. This check was received by the appellant on the morning of the next day, Saturday, December 20th. All banks in the city of Jackson close at noon on Saturday, and the check was not presented to the Merchants' Bank Trust Company for payment until Monday morning, December 22, 1930. The Merchants' Bank Trust Company declined to pay the check for the reason that the Citizens' Bank Trust Company had that day gone into liquidation, and its affairs had been taken over by the State Bank Department. The Citizens' Bank Trust Company then had on deposit with the Merchants' Bank Trust Company funds more than sufficient for the payment of the check. These facts appear from the record without material conflict, so that the only question for decision is: Does it appear therefrom that the appellant was negligent in not collecting the check on the Citizens' Bank Trust Company, deposited with it by the appellee?
According to the appellee, the appellant was negligent in two particulars: First, in forwarding the check direct to the Citizens' Bank Trust Company; and second, in not presenting the check of the Citizens' Bank Trust Company on the Merchants' Bank Trust Company to the latter bank on the day that it was received by the appellant.
When a bank accepts for collection a check payable in a place other than that in which the bank is located, it is charged with the duty of exercising due care in the selection of the person to present the check to, and collect it from, the drawee thereof, and the American courts almost uniformly hold that the person on whom the check is drawn is not a suitable person for its collection. Planters Merc. Co. v. Armour Packing Co., 109 Miss. 470, 69 So. 293; 1 Morse on Banks and Banking (6 Ed.) 582. But this rule has no application here, for the appellee requested the appellant to forward the check direct to the drawee, the Citizens' Bank Trust Company, thereby designating that bank as her agent to collect the check, and remit the proceeds thereof to the appellant.
The appellee testified that by the words "send this check direct" in her second letter to the appellant, she did not mean for it to be sent to the bank on which it was drawn, but direct to Yazoo City, to another bank there. That she in fact so intended may be accepted as true; but unfortunately she selected words which seem to have a different meaning, and which the appellant was justified in interpreting to mean that she desired the check to be sent direct to the Citizens' Bank Trust Company.
When the appellant received the check on the Merchants' Bank Trust Company from the Citizens' Bank Trust Company, the bank designated by the appellee for the collection of the check deposited by her with the appellant, the duty of the appellant to collect it was the same, and no more, than it would have been had it received the check direct from the appellee. When a bank receives a check on another bank or person for collection, it thereby becomes obligated to the person for or from whom it was received, to present the check to the drawee for payment within a reasonable time, which, at common law, "is until the close of banking hours on the business day next following that on which the bank comes into possession of the check." 1 Morse on Banks and Banking (6 Ed.) 586; 3 R.C.L. 62. As Lord Ellenborough long ago said, in Rickford v. Ridge, 2 Camp. 537, 170 Eng. Rep. (Reprint) 1243: "The rule that the minute a cheque is received by the post it should invariably be sent out for payment, would be most inconvenient and unreasonable. . . . Different posts arrive at different hours; but it would be impossible to have clerks constantly ready to carry out all the bills and cheques that may arrive in the course of the day; nor, if it were possible, is it requisite that all other business being laid aside, parties should devote themselves to the presenting of cheques. The rule to be adopted must be a rule of convenience; and it seems to me to be convenient and reasonable that cheques received in the course of one day should be presented the next."
The day following the receipt of this check by the appellant being Sunday, its presentation on Monday was within the foregoing rule.
Counsel for the appellee say, in effect, that this rule has no application here, for, in the language of counsel: "As the record shows, financial institutions in Mississippi were failing in large numbers, and, coupled with the instructions of the appellee to the Capital National Bank, this general condition, well known to the bank, and everyone else in the state of Mississippi, ought to have caused them to use extraordinary diligence, which they failed to do."
The fact that financial conditions are bad, and a number of banks have failed, does not put on a collecting bank the duty of dealing with a check on another bank, deposited with it for collection, as if the drawee bank was about to fail; and neither was such duty imposed on the appellant by the appellee's request that the check be sent direct to the drawee bank. The appellee assumed the risk of what here happened when she directed a check, deposited by her with appellant, to be sent direct to the drawee bank.
Reversed and cause dismissed.