Grocery Company v. Bag Company.

The suit was commenced before a justice of the peace, first by a summons dated 31 December, 1904, returnable 3 January, 1905, on which there was no return, and then by publication dated (175) 16 January, 1905, and returnable the 16th day of the next month. There was no evidence that the summons was ever actually issued by the justice. The defendant relied on the fact that no summons had been issued and upon sundry alleged defects in the mode of publication in support of a motion to dismiss the action which it submitted after entering a special appearance for the purpose.

Plaintiff sued for $172.50, alleged to be due as damages for failing to ship to them a certain number of peanut bags as by contract of 30 April, 1904, the defendant was required to do.

It appears that on 30 April, 1904, the defendant agreed to sell to the plaintiff 10,000 to 15,000 peanut bags of a specified description at a price named, the price to stand if the market advanced; but if the market declined, the defendant had the option to furnish the bags at the lowest price or to cancel the contract. There was a memorandum at the foot of this agreement calling for the shipment of 1,000 cotton sheets. It was shown that this memorandum was made by defendant's traveling salesman, and the order for the sheets purports on its face to have been made by telephone. On the same day the salesman consolidated the two orders into one, which was signed by the plaintiff and addressed to the defendant. It was in the usual form of an order for goods, showing quantity, description and price of the bags and sheets or burlaps, but not fixing the day of payment or time of credit. All the directions in the memorandum as to time and method of shipment and dating of bills refer indiscriminately to the bags and sheets, as if they had been ordered at the same time. The sheets were deliverable in August, 1904, and the bags from October, 1904, to March, 1905.

On 11 June, 1904, the plaintiff by letter advised the defendant that the goods had been offered to them at lower prices, and asking if they "would meet them." This letter contained an itemized statement of the articles, with the reduced price for each, and opposite these articles the following: "All delivered 10 days net." Defendant (176) replied, 14 June, 1904, that it would meet the prices named. The subsequent correspondence shows that the cotton sheets were shipped by the defendant according to the contract, and the plaintiff failed to pay for the same, its draft, which was sent to the defendant, having been afterwards presented and then returned by the collecting bank as unpaid, plaintiff all the time insisting that it was entitled to terms materially different from those contained in the contract of 30 April, as modified by the letters of 11 and 14 June. As the plaintiff failed to pay for the sheets, and insisted on being allowed terms different from those in the contract, the defendant refused to ship the peanut bags. This was on 2 December, 1904, when the purchase price had been long overdue.

On 19 September, 1904, the plaintiff wrote the defendant that they were entitled to 60 days credit on the bags and $8 discount on their draft. On the same day the defendant wrote to the plaintiff that the business had proved to be so unsatisfactory, as it had made so many threats and so often insisted on new terms, that they preferred to cancel the contract, and then requested payment of the draft sent for goods already purchased and shipped. Acknowledging receipt of this letter, plaintiff on the 20th replied that it was willing to relieve defendant of the contract, as it could do as well elsewhere, but before considering itself as released the defendant must wait for a letter to that effect. Then comes the following passage: "We also desire to call your attention (to the fact) that there are no terms specified in the contract of 30 April; therefore, we will expect the same terms that we have been getting from John T. Bailey and other parties, which is 30 days." The draft for the sheets having been returned by the bank, and the plaintiff still insisting on terms which, as contended by the defendant, were not embraced by the contract, the defendant on 2 December, 1904, wrote to the plaintiff rescinding the agreement and in that and (177) subsequent letters declined to ship the bags.

The Court charged the jury that if they found the facts to be as disclosed by the evidence, they should answer "No" to the issue, "Is the defendant indebted to the plaintiff, and if so, in what amount?" The jury answered the issue accordingly. Judgment was entered for the defendant, and the plaintiff appealed. after stating the case: An important question is distinctly presented in this case, namely, whether the issuance of a summons is necessary before the procedure by publication, when the defendant is a nonresident of the State.

There appears from the decisions of this Court to have been some diversity of opinion upon this question, and it being of the first moment that it should be settled, as it affects the integrity of judical proceedings, we have given it the most careful consideration and have reached a conclusion entirely satisfactory to ourselves after thoroughly examining the several statutory provisions relating to the matter and weighing the reasons advanced on either side by those who have discussed it.

Attachment, other than the common-law writ which issued out of the common pleas upon the non-appearance of the defendant at the return of the original writ, had its origin in the civil law, and afterwards was adopted in England in the form of a custom of the London merchants, and out of this, as modified and extended by statute, has grown the modern law in respect to this remedy. 4 Cyc., 396, 397; 1 Sinn on Attachment, secs. 1 and 2. It was resorted to in order to compel the attendance of the debtor as well as to afford a security to the creditor. Under our former statutes, when the defendant was a non-resident, (178) it issued either in the form of an original or a judical attachment and without any notice until there had been a levy or caption of the goods of the debtor, when advertisement was required if the defendant resided without the jurisdiction. Rev. Code, ch. 7, secs. 12 and 13. By sec. 12 it was provided that "No judicial process shall be issued against the estate of any person residing without the limits of the State, unless the same he grounded on an original attachment, or unless the leading process of the suit has been executed on the person of the defendant when within the State." This was the method of proceeding against non-residents until the adoption of the Code system. The remedy then became ancillary to the principal suit for the recovery of the debt. But there was no essential change in the procedure by which the defendant was brought before the Court and compelled to appear and submit his person to its jurisdiction, or lose his property as the penalty for his default, or so much thereof as was necessary to satisfy the plaintiff's demand. The very nature of the case, as shown by the fact of non-residence, made it clearly futile to attempt to serve him personally. As he was presumed to have a constant regard for his property and always to keep a watchful eye upon it, the law-makers at once concluded that the most effective and the speediest way of compelling his appearance was by seizing it; and at the same time this method had the further advantage of protecting his creditor. But in order that the cardinal principle of our judicial system should not be even seemingly violated, it was required that in the original action, instead of the idle and useless ceremony of issuing a summons for a man who it was well known could not be found, publication in such manner as would be likely to give notice of the action should be made; and such is the meaning and clear intent of the statute as plainly manifested by its words. It is true that civil actions are commenced by issuing a summons, but this refers to cases where the defendant, being within the jurisdiction of the Court, can be served personally, and the method of making such service (179) is specially provided for in Rev., secs. 429 to 442.

It is not permissible to construe a statute composed of several sections by the words of any one section, but all those relating to the same subject must be taken and considered together in order to ascertain the meaning and scope of any one of them, and each must be restricted in its application or qualified by the language of any other when the purpose so to do is apparent. This is a rule of construction which has for its basis a practical reason. The Rev., secs. 429 and 430, provides that a civil action shall be commenced by summons to be issued to the Sheriff and personally served by him on the defendant; but where this cannot be done, the person to be served being beyond the jurisdiction of the Court, sec. 442 provides that if it is made to appear by affidavit to the satisfaction of the Court that, after due diligence, the defendant cannot be found within the State, an order shall be made for publication. By the evidence to satisfy the Court was meant not the sheriff's return on the summons; for if it had been the statute would have been so worded; and let us ask here, How could the fact that the defendant could not be found in the State — for that is the requisite condition of publication — be determined only by the return of the sheriff that he cannot be found in his county, when there are now in the State ninety-seven counties in all? It was intended that it should appear only in the way pointed out in the statute, that is, by affidavit. The affidavit is made the initial step in the case, and the order of publication based upon it is the leading process.

The meaning is, therefore, that a civil action shall be commenced by issuing a summons, except in cases where the defendant is not within reach of the process of the Court and cannot be personally served, when it shall be commenced by the filing of the affidavit, to be followed by publication.

We have mentioned the provisions of the Revised Code upon (180) this subject, for the purpose of showing that this distinction between the two cases was clearly marked therein, and specially will this appear when reference is made to ch. 7, sec. 14, already quoted.

This construction brings the different sections of the law in regard to commencing actions into harmony, precludes any suggestion that the Legislature requires to be done a vain and useless thing, and executes its intention according to the letter and spirit of what it has said. We are quite sure that it has the sanction of the profession.

But it is urged that the law has been otherwise declared in McClure v.Fellows, 131 N.C. 509; and that is true. Besides not being satisfied with the reasoning in that case, as contained in either the leading or the concurring opinions, we may remark that the case itself was in direct conflict with the decision of the Court in Best v. Mortgage Co.,128 N.C. 351, though that case is not cited by the Justice who spoke for the Court. The opinion by the present Chief Justice, filed in that case, was well considered, and it, together with his dissenting opinion inMcClure v. Fellows, presents convincing reasons and an unanswerable argument in favor of the interpretation now given to the statute. It may be well to add that the conclusion reached by the Court in Best v.Mortgage Co., and by the dissenting Judge in McClure v. Fellows, is thoroughly well supported by the numerous authorities cited therein.

The fundamental error of the Court in McClure v. Fellows is the assumption that a summons must be issued in all cases without regard to the residence of the defendant; and this resulted from taking a restricted view of sec. 209 of The Code, as isolated from other parts of the statute relating to the same matter, and looking more to the form than to the substance. Besides, the fact assumed was the one to be established, and its existence the very subject of the inquiry.

In McClure v. Fellows the Court mainly relied upon Marshv. Williams, 63 N.C. 371, and Webster v. Sharpe, 116 N.C. (181) 466, and also, it is said in the dissenting opinion, upon Houstonv. Thornton, 122 N.C. 365. None of these cases is an authority for the construction adopted by the Court in McClure v. Fellows. In Marsh v.Williams the defendant was in the county, and the language of Judge Dick is used with reference to that fact, as clearly appears in the case. Of course, a summons was necessary under such circumstances. There was no publication there. Webster v. Sharpe was an action for slander. The statute of limitations was pleaded and the question was when the summons was to be considered as issued, and the suit commenced; and the Court decided it was issued, not when it was signed and then held by the Clerk, but when it was delivered to the sheriff or to some one for him and passed out of the control of the Clerk. That is all. The defendant had been personally served with the summons. So that the point was not in that case. The same may be said of Houston v. Thornton. The statute of limitations was there pleaded, the defendant was personally served, and the only question was as to when the summons is deemed in law to have been issued. Smith v. Lumber Co., at this term.

The first case which directly involved the point was Best v. MortgageCo., and that must be considered as the only precedent at the time McClurev. Fellows was decided. The opinion of the Court in the Best case was unanimous. It therefore had all the force and authority of a controlling decision, if the doctrine, stare decisis et non quieta movere, which means that we should adhere to decided cases and not disturb matters established, is to stand for anything. That case settled a principle which, as will hereafter appear, became substantially a rule of property, as a failure to issue a summons was held not to affect the title to any property sold under any final process issued in the case, and McClure v. Fellows changed that rule so as to (182) invalidate any such sale. The decision was, therefore, within the protection of the doctrine of stare decisis, and for that reason, if for no other, it should not have been reversed.

It cannot be successfully argued that the Best case only decided that a "return of the summons not served" is not a prerequisite to publication, for it is distinctly held that the first step is the making an affidavit, which is the initial paper to be filed, without any reference to the issuing of a summons.

The rule of stare decisis, or, in other words, what is sometimes called the doctrine of precedents, does not forbid that we should disregard a former decision upon a matter of procedure, if it can be done without substantial injury being suffered by litigants who may have relied upon the precedent so established; and if such is not likely to be the result, the Court will not be governed by the former decision. 26 Am. and Eng. Enc. (2 Ed.), 163. Many may have acted upon the construction placed upon the statute in Best v. Mortgage Co., even before that case was decided, and certainly it must have controlled the conduct of many since. Any title depending upon such a proceeding, that is, one where no summons has issued, would be utterly destroyed by the decision in McClure v. Fellows, while no title can be impaired by disapproving that case, as, if the principle therein stated has been followed and a summons has been issued, no harm can possibly have been done, for utile per inutile non vitiatur.

Upon full consideration, therefore, all of us being of the opinion that the statute was correctly interpreted in Best v. Mortgage Co., we overruleMcClure v. Fellows and reinstate the former case in its position and authority as a binding precedent in this Court.

The defendant's objection to the publication based on the fact that a summons had not issued cannot be sustained. There are many other objections to the publication, more or less serious in their nature, (183) which have been urged by defendant's counsel, but they need not be considered.

The remaining question is somewhat difficult, owing to the lack of uniformity in the decisions as regards one phase of it. But we think this difficulty may be avoided by placing our decisions upon a ground quite peculiar to this case. When a contract is in all respects entire, we find little trouble in determining what are the rights of the parties with reference to its enforcement or the recovery of damages, where there has been a breach by either of them. But the law relating to a contract requiring several things to be done, whether treated as separate and distinct promises or not, is somewhat unsettled, in respect to the right of one party who has broken it, as to one of its parts, to recover against the other who, on account of that breach by him, has refused to perform the remaining part of it. Upon this subject we are given the following rules for our guidance: "Failure of one of the parties to a contract to perform an independent promise does not discharge the other party from liability to perform, but merely gives him a right of action for the breach. A promise may be independent in the following ways: 1. It may be absolute, that is, wholly unconditional upon performance by the other party; but promises, each of which forms the whole consideration of the other, will not be held independent of one another, unless the intention of the parties to make them independent is clear. 2. Its performance may be divisible, that is, the promise may be susceptible of more or less complete performance, and the damage sustained by an incomplete performance or partial breach may be apportioned according to the extent of the failure; but this rule does not apply (a) where the circumstances show an intent to break the contract; (b) where such partial breach is made a discharge by the terms of the contract. 2. It may be subsidiary, that is, the promise broken may be a term of the contract which the parties have not regarded as vital to its existence." Clark on Contracts (1 Ed.), (184) 652. It appears, therefore, and the learned author so states, though more fully, in another part of his valuable treatise (p. 660), that the courts are fairly well agreed upon this proposition: Although the performance, to a certain extent, is divisible, yet if the default in one item of a continuous contract is accompanied with an announcement of intention by the party thus in default not to perform it upon the agreed terms, the other party may treat the contract as being at an end. And he may likewise do so if it appears that the failure to perform is deliberate and intentional, and not the result of mere inadvertence or inability to perform. 9 Cyc., 649; Stephenson v. Cady, 117 Mass. 6; Withers v.Reynolds, 2 B. Ad., 822; Bloomer v. Bernstein, L. R., 9 C. P., 588;Bartholomew v. Barwick, 109 E. C. L., 711; Armstrong v. Coal Co.,48 Minn. 113; Blackburn v. Reilly, 47 N.J. Law, 290.

It seems to be the clear result of the decisions that if the purchaser fails to pay for goods already delivered, and further evinces a purpose either not to pay for future deliveries or not to abide by the terms of the existing agreement, but to insist upon new or different terms, whether in respect to price or to any other material stipulation, the vendor may rescind and maintain an action to recover for the goods delivered; and consequently he is not liable in damages for any breach if he has otherwise performed his part of the contract.

We do not hesitate to hold that the contract of the parties was formed by their correspondence and is contained in the agreement of 30 April, 1904, as modified by the plaintiff's letter of 11 June, 1904 (which reduced the price and allowed a credit of 10 days), and defendant's reply thereto on 14 June, 1904. The original contract did not allow any longer credit. The plaintiff had been notified before 20 September that its dealings had not been satisfactory, and that very day it insisted on having a credit in the future of 30 days to pay for (185) goods, assigning as the reason that it was getting the same terms from others, when the contract made no provision for selling on the same terms as others, but defendant thereby simply agreed to sell at the prices specified, even if the market advanced and if it declined, or the plaintiff could purchase at lower prices, to sell at those prices or cancel the contract. That is all. There was not the slightest suggestion in the agreement that the terms of sale should, in any other respect, be in the least controlled by what others might thereafter offer to do.

Without commenting upon the other parts of the correspondence, we find in the letter of 20 September a distinct avowal by the plaintiff that the future dealings between the parties must be subject to terms and restrictions not expressed in the agreement. This was certainly equivalent to an announcement by the plaintiff of an intention to perform the contract, not upon the agreed terms, but upon its own terms; and as it had no right to impose any such condition or to interpolate any such stipulation, it was in law a repudiation of the contract as the parties had made it. There are other clear indications in the correspondence before and after the letter of 20 September was written that the plaintiff intended at least to embarrass the defendant in its effort to complete the deliveries; and if the inference cannot be drawn from the letter of 20 September, alone, and we think it can, it is surely deducible from all the correspondence, that the plaintiff deliberately and intentionally refused to comply further with the contract; and its refusal to carry it out, except upon terms other than those expressed in it, and to which they could not compel the defendant to submit, and which the latter rejected, was in itself virtually a refusal to perform it. When the plaintiff thus declined to go on with the contract, the defendant had the right then and there to rescind, as it did.

Where parties have made an agreement for themselves, the (186) courts will not substitute another for it. The law requires that parties shall perform their contracts as they make them; and if they fail to do so, they must abide the consequences.

We have not inquired whether, as the plaintiff failed to pay for deliveries already made, the defendant was required to go on at the same day forwarded, for collection, to its correspondent, the Merchants and Farmers Bank of Dunn, N.C. The check was received by the bank at Dunn on 1 February, 1904; was marked "Paid," and charged to Griffin Aiken, the drawers, who had funds to their credit in excess of the amount of the check.

On 2 February, 1904, the Murchison National Bank wrote plaintiff: "We have not been able to get any returns. Hope to get something by Monday." On 2 February, 1904, the Merchants and Farmers Bank had in its vaults an amount of currency in excess of the check. On 9 February, 1904, the Merchants and Farmers Bank closed (189) its doors and went into liquidation. The proceeds of the check were never remitted by the bank at Dunn to defendant, the Murchison National Bank.

On 10 February the Murchison Bank wired the plaintiff bank: "Merchants and Farmers Bank, Dunn, reported closed. Check mentioned was taken, subject final actual payment. Have used every effort to collect. We do not assume any responsibility. We notified you on 6th that is was unpaid.' Plaintiff bank wired: "Telegram. All liability on us will fall on you and Dunn Bank. Notify it." The introduction of this telegram was objected to, and exception duly noted to its admission. While we think it competent, its admission was entirely harmless. It did not in any respect change the status of the parties.

The Murchison Bank on 9 February wired the plaintiff that it had no returns from Dunn and had sent a man there, advising that plaintiff's customer send some one there.

Mr. Tillery, cashier of plaintiff bank testified: "The Murchison National Bank notified us of the receipt of the cash item of $1,059, and they had on it the same, or in substance the same, as our creditcard had relative to our side collections. The usual credit-card customary among banks relative to collections of papers outside of the town in which the bank is located is to receive them with the understanding and agreement that the bank so receiving shall not be liable until it receives actual final payment, and the credit-card which acknowledged the receipt of the check of $1,059 had printed on it the following: ``Items outside of Wilmington are remitted at owner's risk until we receive full actual payment.' And this is the usual custom among banks relative to out-of-town collections. I do not know which route the mail goes from Wilmington to Dunn. I think it goes by Goldsboro. Goldsboro is between Rocky Mount and Wilmington. We do not take Sunday mail out of the postoffice until Monday."

(190) The Murchison Bank, at and about the time of this transaction, sent other collections to the Dunn Bank. There was much testimony in regard to the transactions between the Dunn Bank and the Murchison Bank between 1 February and 10 February, 1904; which is immaterial in the view which we take of the case. The defendant Murchison Bank tendered a number of issues directed to the several aspects of the controversy, which are eliminated from this discussion. We carefully examined them and find that several relate to matters in regard to which there is no controversy. The others are immaterial. The issues submitted by his Honor cover the material questions in controversy. The answers to them establish the essential facts herein stated. The 12th and 13th issues are as follows: "Was the Murchison Bank guilty of negligence in the discharge of any duty it owed in connection with the collection of said check of $1,059, Ans.: Yes." "If the Murchison Bank was guilty of negligence in the collection of said check, what loss was sustained thereby? Ans.: $1,059, with interest at 6 per cent. from 6 February, 1904." Issues were submitted in regard to the conduct of the plaintiff bank and its liability to the owner of the check. The answers to these issues exonerated it from liability. This view renders it unnecessary to discuss the correctness of the instructions given.

The first question presented for our consideration is the duty of the plaintiff and the Murchison Bank to the owner, in dealing with the check. While there is a diversity of opinion and the decisions of the courts are not uniform upon the subject, this Court, in Bank v. Bank, 75 N.C. 534, approved and adopted the following rule of conduct: "It is well settled that when a note is deposited with a bank for collection, which is payable at another place, the whole duty of the bank so receiving the note in the first instance is seasonably to transmit the same to a suitable bank, or other agent, at the place of (191) payment. And as a part of the same doctrine, it is well settled that if the acceptor of a bill or promissory note has his residence in another place it shall be presumed to have been intended and understood between the depositor for collection and the bank that it was to be transmitted to the place of residence of the promisor" — or, we may add, drawee or payer. In an opinion expressed with his usual force and clearness, Bynum, J., says: "This decision is consonant with notions of justice." This case has been recognized as controlling in this State, and we think is sustained by the weight of authority in other courts and the reason of the thing.

Mr. Morse in his work on Banks and Banking, Vol. I, sec. 235, thus states the law: "When the paper is payable in some other place than that in which the bank is located, its duty is (1) to forward the bill, or note or check, in proper season, to a sub-agent selected with due care; (2) to send to such agent any instructions bearing upon its duty that may have been received from its depositor, and (3) to make inquiry with due diligence if notice of the arrival of the paper does not come to it within such time as it might reasonably be expected." He further says: "If a bank fails to do its duty in the matter of collection with reasonable skill and care, it is liable for the damage resulting to any party interested in the paper, whether his name appears on the paper or not." Sec. 252.

It is conceded that there is much diversity of opinion and decision in respect to the liability of the receiving bank for the default of its sub-agent, and the courts of the several jurisdictions, holding variant views, proceed upon entirely distinct and opposite constructions of the implied powers conferred upon the bank first receiving the collection. "If a bank receive a paper for collection on a party at a distant place, the agent it employs at the place of payment is the agent of the owner and not of the bank; and, if the bank selects a competent (192) and reliable agent and gives proper instructions, its responsibilities cease." Bank v. Bank, 71 Mo. App. 451. The two rules are stated by Mr. Morse and the cases classified with a discussion of the reason upon which they rest. Ib., 272-287.

As we have seen, this Court has adopted the Massachusetts rule, which is based upon the following satisfactory reason: "The employment of a sub-agent is justifiable, because this manner of conducting business is the usual and known custom, and in a business which requires or justifies the delegation of an agent's authority to a sub-agent, who is not his own servant, the original agent is not liable for the errors or misconduct of the sub-agent, if he has exercised due care in the selection." Measured by this standard there can be no doubt in regard to the conduct of the plaintiff bank in sending the check to defendant Murchison Bank, its standing and fitness to discharge the duty being conceded. His Honor would have been justified in so instructing the jury. Measured by the same rule, the Murchison Bank would have been in the strict line of its duty in sending its collection to its correspondent in Dunn but for the fact that the Dunn Bank was the drawee of the check.

This brings us to the pivotal question in the case: Is the drawee or payee of a bill, note or check a suitable agent to which such paper should be sent for collection? This question has never been decided by this Court, hence we must seek for an answer upon the reason of the thing, the general principles underlying the law of agency, and adjudged cases in other jurisdictions. By accepting the collection from the plaintiff bank the Murchison National Bank became, in respect to Floyd's interest, his agent; but as the amount had been credited to him, the plaintiff was entitled to the proceeds. In this view of the case it is not material whether the bank of Rocky Mount was the proper party plaintiff, as all of the persons interested were before (193) the Court and their relative rights and duties presented for adjustment. The Missouri Court of Appeals in Bank v.Bank, supra, in answering the question presented here, says: "It was negligence to place a collection, which as a matter of business required prompt attention, in the hands of the debtor to collect from himself. The evidence here discloses the impropriety of the transaction. The defendant sent the check to Burr Oak, where it arrived on the 9th. If it had sent it to some one other than the debtor, it would undoubtedly have been paid, since the bank continued to do business and meet its obligations on the 9th and 10th." Morse on Banks, sec. 236, says: "The debtor cannot be the disinterested agent of the creditor to collect the debt, and it cannot be considered reasonable care to select an agent known to be interested against the principal to put the latter into the hands of its adversary; surely, it is not due care in one holding a promissory note for collection to send it to the debtor, trusting him to pay, delay or destroy the evidence of debt as his conscience permits. If this would not be reasonable care and diligence, why should the same conduct be held to be reasonable care and diligence when applied to a bank?" citing Bank v. Bank,117 Ill. 100; 57 Am. Rep., 855. To the same effect are all of the authorities to which we have been cited and which we find in our investigation.

The law is well stated in Ger. Natl. Bank v. Burns, 12 Col., 539, in which it is said: "Even if we can conceive of such an anomaly as one bank acting as the agent of another to make a collection against itself, it must be apparent that the selection of such an agent is not sanctioned by businesslike prudence and discretion. How can the debtor be the proper agent of the creditor in the very matter of collecting the debt? His interests are all adverse to those of his principal. If the debtor is embarrassed there is the temptation to delay. * * * The fact that the L. Bank was a correspondent of the defendant (194) to a limited extent, does not alter the rule. * * * As a matter of law, such method of doing business cannot be upheld. It violates every rule of diligence." In Bank v. Goodman, 109 Pa. St., 428, it is said: "Such suitable agent must, from the nature of the case, be some one other than the party who is to make the payment." Auten, Receiver, v. Bank, 47 L.R.A., 329; I Dan. Neg. Inst., 328. In Farley Natl. Bank v.Pollak, 2 L.R.A., (N.S.), 194, the same principle is announced, and in the note it is said: "The American cases are almost unanimous in support of the doctrine that it is negligence in a bank having a draft or check for collection to send it directly to the drawee." The annotator gives a long list of authorities sustaining this proposition. The defendant Murchison National Bank, however, insists that it has shown that the custom or usage prevails by which a bank, having a check upon its own correspondent in good standing, may intrust it with the collection. The same point has been frequently made, and almost uniformly met with the declaration that such custom, if shown to exist, is invalid.

In this connection it is said by the Court of Appeals of Missouri, inBank v. Bank, supra: "It was said to be customary for banks to transmit collections to their correspondent, even though such correspondent was the debtor. To this we answer that it is not a reasonable custom, and therefore must fail of recognition by the courts. We concede it may be and perhaps is, in many instances, the most convenient mode for the bank intrusted with the collection. But if the bank adopts that mode it takes upon itself the risk of the consequences."

In Min. S. and Door Co. v. National Bank, 44 L.R.A., 507, the Court says: "We can not agree with counsel that the usage and custom here relied upon as a defense to the claim that the defendant was negligent when forwarding this check to the Mapleton Bank for presentation and payment, as a general usage and custom, will not justify (195) negligence. It may be admitted that such a course is frequently adopted; but it must be at the risk of the sender, who transmits the evidence upon which the right to demand payment depends to the party who is to make the payment. Such a usage and custom is opposed to the policy of the law, unreasonable and invalid." In Farley Natl. Bank v. Pollak, supra,Simpson, J., says: "A custom must be reasonable, and the best-considered cases hold, not only that the bank or party who is to pay the paper is not the proper person to whom the paper should be sent for collection, but also that a custom to that effect is unreasonable and bad." The same rule is laid down in the notes and a number of cases cited to sustain it. Morse on Banks, sec. 236.

The defendant says, however this may be, the check was received for collection pursuant to an express contract that "items outside of Wilmington are remitted at owner's risk until we receive full actual payment." This language was brought to the attention of the plaintiff bank, and we may assume entered into the contract under which defendant received the paper for collection. We can not suppose that it was intended to be understood as releasing the defendant from the consequences of its own negligence. The extent to which it will be permitted to exonerate defendant bank is that it shall not be responsible for the negligence or misconduct of its sub-agents properly selected. If given its literal meaning, no liability whatever in respect to the collection of the check would attach to it. This construction would relieve it from the duty of using due care in the selection of a sub-agent. If such is the proper construction of the language, and if, thereby, it is relieved from the responsibility for its own negligence, we should not hesitate to hold it unreasonable and invalid.

An agreement to relieve an agent or fiduciary of all responsibility for its own negligence or misconduct is unreasonable and can not be (196) sustained. This is elementary learning as applied to common carriers. 6 Cyc., 392. It would seem equally so when it is sought to relieve a person or corporation from all responsibility for a breach of its contractual duty by negligence or otherwise. Doubtless, in view of the fact that many courts hold that the receiving bank sending a collection on a distant point to its correspondent at the place of payment is responsible for the negligence or misconduct of such sub-agent, the defendant bank, wishing to restrict its liability in this respect, placed upon its stationery the language in question. While, as we have seen in this State, no such liability attached, we can see no reason why, in those States where the law is otherwise, a contract to this effect would not be valid. It is simply an agreement that the receiving bank shall have the power to select the proper agent to collect the check at the place of payment and that such sub-agent shall thereby become the agent of the owner of the check.

But when it is sought to relieve itself of all liability for negligence in the selection of such agent quite a different question arises. Whatever may be the proper construction of the language, we do not think that the defendant Murchison Bank was authorized, in violation of a well-settled rule of law, to send the check to the drawee; and if by reason of doing so, loss has been sustained, it must be held responsible therefor. It appears that upon the receipt of the check by the Dunn Bank on 2 February, 1904, the cashier of said bank immediately canceled the same and charged the amount to the drawer, who had funds sufficient to meet it. It further appears that on that day the Dunn Bank had in its vaults an amount sufficient to have paid the check. The defendant, however, contends that as the Dunn Bank was insolvent the status of the parties was in no respect changed; that it was "a mere playing with figures," and citesBank v. Davis, 114 N.C. 343.

It was clearly the duty of the Dunn Bank upon presentation of the check to pay it and to remit the proceeds. Its customer had (197) funds for that purpose and the bank had funds to meet this customer's check. There is no suggestion that on 2 February the Dunn Bank anticipated an immediate closing. The testimony is all to the contrary. It can not be doubted, therefore, that it was a good payment of the check. If the check had been sent to some other person and presented on 2 February, there is no suggestion that it would not have been paid. The temptation to the Dunn Bank to retain the money instead of immediately remitting, as was its duty, is a danger which the law guards against by prohibiting the sending of the check for collection to the drawee bank. It therefore seems clear that the failure of the plaintiff bank to receive the proceeds of the check was due to the breach of duty on the part of the Murchison Bank in sending it to the Dunn Bank. In other words, that such breach of duty was the proximate cause of the loss.

There are a large number of exceptions to his Honor's rulings in the admission of testimony, and the instructions given and declined. The scope of the action, as set forth in the complaint, comprehends a number of questions affecting the rights and liabilities of the several defendants, which were properly discussed in the brief. We are of the opinion that, eliminating every other phase of the case, the right of the plaintiff to recover of the defendant Murchison Bank rests upon facts found by the jury, being largely upon undisputed testimony.

We do not think it necessary to discuss or decide the other questions; they are not so related to the facts upon which the conclusion is based as to affect the result. The entire testimony, and the result of the action in sending the check to the drawee bank, although entirely unexpected, strongly illustrates the wisdom of the law which declares that the party whose duty it is to pay is not the proper party to assume the duty of collecting. The testimony shows diligence on the part of the (198) officers of the Murchison Bank to secure its customers after the discovery of the trouble, but this can not relieve it of liability for the original breach of legal duty. It has been held that if the drawee be the only bank at the place of payment, an exception to the general rule is made. This holding is not in harmony with the best thought on the subject or the principle underlying the law of agency. While the convenience of persons and corporations engaged in particular lines of business, and the general custom recognized and acted upon, are properly given consideration in the construction of contracts and fixing rules of duty and liability, elementary principles of law founded upon the wisdom and experience of the ages should not be violated.

Upon a consideration of the whole record we find

No Error.