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But he will not be liable for its loss if it was transmitted by him for collection to the place of payment with the knowledge of the owner.155 If, however, an unreasonable time is lost in ascertaining and notifying the holder of the loss of a check forwarded by mail, and an opportunity to protect himself is thereby lost, the agent will be liable for his negligence.156 And if an agent, who is liable for the loss of a note, promises to pay the amount, his estate will be liable on such promise.157 The liability of the agent for negligence may, however, be waived by long acquiescence on the part of his principal.158

If a bank acts as principal without disclosing its agency, it will be liable as principal to other parties, notwithstanding a custom of banks not to disclose such agency.159 But where a bank acts as agent both for the drawer and the acceptor of a bill made payable at the bank, and payment is countermanded before maturity by the acceptor, the bank is not liable to the drawer for negligence in not giving notice of such circumstance.160

Presentment and Notice by Agent.

161

§ 1460. Where a bill of exchange is payable at a certain time after date, presentment for acceptance is necessary, as we have seen, and it is the duty of an agent, holding the bill for collection, to present it immediately for acceptance; and he will be liable for negligence if he fails to do so.1 And an agent is liable for negligence if he takes an insufficient acceptance. 162 But it is not negligence to leave a bill for acceptance, and receive it back three days afterwards with the acceptance canceled, the drawer having Stancill v. Gilmore, 6 La. Ann. 763; and an offer to return the note is not an excuse for want of diligence, Livaudais v. Denis, 4 La. Ann. 300.

155 Jacobsohn v. Belmont, 7 Bosw. (N. Y.) 14.

156 Shipsey v. Bank, 59 N. Y. 485.

157 Sandefur v. Mattingley, 16 Ark. 237.

158 Towle v. Stevenson, 1 Johns. Cas. (N. Y.) 110.

159 Canal Bank v. Bank, 1 Hill (N. Y.) 287.

160 Crosse v. Smith, 1 Maule & S. 545.

161 Allen v. Suydam, 20 Wend. (N. Y.) 321.

And see & 569, supra.

162 E. g. by the personal acceptance of the officer of the corporation on which the bill is drawn, Exchange Nat. Bank v. Third Nat. Bank, 112 U. S. 276, 5 Sup. Ct. 141.

in the meantime mislaid the bill, which was called for at its request each day by the agent.163

It is also the duty of a collecting agent to present the instrument for payment, and to protest it, if necessary, so as to charge the indorser.164 And where the bill is not presented for payment at maturity, and the drawer's funds (which were there at that time) are afterwards withdrawn and the drawer becomes insolvent, the agent is held liable for the face of the bill.165. So, if a postdated check is deposited with the bank, on which it was drawn, several days before it is payable, and is not presented until several days after maturity, when the drawer had failed (after depositing in the meantime, and withdrawing again, more than sufficient funds), the bank will be liable to its depositor for negligence in making an insufficient demand.166 So, a bank will be liable if it makes the demand at too late a day, by allowing grace on paper which is not entitled to it; or if it marks a note "Paid" prematurely, and remits a draft in payment, and afterwards recalls the draft and protests the note on its dishonor at a later day.168 But in order to hold an agent for negligently making demand on a wrong day, the negligence should be particularly averred in the pleading.169

. 167

It is sufficient if the agent presents a bill or note according to the usage of the place where it is payable; e. g. by notifying the maker just before maturity in accordance with the usage of the Boston banks. But if a check is presented to the drawee by mail, and the money is lost in consequence by the insolvency of the bank, which gave a bad draft in payment, but would have paid over the counter in cash, the agent has been held to be liable for negligence in Pennsylvania.171 In New York, however, an agent who presents a note

163 Bank of Van Diemen's Land v. Bank of Victoria, L. R. 3 P. C. 526. 164 Steele v. Russell, 5 Neb. 211; Armington v. Light Co., 15 La. 414. 165 Laughlin v. Greene, 14 Iowa, 92. And see §§ 1055, 1056, 1090, 1103, 1105, supra.

166 Especially as it had secured the larger part of the drawer's assets on its own account, Bank of New Hanover v. Kenan, 76 N. C. 340.

167 Durnford v. Patterson, 7 Mart. (La.) 460.

168 Whiting v. City Bank, 77 N. Y. 363.

169 Hough v. Young, 1 Ohio, 504.

170 Warren Bank v. Parker, 8 Gray (Mass.) 221. And see §§ 1106, 1133, 1134, supra.

171 Merchants' Nat. Bank v. Goodman, 109 Pa. St. 424, 2 Atl. 687.

by mailing it to the bank where it is payable, without indorsement and according to the custom of banks there, does not create an agency in the second bank, and is not liable for negligence in receiving a bank check which was afterwards promptly presented by him and dishonored.172 But if an agent receives a draft in payment, and fails to use due diligence in presenting and protesting it, he will be liable to his principal.173

175

Notice by Agent-Damages.

§ 1461. If an agent neglects to give proper notice of dishonor, and the indorser is discharged thereby, he will be liable for the face of the note.174 The law requires no greater diligence in this respect from a collecting agent than from an indorsee or purchaser. If the indorser lives in the same town, and is, therefore, entitled to personal notice, it will be negligence for the collecting bank to give him notice by mail.176 So, it is incumbent upon the agent to give notice of dishonor at the proper time,1 177 and to the proper person. But if the notary is instructed by his indorser to send notice of dishonor to the collecting bank, he will not be liable for failure to give notice to the owner, who indorsed to the bank.17 So, a collecting agent will not be liable for giving notice to a wrong person of the same name as the indorser, if he was guilty of no negligence in the matter, although the indorser was discharged thereby.179 So, he will not be liable for sending notice to the wrong address, on misinformation received, in the holder's absence, from his wife.180 And although it is the duty of an agent to give notice of dishonor, it will be dispensed with by anything constituting an

172 Indig v. Bank, SO N. Y. 100, reversing 16 Hun, 200.

173 Capitol State Bank v. Lane, 52 Miss. 677. And see §§ 1137, 1139, supra. 174 But the holder must prove that the maker was insolvent and the indorser able to pay. Borup v. Nininger, 5 Minn. 523 (Gil. 417). As to the agent's duty in giving notice of dishonor, see §§ 1198, 1236, supra.

175 Farmers' & Mechanics' Bank v. Turner, 2 Litt. (Ky.) 13.

176 Bowling v. Harrison, 6 How. 248.

177 Bank of Washington v. Triplett, 1 Pet. 25. And see §§ 1262, 1268, supra, as to the time for giving such notice.

178 Moore v. Corning, 12 La. Ann. 256. And see § 1240, 1241, supra.

179 Mount v. Bank, 37 Iowa, 457.

180 Bellemire v. Bank, 4 Whart. (Pa.) 105.

excuse for notice.181 A collecting agent must also use due diligence at common law (although not by the law merchant) in collecting collateral securities.182

The measure of damages for which a collecting agent is liable is, in general, the face of the paper, with interest.183 But an agent will be liable only for the amount actually collected by him in a compromise, which was submitted to the principal and accepted by him.184 In Louisiana, where the agent has been guilty of negligence in making a proper demand of payment, the burden is on him to show that no damages were sustained by the holder.185

Payment to Payee.

§ 1462. When a bill or note is payable to order, payment to a holder without indorsement will not be sufficient; 186 especially where the holder does not produce the instrument to be paid.187 If payment is made to the payee, it must be made before indorsement by him.188 And payment made to the payee after transfer to another is of no avail, whether the payment be made before maturity,189 or after maturity,190 even as against a transferee after 181 West Branch Bank v. Fulmer, 3 Pa. St. 399; Van Wart v. Woolley, 3 Barn. & C. 439, 5 Dowl. & R. 374.

182 Lawrence v. McCalmont, 2 How. 426. And he will be liable for negligence if he surrenders a collateral bill of lading on receipt of a draft. National Bank of Commerce v. Merchants' Bank, 91 U. S. 92.

183 First Nat. Bank v. Fourth Nat. Bank, 24 Hun (N. Y.) 241; less commissions agreed on, Wingate v. Bank, 10 Pa. St. 104; Tyson v. Bank, 6 Blackf. (Ind.) 225. But see Mitchell v. Schuert, 16 Mich. 444, to the effect that the actual value of the note, and not its face, is the measure of damages. And see §§ 1198, 1236, supra.

184 Armstrong v. Gilchrist, 2 Johns. Cas. (N. Y.) 424.

185 Miranda v. Bank, 6 La. 744.

186 See §§ 787, 1079, supra. Although after its maturity, Rumsey v. Schmitz, 14 Kan. 542; and notwithstanding that a special indorsement was made by the payee "for collection," Barnett v. Ringgold, 80 Ky. 289.

187 Hannon v. Sullivan, 3 Mo. App. 583

188 Webster v. Lee, 5 Mass. 334.

189 Burhans v. Hutcheson, 25 Kan. 625; First Nat. Bank v. Michael, 96 N. C. 53, 1 S. E. 855; Murphy v. Barnard, 162 Mass. 72, 38 N. E. 29; Bull v. Mitchell, 47 Neb. 647, 66 N. W. 632; Block v. Kirtland, 21 Ark. 393.

190 Capital City Ins. Co. v. Quinn, 73 Ala. 558.

RAND.C.P.-133

So, too,

(2113)

maturity.1

So, payment to a former holder, upon a receipt given with a promise to produce and surrender the bill in a few days, is of no avail against a bona fide purchaser for value before maturity.192

In like manner, although a note is payable to bearer, it cannot be paid to the original holder upon his receipt, after it has been transferred by him.193 So, if a note payable to an agent or bearer is paid to the agent, the payment will be no defense against the principal, if made before maturity and after transfer of the note to the principal.194 So, if a demand note is paid to the payee on his separate receipt, after transfer by him, it will not bind the indorsee. 195 So, payment made to the payee of a note after it has been indorsed for accommodation by a second indorser, and has been taken up by him at maturity, will not bind such indorser.is So, if a renewal note is given to the original payee, after transfer of the original note without the maker's knowledge, the indorsee can bring suit upon the original note, although the renewal was afterwards transferred to him with notice of the circumstances under which it was made.19'

of transfer without indorsement. Loan Ass'n v. Merritt, 112 N. C. 243, 17 S. E. 296. But it is admissible against a subsequent transferee for usurious and illegal consideration. Caswell v. Railroad, 50 Ga. 70. And see $ 693, supra. And an indorsee may lose his right (as against the acceptor of a bill) to object to such payment where he has acquiesced in it for three years, and charged the bill to the payee, and failed to apply his funds to it, although he often had sufficient funds in hand, or to prove it in bankruptcy against the payee. Field v. Carr, 2 Moore & P. 46, 5 Bing. 13. So, he may by his actions have made or held out the indorser as his agent to collect the bill. change Nat. Bank v. Johnson, 30 Fed. 588.

Ex

191 Harpending v. Gray, 76 Hun, 351, 27 N. Y. Supp. 762; Adair v. Lenox. 15 Or. 489, 16 Pac. 182. But see, contra, Haywood v. Seeber, 61 Iowa, 574. 16 N. W. 727.

192 Wilcox v. Aultman, 64 Ga. 544.

193 Enochs v. Therrell, 61 Miss. 178.

194 Mitchell v. Bristol, 10 Wend. (N. Y.) 493.

195 Dorr v. Rowell, 12 N. H. 49.

196 Although he had taken from the payee his note, and retained the note in suit as collateral, and transferred it on the dishonor of the new note, Carr v. Lewis, 20 N. Y. 138.

197 The indorsee taking no title to the renewal so made, Newman v. Henry, 29 Ark. 496.

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