O'Leary Bros. v. Abeles

57 S.W. 791, 68 Ark. 259, 1900 Ark. LEXIS 41

• Court: Supreme Court of Arkansas
• Decided: June 9, 1900
• Status: Published

Opinion

Wood, J.

When the holder of a cheek delivers same to a bank as his bailee for collection, and the bank sends the check by mail to the drawee, who lives at a distance, and the drawee, upon receipt of the check, having money on deposit to the credit of the drawer, indorses the cheek “Paid,” and after-wards delivers same to the drawer, as between the payee or holder and the drawer, the check is paid; for, if the holder chooses this method of collection, and the bailee' bank, instead oí receiving the cash, takes, for the amount of the check, exchange which turns out to be worthless, the loss which the holder thereby sustains is regarded as the result of his own negligence, or that of the bank holding same for collection. This doctrine applies here. Anderson v. Rodgers, 27 L. R. A. 248, and authorities there cited; also, note to same; 1 Dan. Neg. Inst. 328a; 3 Am. & Eng. Enc. Law, (2d Ed.) 804; Bolles on Banks & Bankers, § 295; Anheuser Busch Brewing Assn. v. Clayton, 13 U. S. A. 295; Wagner v. Crook, 167 Pa. St. 259; Zane on Banks & Banking, § 171 et seq., 188; Minneapolis Sash & Door Co. v. Metropolitan Bank, 44 L. R. A. 504. See, also, Loth v. Mothner, 53 Ark. 116. See, contra, McIntosh v. Tyler, 47 Hun, 99; Indig v. Bank, 80 N. Y. 100; Briggs v. Bank, 89 N. Y. 182. The rule, it seems, is not affected by any usage or custom where such methods of collection obtain. Minneapolis Sash & Door Co. v. Bank, 44 L. R. A. 504, and authorities cited.

2. There is no rule of law that would make Abeles liable for the loss resulting from the transaction in proof because of his being a director in the drawee bank. He is not shown to have been negligent in the discharge of any of his duties as director, whereby the loss was occasioned. He is not charged with fraud, but the proof shows affirmatively that he acted ip good faith with his creditor. He believed the bank solvent, as shown by his depositing money therein on the very day his check was presented for payment. The bank was open and doing business -on that day. Certainly, there was nothing in his duties as director that would charge him with the knowledge that a check drawn by him on funds in the bank to his credit would not be properly presented for collection, and collected in money, instead of worthless exchange. Good faith only is required of him in matters of this kind. Hayes v. Beardsley, 136 N. Y. 299. See, also, Briggs v. Spaulding, 141 U. S. 132.

Affirm.

Battle, J., did not participate.