Fisk, J.
This is one of those unfortunate controversies wherein one of two innocent persons must suffer for tbe default of a third person, and the crucial question for decision is, Whose agent, in the transaction between the parties, was such third person, plaintiff’s or defendant’s ?
The facts necessary to a correct understanding of the points involved are as follows:
On, and prior to December 18, 1909, plaintiff, a resident of Springfield, Illinois, being the owner in fee of the real property described in the complaint, a quarter section of land in Nelson county, this state, entered into an agreement to sell such land to the defendant Olson, for the sum of $4,500. Such contract was entered into through correspondence, the plaintiff having written to Olson a few days prior to December 18th, offering to sell the land to him at said price, the acceptance of which offer was communicated to plaintiff through a letter, Exhibit 1, written by one Thomas J". Baird to plaintiff, dated December 18th, as follows:
We are in receipt of your letter of the 13th inst. and herewith inclose you a check for $200, as part payment on the N. W. J, 32-152-60. We also inclose you a warranty deed, which you can execute and have your Elkhart bank send to the People’s State Bank of Lakota and we will take same up. If married you can fill in your wife’s name.
We sold this land to Mr. Olson for $4,500, you to pay us a commission of $100, and Mr. Olson is to deliver your grain in the elevator free, which he will do as soon as possible. There will be $4,200 balance due you on this proposition less abstracting. Send us abstracts of title at once. We inclose you a receipt, which please sign and return to us.
Very respectfully,
Thomas J. Baird.
On receipt of the Baird letter, plaintiff delivered such letter to his local bank at Elkhart, Illinois, and also a duly executed warranty deed of this land running to Olson, and instructed such bank to forward such deed to the people’s State Bank of Lakota, as suggested in Baird’s letter.
On January 6, 1910, the Elkhart bank, through plaintiff’s son as [547]*547cashier, wrote the Thomas J. Baird Investment Company at Lakota as follows:
Gentlemen:—
I am this day forwarding by registered letter to the people’s State Bank of yonr city warranty deed and abstract to the N. W. 1-, 32— 152 — 60, along with sight draft for $4,200 with exchange, advising them to deduct amount of abstracter’s charge for recording the release of mortgage, which is the only item which does not appear on abstract, and otherwise there is nothing against the place whatever.
Inclosed herewith you will also find receipt for $200 for first payment on this land. This deed has been in my possession for several days, with instructions from my father to send it on, but I have been very busy and it has been neglected, which I regret.
Very truly yours,
W. E. Schafer,
Cashier.
And on said January 6th such Elkhart bank also wrote the People’s State Bank of Lakota as follows:
Gentlemen:—
I am handing you herewith at the request of the Thos. J. Baird Inv. Co., warranty deed to the N. W. -J 32 — 152—60, along with the abstract of title thereto and sight draft for $4,200, with exchange.
There is a release of mortgage on record that is not shown on this abstract, the recording of which on this abstract may be deducted from the principal amount, but that is all, as there is nothing else against the place and hasn’t been.
Upon the payment of the above amount, less the abstracting charge of that item, kindly turn the deed and abstract over to parties, and make remittance in New York or Chicago Exchange to me.
Very truly yours,
W. F. Schafer,
Cashier.
Thereafter defendant Olson, acting through Baird, procured a loan,. [548]*548from defendant Lord for tbe sum of $4,000, giving a mortgage as security on this and another quarter of land, and tbe proceeds of sucb loan were deposited by tbe Baird Investment Company in tbe People’s State Bank, and on January 18, 1910, sucb investment company gave its cbeclc payable to tbe order of tbe People’s State Bank for tbe sum of $4,199.20, representing tbe balance of tbe purchase price due plaintiff on sucb deal after deducting certain minor items of expense and tbe $100 commission which plaintiff was to pay Baird, and thereupon tbe People’s State Bank received sucb check and delivered tbe warranty deed aforesaid, and the same was thereafter duly recorded. At tbe time sucb check was given, tbe Tbos. J. Baird Investment Company bad on deposit in tbe People’s State Bank tbe suir of about $8,000. Tbe testimony discloses that sucb check was not charged on tbe books of tbe bank against tbe account of tbe Baird Investment Company, and that tbe bank never remitted to plaintiff or to tbe Elkhart bank for plaintiff, by New York or Chicago Exchange or otherwise, tbe amount of tbe balance due plaintiff on sucb sale. Thereafter, and on tbe evening of January 26th, tbe bank closed its doors, and ever since .has been in tbe bands of tbe state bank examiner, or a receiver appointed by the court in an action pending to wind up its affairs as an insolvent institution.
Plaintiff, by this action, seeks to recover sucb balance from Olson, and be is concededly entitled to recover unless the People’s State Bank was bis agent, and also unless the giving to and acceptance by sucb bank ■of tbe Baird check constituted in law a valid payment to him. Plaintiff bad judgment in tbe lower court, and defendant Olson appeals.
There are but two points involved. First, Was tbe People’s’ State Bank the agent of tbe plaintiff to receive tbe balance due him of sucb purchase price and to malee delivery of tbe deed, or was sucb bank defendant Olson’s agent? And, second, if it was plaintiff’s agent, was tbe payment by check as aforesaid a sufficient payment to bind tbe plaintiff ?
Conceding, for the sake of argument, all that respondent’s counsel claim with respect to tbe authority of Baird to write tbe letter, Exhibit 1, as tbe agent of Olson, and consequently that tbe latter is bound by everything contained therein, still we find ourselves unable to agree .with tbe conclusion of tbe trial court to tbe effect that tbe People’s [549]*549State Bank was Olson’s, and not Schafer’s agent in consummating tbe deal. If tbe bank was Olson’s agent to collect tbe purchase price and to deliver tbe deed, then Olson’s agent Baird dealt with Olson’s agent tbe bank, in closing tbe deal. In other words, it was a one-sided transaction of Olson dealing with Olson, Schafer not being represented at all. Surely it cannot be contended that this important business transaction was consummated, or was to be consummated, except by tbe payment of tbe purchase price and tbe delivery of tbe deed; and bow either could be accomplished in tbe absence of plaintiff in person or through an authorized agent we are unable to understand.
Tbe letter Exhibit 1 contains this language:
Free access — add to your briefcase to read the full text and ask questions with AI
Fisk, J.
This is one of those unfortunate controversies wherein one of two innocent persons must suffer for tbe default of a third person, and the crucial question for decision is, Whose agent, in the transaction between the parties, was such third person, plaintiff’s or defendant’s ?
The facts necessary to a correct understanding of the points involved are as follows:
On, and prior to December 18, 1909, plaintiff, a resident of Springfield, Illinois, being the owner in fee of the real property described in the complaint, a quarter section of land in Nelson county, this state, entered into an agreement to sell such land to the defendant Olson, for the sum of $4,500. Such contract was entered into through correspondence, the plaintiff having written to Olson a few days prior to December 18th, offering to sell the land to him at said price, the acceptance of which offer was communicated to plaintiff through a letter, Exhibit 1, written by one Thomas J". Baird to plaintiff, dated December 18th, as follows:
We are in receipt of your letter of the 13th inst. and herewith inclose you a check for $200, as part payment on the N. W. J, 32-152-60. We also inclose you a warranty deed, which you can execute and have your Elkhart bank send to the People’s State Bank of Lakota and we will take same up. If married you can fill in your wife’s name.
We sold this land to Mr. Olson for $4,500, you to pay us a commission of $100, and Mr. Olson is to deliver your grain in the elevator free, which he will do as soon as possible. There will be $4,200 balance due you on this proposition less abstracting. Send us abstracts of title at once. We inclose you a receipt, which please sign and return to us.
Very respectfully,
Thomas J. Baird.
On receipt of the Baird letter, plaintiff delivered such letter to his local bank at Elkhart, Illinois, and also a duly executed warranty deed of this land running to Olson, and instructed such bank to forward such deed to the people’s State Bank of Lakota, as suggested in Baird’s letter.
On January 6, 1910, the Elkhart bank, through plaintiff’s son as [547]*547cashier, wrote the Thomas J. Baird Investment Company at Lakota as follows:
Gentlemen:—
I am this day forwarding by registered letter to the people’s State Bank of yonr city warranty deed and abstract to the N. W. 1-, 32— 152 — 60, along with sight draft for $4,200 with exchange, advising them to deduct amount of abstracter’s charge for recording the release of mortgage, which is the only item which does not appear on abstract, and otherwise there is nothing against the place whatever.
Inclosed herewith you will also find receipt for $200 for first payment on this land. This deed has been in my possession for several days, with instructions from my father to send it on, but I have been very busy and it has been neglected, which I regret.
Very truly yours,
W. E. Schafer,
Cashier.
And on said January 6th such Elkhart bank also wrote the People’s State Bank of Lakota as follows:
Gentlemen:—
I am handing you herewith at the request of the Thos. J. Baird Inv. Co., warranty deed to the N. W. -J 32 — 152—60, along with the abstract of title thereto and sight draft for $4,200, with exchange.
There is a release of mortgage on record that is not shown on this abstract, the recording of which on this abstract may be deducted from the principal amount, but that is all, as there is nothing else against the place and hasn’t been.
Upon the payment of the above amount, less the abstracting charge of that item, kindly turn the deed and abstract over to parties, and make remittance in New York or Chicago Exchange to me.
Very truly yours,
W. F. Schafer,
Cashier.
Thereafter defendant Olson, acting through Baird, procured a loan,. [548]*548from defendant Lord for tbe sum of $4,000, giving a mortgage as security on this and another quarter of land, and tbe proceeds of sucb loan were deposited by tbe Baird Investment Company in tbe People’s State Bank, and on January 18, 1910, sucb investment company gave its cbeclc payable to tbe order of tbe People’s State Bank for tbe sum of $4,199.20, representing tbe balance of tbe purchase price due plaintiff on sucb deal after deducting certain minor items of expense and tbe $100 commission which plaintiff was to pay Baird, and thereupon tbe People’s State Bank received sucb check and delivered tbe warranty deed aforesaid, and the same was thereafter duly recorded. At tbe time sucb check was given, tbe Tbos. J. Baird Investment Company bad on deposit in tbe People’s State Bank tbe suir of about $8,000. Tbe testimony discloses that sucb check was not charged on tbe books of tbe bank against tbe account of tbe Baird Investment Company, and that tbe bank never remitted to plaintiff or to tbe Elkhart bank for plaintiff, by New York or Chicago Exchange or otherwise, tbe amount of tbe balance due plaintiff on sucb sale. Thereafter, and on tbe evening of January 26th, tbe bank closed its doors, and ever since .has been in tbe bands of tbe state bank examiner, or a receiver appointed by the court in an action pending to wind up its affairs as an insolvent institution.
Plaintiff, by this action, seeks to recover sucb balance from Olson, and be is concededly entitled to recover unless the People’s State Bank was bis agent, and also unless the giving to and acceptance by sucb bank ■of tbe Baird check constituted in law a valid payment to him. Plaintiff bad judgment in tbe lower court, and defendant Olson appeals.
There are but two points involved. First, Was tbe People’s’ State Bank the agent of tbe plaintiff to receive tbe balance due him of sucb purchase price and to malee delivery of tbe deed, or was sucb bank defendant Olson’s agent? And, second, if it was plaintiff’s agent, was tbe payment by check as aforesaid a sufficient payment to bind tbe plaintiff ?
Conceding, for the sake of argument, all that respondent’s counsel claim with respect to tbe authority of Baird to write tbe letter, Exhibit 1, as tbe agent of Olson, and consequently that tbe latter is bound by everything contained therein, still we find ourselves unable to agree .with tbe conclusion of tbe trial court to tbe effect that tbe People’s [549]*549State Bank was Olson’s, and not Schafer’s agent in consummating tbe deal. If tbe bank was Olson’s agent to collect tbe purchase price and to deliver tbe deed, then Olson’s agent Baird dealt with Olson’s agent tbe bank, in closing tbe deal. In other words, it was a one-sided transaction of Olson dealing with Olson, Schafer not being represented at all. Surely it cannot be contended that this important business transaction was consummated, or was to be consummated, except by tbe payment of tbe purchase price and tbe delivery of tbe deed; and bow either could be accomplished in tbe absence of plaintiff in person or through an authorized agent we are unable to understand.
Tbe letter Exhibit 1 contains this language: “We also inclose you a warranty deed which you can execute and have! your Elkhart hank send to the People’s State Bcunk of Lakota,.and we will take same up.” It is respondent’s contention that this language amounts to a positive direction from Olson to Schafer to send tbe deed to such bank. We do not thus construe it. Olson, through bis agent Baird, bad no right to dictate where or how the deal should be closed, and of course Schafer knew this. Moreover, we think it manifestly clear that neither party thus construed siich letter, but on the contrary it was intended merely as a suggestion of a convenient method of closing the deal. Schafer was at liberty to either act or refuse to act according to the suggestion, but having adopted and acted on the suggestion by sending the deed to such bank together with a sight draft for the balance of the purchase price, and giving full and explicit instructions to such bank regarding what should be done, we must hold that he thereby made the bank his agent for such purposes. Instead of the bank being thereby “created by Olson an instrumentality for closing the deal,” it was created an instrumentality for such purpose by Schafer. Everything which the bank did or was authorized to do was for Schafer, to wit, the collection of the purchase price and the transmission thereof in the form of New York or Ohicago Exchange to plaintiff, and also the delivery of the deed to Olson. We fail to see how such delivery of the deed could be made except by Schafer personally, or through his duly authorized agent.
In support of their contention that the bank was Olson’s agent, respondent’s counsel cite McMullen v. People’s Sav. & L. Asso. 57 Minn. 33, 58 N. W. 820; Fair v. Bowen, 127 Mich. 411, 86 N. W. 991; [550]*550Dodge v. Tulleys, 144 U. S. 451, 36 L. ed. 501, 12 Sup. Ct. Rep. 728; Kidd v. Cromwell, 17 Ala. 648. The Minnesota case appears, on cursory reading, to squarely support sucb contention, but on careful examination we do not' thus construe it. The statements of Mr. Justice Mitchell tend, we think, to differentiate that case from the case at bar. We quote: “While it is true that the money was payable at defendant’s office on presentation and surrender of the necessary vouchers, and that defendant was not bound to do anything until a demand was made at that place, yet it was competent for the defendant to waive this, and to propose a different method and place of payment; and while defendant, in doing what it did, might have been actuated by considerations of convenience to the plaintiff, yet we think the fair import of its letter to plaintiff was that, if she would send the papers to the bank, defendant would pay the money to her. It is probably fairly inferable that it contemplated making this payment through the medium of the bank (and this is as the plaintiff evidently understood it); but in doing so the bank would be the agent of the defendant. There is nothing in plaintiff’s letter to the bank inconsistent with this idea, or indicating any intention on her part to appoint it her agent for the purpose of collecting or transmitting her money. All there is to it is that plaintiff, assuming that the defendant proposed to use the bank as its medium for the payment of the money, requested it to transmit it at its earliest convenience.” The letter of plaintiff to the bank differs quite materially from that written by the plaintiff to the bank in the Minnesota case, as a comparison will disclose. In the case at bar, as we have before stated, a deed was transmitted to the bank, together with a sight draft for $4,200, with specific instructions to deliver such deed only on payment of such draft, and when paid to remit in a certain manner, clearly proving that plaintiff intended to retain control of such deed, and not to deliver it until the sight draft was paid. The facts in the Michigan case clearly differentiate it from the case at bar, as do the facts in the two other cases cited by respondent’s counsel.
Plaintiff intrusted to the People’s State Bank the completion of the deal, and such bank was clearly Schafer’s agent to receive the purchase price and to deliver the deed, and not Olson’s agent to pay such draft. [551]*551Welge v. Batty, 11 Ill. App. 461; British & A. Mortg. Co. v. Tibballs, 63 Iowa, 468, 19 N. W. 319.
This brings us to the only other point in the case, which is, whether the delivery of the Baird check to the bank on January 18th constituted payment. We think it did. There is no proof that on said date the bank was insolvent, but even if there was, it is not contended that Baird had even the slightest intimation thereof, and at the time such check was tendered to and received by the bank it was, in so far as everyone had reason to believe, except the bank officials, a perfectly solvent institution, and for eight days thereafter it transacted its ordinary banking business. True, such check was not actually charged to Baird’s account on the books of the bank until after the bank examiner took possession, such officer making such charge on the books. But we do not deem this controlling, for it is fair to assume from the record that if Baird had at that time requested the cash on the check it would have been counted out to him, and he could then have passed it back to the cashier in payment of the plaintiff’s draft. This was a needless formality. Neither the law nor business usage exacted any such act on his part. It will be presumed, in the absence of proof to the contrary, that the bank, being at that time a going institution, receiving deposits and paying out moneys in the usual way, had funds on hand with which to pay the checks of its depositors in the usual manner. The fact that on January 26th the bank closed its doors and ceased doing business is no proof of its insolvency eight days prior thereto. We think that the act of the bank, in honoring Baird’s check by receiving and retaining the same and by delivering the deed, operated in law as a payment of the draft. Such check, when thus accepted, was to all intents and purpose the equivalent of cash, and the mere matter of bookkeeping on the part of the bank officials, in entering or neglecting to enter s^^ch transaction on the books of the bank, is not the test as to whether payment was made. On the latter point we invite attention to the case of Nineteenth Ward Bank v. First Nat. Bank, 184 Mass. 49, 67 N. E. 670, where, among other things, the court, in disposing of a similar question, said: “It is true that the proper records were to be made upon the books, but the payment is effected by the acts, and not hy the record, and was valid, even without records. Consequently the question of the subsequent records is not material. So far as re[552]*552spected the plaintiff, the defendant had received the money for the note, and was bound to remit it to the plaintiff.”
As lending support to our views that the transaction of giving the check by Baird, and its acceptance and retention by the bank, together with its delivery of the deed, constituted payment of the draft, we cite the following authorities, some of which are directly in point and others merely by inference: Welge v. Batty, and British & A. Mortg. Co. v. Tibballs, supra; Scott v. Gilkey, 153 Ill. 168, 39 N. E. 265; Francis v. Evans, 69 Wis. 115, 33 N. W. 93; Howard v. Walker, 92 Tenn. 452, 21 S. W. 897; Pinkney v. Kanawha Valley Bank, 68 W. Va. 254, 32 L.R.A.(N.S.) 987, 69 S. E. 1012, Ann. Cas. 1912 B, 115; Winchester Mill Co. v. Bank of Winchester, 120 Tenn. 225, 18 L.R.A. (N.S.) 441, 111 S. W. 248; Harrison v. Legore, 109 Iowa, 618, 80 N. W. 670; Hare v. Bailey, 73 Minn. 409, 76 N. W. 213; Arnot v. Bingham, 55 Hun, 553, 9 N. Y. Supp. 68; Daniel v. St. Louis Nat. Bank, 67 Ark. 223, 54 S. W. 214; Briggs v. Central Nat. Bank, 61 How. Pr. 250; Nineteenth Ward Bank v. First Nat. Bank, 184 Mass. 49, 67 N. E. 670; See also note to Griffin v. Erskine, 9 Ann. Cas. 1193; Morse, Banks & Bkg. § 305; 2 Bolles, Bkg. p. 557.
We have not overlooked the case of State Bank v. Byrne, 97 Mich. 178, 21 L.R.A. 753, 37 Am. St. Rep. 332, 56 N. W. 355, nor the other cases cited by respondent’s counsel. In the Byrne Oase the collecting bank received a demand draft for collection. The drawee of the draft was a depositor in the collecting bank, and when the draft was presented to him for payment he indorsed his acceptance thereon, and in accordance with a prior custom the bank charged such draft to the drawee’s account. The bank failed to remit, and closed its doors within a few days thereafter, and it was held that such transaction did not constitute a payment of the draft. Such draft had not been delivered to the debtor, but was in the bank when it failed, and the same was thereafter returned to the creditor. It will thus be seen that the casé is not directly in point with the case at bar. In the opinion the court takes occasion to criticize the cases of Welge v. Batty, and British & A. Mortg. Co. v. Tibballs, supra, and states that the great weight of authority is against these holdings. We feel obliged to differ with the Michigan court. The weight of authority, as well as reason, seems to be to the contrary, especially under facts like those in the case at bar.
[553]*553The Michigan court, among other things, says: “The fact that a debtor has a credit at a bank is not conclusive evidence that the bank has money with which to honor his cheeks. As in this case, the bank may be insolvent when it receives the check, and there is no good reason apparent for permitting the depositor of an insolvent bank to pay his debt with worthless paper, thereby making his creditor a loser.” With all this we most heartily concur; but, as before stated, the record is silent in the case at bar upon the question of the bank’s insolvency; and this being true, it will certainly not be presumed that eight days before closing its doors the bank was insolvent or unable to pay its checks on presentment. We think the fact as stated in the Michigan opinion, that the collecting bank was insolvent when it received the check, or charged the draft as the equivalent of a check to the debtor’s account, sufficiently differentiates that case from the case at bar.
The other cases which respondent cites are not in point.
The judgment appealed from is reversed, and the District Court is directed to dismiss the action.