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They were transmitted for collection at different times before maturity by the plaintiff to the defendant in letters describing them by their numbers and amounts, and by the words "Newark Tea Tray Co." They were sent by the defendant to its correspondent, the First National Bank of Newark, inclosed in letters describing them generally in the same way, except that, in two of the letters, they were described as drawn on "W. M. Conger, Sec'y." The drafts were received by the defendant in New York within a day or two of the time of discounting them. They were presented by the First National Bank of Newark to Conger for acceptance, who, except in one instance, accepted them by writing on the face these words: "Accepted, payable at the Newark National Banking Co. WALTER M. CONGER." When the acceptances were taken, the time of payment was so far distant that there was sufficient time to communicate to the plaintiff the form of the acceptance, and for the plaintiff thereafter to give further instructions as to the form of acceptance. The Newark bank held the drafts for payment, but the plaintiff was not advised of the form of acceptance until, on the thirteenth and nineteenth of October, two of them were returned to it by the defendant. At that time the drawers and indorsers were insolvent, but the drawers were in good credit when the drafts were discounted by the plaintiff. The drafts were duly protested for non-payment, but none of them were paid. The Newark Tea Tray Company is a New Jersey corporation doing business in that state, and Walter M. Conger is its secretary. The drafts were represented to the plaintiff by Burchfield, one of the drawers, who offered them for discount, to be "the paper of the Newark Tea Tray Company” drawn against shipments of iron by Rogers & Burchfield to that company, and were discounted as such by the plaintiff. He also represented that Walter M. Conger was the person who examined the shipments of iron and "accepted the drafts," and that they were drawn in this form for the convenience and accomodation of the company. On drafts of Rogers & Burchfield on the "Newark Tea Tray Co.," dated May 4, 1874, May 20, 1874, and June 30, 1874, discounted by the plaintiff, and transmitted for acceptance to the defendant, and by it sent to the same Newark bank, that bank took acceptances from Walter M. Conger individually, without notice to the plaintiff; and Conger, during the time drafts sent by the plaintiff to the defendant, addressed to the "Newark Tea Tray Co." and to “Walter M. Conger, Sec'y Newark Tea Tray Co., Newark, N. J.," were in the hands of the Newark bank to procure acceptance, informed the cashier of the Newark bank that he would not accept these drafts in his official capacity as secretary.

The negligence alleged consists in not obtaining acceptance of the drafts by the Tea Tray Company, or having them protested for non-acceptance by that company, or giving notice to the plaintiff of such non-acceptance, and in failing to give notice to the plaintiff that the company would not accept the drafts, or that Conger would not accept them in his official capacity. The decision of the circuit court proceeded on the ground that, at most, the defendant erred in judgment as to the import of the address on the drafts; that it had no information to qualify or explain such import; that for it to regard the drafts as addressed to Conger in his individual capacity was not a culpable error, because it followed decisions to that effect made by courts of the highest standing in New Jersey and New York and elsewhere; that it exercised intelligent and cautious judgment on the information it had; and that the plaintiff knew who was the intended drawee, as understood between it and the drawers, and ought to have advised the defendant, but failed to do so. 4 Fed. Rep. 20.

The only question presented by the record is that of the sufficiency of the facts found to support the judgment. It is contended by the defendant that its liability, in taking at New York for collection these drafts on a drawee at Newark, extended merely to the exercise of due care in the selection of a competent agent at Newark, and to the transmission of the drafts to such

agent, with proper instructions; and that the Newark bank was not its agent, but the agent of the plaintiff, so that the defendant is not liable for the default of the Newark bank, due care having been used in selecting that bank. Such would be the result of the rule established in Massachusetts, (Fabens v. Mercantile Bank, 23 Pick. 330; Dorchester Bank v. New England Bank, 1 Cush. 177;) in Maryland, (Jackson v. Union Bank, 6 Harr. & J. 146;) in Connecticut, (Lawrence v. Stonington Bank, 6 Conn. 521; East Haddam Bank V. Scovill, 12 Conn. 303;) in Missouri, (Daly v. Butchers' & Drovers' Bank, 56 Mo. 94;) in Illinois, (Etna Ins. Co. v. Alton City Bank, 25 Ill. 243;) in Tennessee, (Bank of Louisville v. First Nat. Bank, 8 Baxt. 101;) in Iowa, (Guelich v. National State Bank, 56 Iowa, 434; S. C. 9 N. W. Rep. 328;) and in Wisconsin, (Stacy v. Dane County Bank, 12 Wis. 629.) The authorities which support this rule rest on the proposition that since what is to be done by a bank employed to collect a draft payable at another place cannot be done by any of its ordinary officers or servants, but must be intrusted to a subagent, the risk of the neglect of the subagent is upon the party employing the bank, on the view that he has impliedly authorized the employment of the subagent; and that the incidental benefit which the bank may receive from collecting the draft, in the absence of an express or implied agreement for compensation, is not a sufficient consideration from which to legally infer a contract to warrant against loss from the negligence of the subagent.

2

The contrary doctrine, that a bank, receiving a draft or bill of exchange in one state for collection in another state from a drawee residing there, is liable for neglect of duty occurring in its collection, whether arising from the default of its own officers, or from that of its correspondent in the other state, or an agent employed by such correspondent, in the absence of any express or implied contract varying such liability, is established by decisions in New York, (Allen v. Merchants' Bank, 22 Wend. 215; Bank of Orleans v. Smith, 3 Hill, 560; Montgomery County Bank v. Albany City Bank, 7 N. Y. 459; Commercial Bank v. Union Bank, 11 N. Y. 203, 212; Ayrault v. Pacific Bank, 47 N. Y. 570;) in New Jersey, (Titus v. Mechanics' Nat. Bank, 6 Vroom, 588;) in Pennsylvania, ( Wingate v. Mechanics' Bank, 10 Pa. St. 104;) in Ohio, (Reeves v. State Bank, 8 Ohio St. 465;) and in Indiana, (Tyson v. State Bank, 6 Blackf. 225.) It has been so held in the second circuit, in Kent v. Dawson Bank, 13 Blatchf. C. C. 237, and the same view is supported by Taber v. Perrot, 2 Gall. 565, and by the English cases of Van Wart v. Woolley, 5 Barn. & C. 439, and Mackersy v. Ramsays, 9 Clark & F. 818. In the latter case, bankers in Edinburgh were employed to obtain payment of a bill drawn on Calcutta. They transmitted it to their correspondent in London, who forwarded it to a house in Calcutta, to whom it was paid; but that house having failed, the bankers in Edinburgh, being sued, were by the house of lords held liable for the money, on the ground that, they being agents to obtain payment of the bill, and payment having been made, their principal could not be called on to suffer any loss occasioned by the conduct of their subagents, between whom and himself no privity existed.

The question under consideration was not presented in Bank of Washington v. Triplett, 1 Pet. 25; for, although the defendant bank in that case was held to have contracted directly with the holder of the bill to collect it, the negligence alleged was the negligence of its own officers in the place where the bank was situated. In Hoover v. Wise, 91 U. S. 308, a claim against a debtor in Nebraska was placed by the creditor in the hands of a collecting agency in New York, with instructions to collect the debt, and with no other instructions. The agency transmitted the claim to an attorney at law in Nebraska. The attorney received the amount of the debt from the debtor in Nebraska, in fraud of the bankrupt law, and paid it over to the agency, but the money did not reach the hands of the creditor. The assignee in bankruptcy having sued the creditor to recover the money, this court (three jus

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tices dissenting) held that the attorney in Nebraska was not the agent of the creditor, in such a sense that his knowledge that a fraud on the bankrupt law was being committed was chargeable to the creditor, on the ground that, the collecting agency having undertaken the collection of the debt, and employed an attorney to do so, the attorney employed by it, and not by the creditor, was its agent, and not the agent of the creditor; and the creditor was held not to be liable to the assignee in bankruptcy for the money. In the opinion of the court it is said that the case falls within the decisions in the abovementioned cases of Reeves v. State Bank, 8 Ohio St. 465; Mackersy v. Ramsays, 9 Clark & F. 818; Montgomery County Bank v. Albany City Bank, 7 N. Y. 459; Commercial Bank v. Union Bank, 11 N. Y. 203; and Allen v. Merchants' Bank, 22 Wend. 215; and it is said that those cases, the first three of which are stated at length, show "that where a bank, as a collection agency, receives a note for the purposes of collection, its position is that of an independent contractor, and the instruments employed by such bank in the business contemplated are its agents, and not the subagents of the owner of the note." The court proceeds to say that those authorities go far towards establishing the position that the collecting agency was an independent contractor, and that the attorney it employed was its agent only, and not in such wise the agent of the defendant, as to make the defendant responsible for the knowledge of the attorney in Nebraska. The court then cites, as a case in point, Bradstreet v. Everson, 72 Pa. St. 124, as holding that, where a commercial agency at Pittsburgh received drafts to be collected at Memphis, and sent them to its agent at Memphis, who collected the money and failed to remit it, the agency at Pittsburgh was to be regarded as undertaking to collect, and not merely receiving the drafts for transmission to another for collection, and as being liable for the negligence of its agent at Memphis. It also cites, as to the same purport, Lewis v. Peck, 10 Ala. 142, and Cobb v. Becke, 6 Adol. & E. 930. It then says that these authorities fix the rule, before stated, on which the decision is rested. So far from there being anything in that case which goes to exonerate the defendant in the case at bar, its reasoning tends strongly to affirm the principle on which the defendant must be held liable. Indeed, its language supports the view that the Newark bank, in this case, would not be liable directly to the plaintiff. If that be so, and the defendant is not liable, the plaintiff is without remedy.

The case of Britton v. Niccolls, 104 U. S. 757, is cited to show that the defendant is not liable. In that case, the defendants, bankers in Natchez, Mississippi, received from the plaintiff, a resident of Illinois, for collection, two promissory notes, dated at Natchez, but not stating any place of payment. They were sent to the defendants, through a banking-house in Bloomington, Illinois, with instructions to collect them, if paid, and, if not, to protest them and give notice to the indorsers. The defendants placed the notes in the hands of a reputable notary in Natchez, to make demand of payment and give notice to the indorsers. It was held that the defendants were not liable for negligence on the part of the notary, whereby the liability of a responsible indorser was released. The negligence consisted in not presenting the notes to the maker at maturity and demanding payment. The maker resided 12 or 15 miles from Natchez, and had no domicile or place of business in Natchez. No information as to his residence was given to the defendants with the notes, and the plaintiff was ignorant of it. All the instructions which the defendants gave to the notary were given on the several days the notes matured, when they handed the notes to the notary, with instructions to demand payment, and, if they were not paid, to protest them and send notice of nonpayment to the indorsers. The notary knew where the maker resided, and that he had no place of business in Natchez; but he inquired for him at three public places in Natchez, and, not finding him, protested the notes for nonpayment, and gave notice to the indorsers. The defendants had inquired at

Natchez as to the residence of the maker, but had not learned it, and had sent notices to him, through the post-office there, of the amount and date of maturity of the notes a reasonable length of time in advance. On these facts, it is apparent that the only question raised was as to the liability of bankers, in Natchez, in respect to a note sent to them for collection, dated at Natchez. and not payable at any specified place there or elsewhere, for the negligence of a public notary there. The suit was not against the banking-house in Bloomington, which was only the agent to transmit the notes to the defendants for collection. The opinion of the court states the question to be as to "the liability of the collecting bankers for the manner in which the notary to whom the notes are delivered for presentment and protest discharges his duty." The court says: "The notes being dated at Natchez, the presumption of law, in the absence of other evidence on the subject, is that that was the place of residence of the maker, and that he contemplated making payment there. The duty of the bankers, as collecting agents, was, therefore, to make inquiry for his residence or place of business in that city, and, if he had either, to make there the presentment of the notes, but, if he had neither, to use reasonable diligence to find him for that purpose." The court then refers to the case of Allen v. Merchants' Bank, 22 Wend. 215, in the court of errors of New York, as declaring the doctrine that a bank receiving paper for collection is responsible "for all subsequent agents employed in the collection of the paper," and states that, though that decision has been followed in New York, and its doctrine has been adopted in Ohio, it has been generally rejected in the courts of other states. The case of Dorchester Bank v. New England Bank, 1 Cush. 177, is then cited as holding that, if a bank acts in good faith in selecting a suitable subagent at the place where the bill is payable, it is not liable for his neglect; and the opinion states that this doctrine has been followed in the supreme courts of Connecticut, Maryland, Illinois, Wisconsin, and Mississippi.

The court, however, does not adopt either of these views, or rest the decis- & ion of the case before it on the latter view; for, it proceeds to say: "In*the New York case, in the court of errors, it was conceded that the general liability of the collecting bank might be varied and limited by express agreement of the parties, or by implication arising from general usage, and, in some of the cases in other states, proof of such general usage of bankers in the employment of notaries was permitted, and a release thereby asserted from liability of the bank for any neglect by them." The court then states that there was in the case no proof of any general usage of bankers at Natchez as to the employment of notaries public in the presentment and protest of notes left with them for collection. But, as there was a statute of Mississippi, passed in 1833, authorizing notaries to protest promissory notes, and requiring them to keep a record of their notarial acts in such cases, and making the record admissible in evidence in the courts as if the notary were a witness, and, as the courts of that state had held, (Tiernan v. Commercial Bank, 7 How. (Miss.) 648; Agricultural Bank v. Commercial Bank, 7 Smedes & M. 592; Bowling v. Arthur, 34 Miss. 41,) under that statute, that it was a part of the duty of the notary, when protesting paper, to give all notices of dishonor required to charge the parties to it, and that a bank receiving commercial paper, as an agent for collection, properly discharged its duty, in case of non-payment, by placing the paper in the hands of such notary, to be proceeded with in such manner as to charge the parties to it, and that the bank was not liable in such cases for the failure of the notary to perform his duty, the court says that, "judged by the law of Mississippi," the defendants "discharged their duty to the plaintiff when they delivered the notes received by them for col lection to the notary public, " and adds, “what more could they have done, as intelligent and honest collecting agents, desirous of performing all that was required of them by the law, ignorant as they were of the residence or place of business of the maker of the notes, and having unsuccessfully made dili.

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gent inquiry for them?" It further says: "The notary was not, in this matter, the agent of the bankers. He was a public officer, whose duties were prescribed by law, and when the notes were placed in his hands, in order that such steps should be taken by him as would bind the indorsers if the notes were not paid, he became the agent of the holder of the notes. For any failure on his part to perform his whole duty, he alone was liable." On these grounds the court held that the defendants were not guilty of negligence, and were not liable for the negligence of the notary. The decision was not placed on any general rule of commercial law, but rested on the fact that the notary was a public officer, with duties prescribed by statute, and has no application to the case at bar. No reference was made to the case of Hoover v. Wise, nor any suggestion that the views stated in the opinion in that case were doubted or dissented from. There is, in the case at bar, no negligence of a notary, or of a public officer, or of any person whose duties or functions are prescribed by statute; and the question of the liability of the defendant is to be determined on principles not involved in the actual decision in Britton v. Niccolls.

The question involves a rule of law of general application. Whatever be the proper rule, it is one of commercial law. It concerns trade between dif ferent and distant places, and, in the absence of statutory regulations, or spe cial contract, or usage having the force of law, it is not to be determined ao cording to the views or interests of any particular individuals, classes, or localities, but according to those principles which will best promote the general welfare of the commercial community. Especially is this so when the question is presented to this tribunal, whose decisions are controlling in all cases in the federal courts. The agreement of the defendant in this case was to collect the drafts, not merely to transmit them to the Newark bank for collection. This distinction is manifest; and the question presented is whether the New York bank, first receiving these drafts for collection, is responsible for the loss or damage resulting from the default of its Newark agent. There is no statute or usage or special contract in this case, to qualify or vary the obligation resulting from the deposit of the drafts with the New York bank for collection. On its receipt of the drafts, under these circumstances, an implied undertaking by it arose, to take all necessary measures to make the demands of acceptance necessary to protect the rights of the holder against previous parties to the paper. From the facts found, it is to be inferred that the New York bank took the drafts from the plaintiff, as a customer, in the usual course of business. There are 11 drafts in the case, running through a period of over three months, and the defendant had previously received from the plaintiff two other drafts, acceptances of which it had procured from Conger, at Newark, through the Newark bank. The taking by a bank, from a customer, in the usual course of business, of paper for collection, is sufficient evidence of a valuable consideration for the service. The general profits of the receiving bank from the business between the parties, and the accommodation to the customer, must all be considered together, and form a consideration, in the absence of any controlling facts to the contrary, so that the collection of the paper cannot be regarded as a gratuitous favor. Smedes v. Bank of Utica, 20 Johns. 372, and 3 Cow. 662; McKinster v. Bank of Utica, 9 Wend. 46, and 11 Wend. 473. The contract, then, becomes one to perform certain duties necessary for the collection of the paper and the protection of the holder. The bank is not merely appointed an attorney, authorized to select other agents to collect the paper. Its undertaking is to do the thing, and not merely to procure it to be done. In such case, the bank is held to agree to answer for any default in the performance of its contract; and, whether the paper is to be collected in the place where the bank is situated, or at a distance, the contract is to use the proper means to collect the paper, and the bank, by employing subagents to perform a part of what it has contracted to do, becomes responsible to its customer. This general principle applies to