Morris v. First National Bank , 201 Pa. 160 ( 1902 )

Opinion by

Mb. Justice Mitchell,

The learned judge below directed a nonsuit on two grounds, the first of which was that the plaintiffs did not appear to have been the owners of the draft at the time of the cause of action sued for, or at any time subsequent. The draft was drawn by plaintiffs, Nelson Morris & Company, to the order of Nelson Morris, was indorsed by him individually “ for deposit ” in the Chicago bank, and on its return unpaid was charged back to his account, as appeared by memorandum on its face. There was no further evidence as to the ownership except the answer of one witness to the question, “ The bank was simply the agent of Nelson Morris & Company? Answer. Simply the agent to forward the draft for collection,” the context showing that his attention was not directed to the matter of ownership as between Morris and the firm, but to the purpose for which the draft was given to the bank. The objection is technical and probably the fact is that the plaintiffs were the owners all the time, but the evidence did not show it and the judge could not assume it in the absence of proof.

The second ground for the nonsuit was the absence of any contractual relation between the plaintiffs (or Nelson Morris individually) and the defendant, out of which a right of action could arise. Appellant has argued, as the hinge of the case, that the Chicago bank was merely an agent for transmission and that when the defendant received the draft it became plaintiffs’ agent for collection, and, therefore, liable for its negligence in failing to follow instructions. But the undisputed facts are against this contention. The draft was indorsed by Nelson Morris “ For deposit ” and entered to his credit in the Chicago bank, which then indorsed it to its own order “ For collection, Account of First National Bank, Chicago,” and sent it to the defendant. The Chicago bank clearly undertook the collection and as between it and the defendant was to be regarded as the owner. In fact so long as the amount remained in Morris’s account to his credit, the bank was the owner and the title did not revert to him until the draft was returned unpaid and charged back to the debit side of his account. The ownership as between the Chicago and the Allegheny banks being thus in the former, the liability of the latter was to the former as agent to principal, and not to the depositor. This precise point as to liability of the agent to the depositor does not seem to have been decided by this court, but the converse proposition, that the - bank receiving a claim for collection becomes an independent contractor liable for the negligence or default of the agents to whom it entrusted the actual collection, was expressly held in Bradstreet v. Everson, 72 Pa. 124, followed in Morgan v. Tener, 83 Pa. 305, and Siner v. Stearne, 155 Pa. 62. The reasoning of these cases requires the affirmance of the proposition that the liability of the subcollector is only to the collector as his principal. This was expressly held by the Supreme Court of the United States in Hoover v. Wise, 91 U. S. 308, largely on the authority of Bradstreet v. Everson, supra. “ The cases .... of an attorney employed not by the creditor but by a collection agent who undertakes the collection of the debt .... establish that such attorney is the agent of the collecting agent, and not of the creditor who employed that agent.” Though there was a dissent in that case it was upon the operation of the bankrupt law under the special facts, and the dissenting opinion concedes the rule as applicable to a bank undertaking to collect a note indorsed to it.

Judgment affirmed.