Case ID: miss_15/html/0592-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief Justice ShaRKey", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The President, Directors and Company of the Agricultural Bank of Mississippi vs. The Commercial Bank oe Manchester.
    A bank which receives a note for collection, and places it in the hands of a notary in time for demand and protest, is not liable for any loss on account of the negligence of the notary.
    A bank, in undertaking the collection of a note, becomes the agent of the owner, and is bound to use only reasonable skill and ordinary diligence. And when the note is placed in the hands of a notary for demand and protest, the notary becomes a sub-agent, for whose negligence the agent is not responsible, if he has used reasonable diligence in his choice as to the skill and ability of the sub-agent.
    In an action against a bank, for negligence in making such demand and protest of a note, left with the bank for collection, as was necessary to fix the liability of the indorsers, the bank, by showing the delivery of the note to a notary public for demand and protest, in due time, is -prima facie exonerated from liability; and to rebut such prima facie case, it is not sufficient for the plaintiff to prove in general terms that the notary was a man of dissipated habits ; he must establish the negligence more definitely by proof that the notary was drunk at the time the note was given to him, or that his habits were so universally intemperate as to disqualify him for the discharge of an official act.
    Error from the circuit court of Yazoo county; Hon. Morgan L. Fitch, judge.
    This was an action brought by the President, Directors and Company of the Agricultural Bank of Mississippi, against the Commercial Bank of Manchester, to recover the amount of a note for eight thousand dollars, deposited by the former with the latter for collection. The declaration averred, that in a suit, instituted by the plaintiffs against the indorsers, a recovery was defeated, and the indorsers released and discharged on account of the negligence of the Commercial Bank of Manchester, and her failure to make a legal demand of payment of the 
      note, and that in consequence of such negligence and failure, she was liable to the plaintiffs for the amount of the note, with interest.
    The defendant pleaded the general issue. After a verdict and judgment were rendered in favor of the defendant, the plaintiffs moved for a new trial; their motion was overruled, and they filed a bill of exceptions, setting out the whole evidence; which was substantially as follows, to wit: The plaintiffs read to the jury the note for eight thousand dollars, deposited by them with the defendant for collection; it was then admitted that the defendant handed the note, upon its maturity, to George E. Markham, a justice of the peace, and ex officio notary public, for protest; that Markham, the day the note was delivered to him for protest, went to the office of the Planters Bank in Manchester, where the note was payable, between the hours of eleven and twelve o’clock, A. M., and then and there demanded payment thereof of the teller of the Planters Bank, and payment being refused, he immediately thereafter left the bank, taking the note with him, and returned the same to the banking-house of the defendant; that he did not return on that day to the Planters Bank with the note, but waited until the expiration of the business hours of the Planters Bank, and then protested the note; that the business hours of the Planters Bank were then from ten o’clock, A. M. till two o’clock, P. M.; and it was also admitted that the plaintiffs had sued the makers and indorsers of the note, and judgment was rendered in favor of the indorsers in consequence of the demand of payment being made as above stated.
    The plaintiffs then introduced S. S. Griffin, who being sworn, testified that at the time when the demand of payment of the note was made, Markham was a man of very dissipated habits, and was frequently drunk ; that he would not have entrusted a similar duty to him except when he was sober. Nathaniel G. Nye, another witness for the plaintiffs, stated that Markham was a man of intemperate habits, although when sober a very competent officer; that if Markham had been sober at the time, he would have confided the note to him without hesitation, but if he had been drinking he would have hesitated about giving it to him, unless he could have superintended personally his action in the matter. Here the plaintiffs rested their case.
    The defendant then introduced J. J. Hughes, who testified that he frequently handed out notes at the counter of the defendant to Markham to make demand, &c.; and upon all occasions Markham appeared to him to be sober. But he was not always present to hand out notes, and they were often handed out by the teller of the bank. It was also proven that there was a mayor resident in Manchester at the time the demand of payment was made, of strictly temperate habits: but Markham, when sober, was the more competent officer of the two. That at that time it was the general custom of notaries in this state to make demand of notes in the same manner the demand was made in this case by Markham; and the legality of such procedure was not at that time doubted.
    This being all the evidence offered on either side, the plaintiffs’ counsel asked the court to instruct the jury, “ 1. That if they believed, from the evidence, that the defendant did not retain the note in bank until- the last hour o'f doing business in the bank, according to the usage of the same when the note became due, and which by law the defendant was bound to do, but before the closing hour of the bank on the day the note became due, gave it to Markham, her notary, to protest, the defendant has not discharged her duty as a collecting agent, and that the law is for the plaintiffs, and the jury will so find.
    
      “ 2. That if they believe, from the evidence,' that the bank, the defendant, employed Markham, a notary public, to protest the note, and he did so in such a manner as to produce a loss to the plaintiffs, the defendant is liable for that loss, and the jury, will find for the plaintiffs.
    
      “ 3. That if they believe, from the evidence, that Markham, by his act as agent for defendant, in protesting said note, injured the plaintiffs, though he did so through a mistaken notion of the law governing his conduct as notary, the defendant is liable for his misconduct, and they will find for the plaintiffs.
    !! 4. That if they believe, from the evidence, that George E. Markham was employed by the defendant as her notary to protest said note, the amount of which was lost by his misconduct, he acted as the servant and agent of defendant, and the defendant is bound for any loss which has accrued by his misconduct, and they will find for the plaintiffs.
    
      “ 5. That if they believe, from the evidence, that Markham, the notary, was not a competent and faithful person at the time when the note was handed to him for protest, by reason of his intemperate habits, that the defendant is bound for the act of said Markham, and the law is for the plaintifFs.”
    The court refused to give either the first, second, third or fourth instruction; but gave the fifth, as asked. The defendant’s counsel then asked the court to instruct the jury, “ That if they were of opinion that Markham, the person who protested the note, was, in so doing, exercising the functions of a public notary by virtue of his office of justice of the peace, then the defendant is not liable for his failure to perform his duty in the demand of payment and protest of the note; but the plaintiffs must look to Markham.” Which instruction was given by the court, with the qualifications contained in the fifth instruction asked by the counsel of the plaintiffs. To the opinion of the court, refusing to give four of the instructions asked by the counsel for the plaintifFs, and granting the instruction asked by the counsel for the defendant, the counsel for the plaintiffs excepted. And the plaintiffs now prosecute this writ of error.
    
      Eustis, for plaintiffs in error.
    In my endeavors to show that the defendants in this case ought not to be discharged from liability, it is not my purpose to question any decision which has been heretofore made by this court.
    In The Commercial and Railroad Rank v. Hamer, 7 How. 451, it was the opinion of the court that the demand in the record was good; that there was no default in the case.
    In Tiernan v. Commercial Bank of Natchez, 7 How. 657, the court decide that the bank is discharged if, when the note is not paid, they place it in the hands of a notary to protest, and give the requisite notices.
    
      In this last case nothing will be found to support the proposition, that the official commission renders competent those who are irresponsible in law for all acts; for instance, the insane, or that larger class, to which the person employed in this case, belongs — who have only visitations of reason — who are so “ frequently drunk,” and in need of the superintending care of others, that an interval of sobriety is the exception to the rule of their lives.
    The suit against the indorsers failed for want of a legal demand upon the maker. It was the duty of the defendants to make or cause to be made such demand. How have they discharged that duty? They say they gave it to a notary; on what day does not appear. The phrase in the bill of exceptions is, “ upon the maturity of the notewhich may mean, upon one or other of the three days of grace. It does not mean “ at the close of banking hours on the third day of grace,” because it is subsequently stated that at that point of time, it was in the banking-house of the defendants. This subsequent statement is, that the notary, “on the day on which said note was so handed to him for protest, went to the office of the Planters Bank, between the hours of eleven and twelve o’clock, and then and there, &c. and immediately thereafter left said bank, taking the note with him, and returned the same to the banking-house of the defendants; and after business hours protested it.”
    Now it appears that the bank at which the note was payable, closed at two o’clock. According to the law, as now settled, that was the hour for presentation. At that time the note was lying upon the counter of the defendants. It is barely possible that the notary was doing likewise, that being the only presumption which will support the idea of its continuing in his possession, but a stronger presumption is, that he was refreshing his competency elsewhere, and that the note remained in the possession, and under the control of the defendants.
    Then it appears that, from the return of the notary at twelve •o’clock, until two o’clock, the hour of closing, the defendants ¡held the note in their possession. The place of payment was in the same small town, in which is their banking-house. Any one of their clerks was competent to make the demand; yet they neglected to send any one for that purpose. Now, when we say to them, “ this was negligence, by which we are liable to lose a large sum of money, and the loss ought to fall .upon you,” what is the reply ? Not, that they were mistaken in the law — but, making us acquainted with their “eleven o’clock” friend, they assure us that he was actually then and there a commissioned notary public, and that they rely with perfect confidence for their discharge, upon the fact, that he once, “upon the maturity of the note,” had it in his possession. As to any demand by him, whether on the proper day, or six months previously, they agree with us, that it was premature,insufficient, and unprofitable.
    That they gave it to a notary to protest, before it was due, is the full extent of the case made for the defence in an action, the gravamen of which is, the neglecting to make a demand. If, after these several futile performances on their own part and on the part of the notary, the note is shown to have come again into their custody and under their control, before the time of presentation for payment, and they, having that control, neglected to make the demand, the charge is proved as laid in the declaration, and the plaintiffs were entitled to a verdict.
    What if such premature demand was customary amongst notaries in this state? If the fact be so, it was of no avail for the plaintiffs in the action against the indorsers on the note. It is equally foreign to the purpose, when set up by the defendants in this case. In both suits, there was a contract that there should be legal demand.
    If, however, the court should doubt whether returning with the note to the banking-house of the defendants, was returning it to their custody and control, then the competency of the notary becomes material; and the evidence clearly shows that the notary employed by the defendant was not a suitable or competent person to perform the important and responsible duty confided to him.
    
      
      William R. Miles, for defendant in error.
    From the bill of exceptions it appears that several instructions were asked of the court below by the plaintiff in error, all of which were refused but the last; and that the only instruction asked by the defendant in error, was given.
    An examination of the case of Tiernan et al. v. The Commercial Rank of Natchez, 7 How. R. 649, will at once manifest the propriety and entire accuracy of the judgment pronounced by the court below. With the law .thus settled, I deem it a work of supererogation to attempt an addition to the reasoning of the court contained in the opinion above referred to.
   Mr. Chief Justice ShaRKey

delivered the opinion of the court.

It seems that the Agricultural Bank was the holder of a promissory note made payable at the Planters Bank at Manchester, and transmitted it to the Commercial Bank of Manchester for collection. At its maturity the note was delivered by some of the officers of the Commercial Bank to a notary for demand and protest. He went to the Planters Bank on the last day of grace; and made demand between the hours of eleven and twelve o’clock., and on being refused payment, took the note away with him, and returned it to the Commercial Bank, and protested it for non-payment after the close of banking hours. The bank closed at two o’clock P. M., until which time debtors had a right to pay their notes. In consequence of this premature demand the indorsers were discharged, the holder of the note having failed on that ground in a suit against them. This suit is brought against the Commercial Bank to recover the amount of the note in consequence of alleged negligence in having the demand made.

In the case of Tiernan v. The Commercial Bank of Natchez, it was settled that a bank which receives a note for collection, and places it in the hands of a notary in time for demand and protest, is not liable for the neglect of the notary. That in undertaking to collect for others, a bank becomes an agent, and is bound to use only reasonable skill and ordinary diligence. That the notary selected by the bank becomes a sub-agent, for whose negligence the agent is not responsible, if he has used reasonable diligence in his choice as to the skill and ability of the sub-agent. 7 How. 648. The present case is admitted to be like the one cited except in one particular, and that it is said is of such a character as to entitle the plaintiff to recover. The notary to whom the note was delivered, was a man of very dissipated habits. One witness stated that the notary, at the time the demand was made, was a man of very dissipated habits, and frequently drunk; the witness would not have trusted him to discharge such a duty except when sober. Another witness also stated that the notary was a man of intemperate habits, but a very competent officer when sober. He would have trusted him without hesitation to discharge such a duty when sober, but if the notary had been drinking, he would have hesitated about giving him the note unless he could himself have superintended his action. J. J. Hughes stated that he had frequently handed out notes at the counter of defendant to the same notary to demand and protest, and upon all such occasions the notary seemed to be sober, but the witness was not always present at the banking house to hand out notes; they were sometimes given out by the teller. It was also in proof that there was at the time this protest was made, a mayor of Yazoo city, the town in which these banks were situated, who was á temperate, steady man, but that the notary was best qualified for such duties when sober; and it was further in proof, that at the time when this protest was made, it was the general custom of notaries in this state to make demand as it was made by this notary. The question is, does this testimony vary the case from the precedent cited, and establish such negligence as to make the Commercial Bank liable?

The witnesses spoke of the notary’s general habits; there was no proof as to his condition when the note was delivered. Let it be admitted that the plaintiff made out a prima facie case by showing that this note was received by the defendant for collection, and that the indorsers were discharged and the debt lost for want of proper demand. It was then incumbent on the defendant to furnish an excuse. This it did prima facie, according .to the principle of the case cited, by showing the delivery of the note to a notary in due time for a demand. Supposing the proof to have been introduced in this order, then the defendant stood exonerated. To rebut this prima facie excuse, the plaintiff introduces proof in general terms of the bad habits of the notary; but does it necessarily follow that the loss was a consequence of these bad habits'? Not at alb; for the notary may have been sober at the time, and the witnesses say he was competent when sober. Such proof then did not necessarily remove or rebut the defence; it was necessary that the plaintiff should have established the negligence more definitely by proof that the notary was drunk at the time, or that his habits were so universally intemperate as to disqualify him for the discharge of an official act. The court did instruct .the jury that if the notary was not a competent and faithful •person by reason of his intemperate habits when the note was delivered to him, then the defendant was liable; and we do not think that the court could have given’ the other charges asked according to law. The question of the notary’s drunkenness at the time he received the note, was one of fact for the jury, and the charge of the court was such as to bring it to their notice. It seems, moreover, that the defendant was in the habit of employing .this same notary in its own business, for so we must understand the testimony of Hughes, and it was not required to exert greater diligence for another. Tiernan v. Commercial Bank, 7 How. 648. We cannot agree that the onus was changed or shifted by this general proof of intemperate habits, as it is in cases of insanity, and that it was consequently necessary, after such proof, for the defendants to show that the notary was sober when the note was delivered. When a man is proven to be non compos mentis, the law presumes that he continues so, and hence the reason of the rule.

Judgment affirmed.