New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1874-12-20

BANKING Association 0uAp0n000 payment
ON the sixth Of October, 1873. Ev., p. IS
It continued to pay out until P. n. on the
fourth of October. s.es, s4.is - -,
It made NO exchanges with the Clearing
House Association on Monday. Mr.. Dppuy
met Mr.. Blache At IL AN ON that day,
and made an exchange Of checks with him;
p. Is. At about 9 to 10 A. NJ, on that day,
Mr.. Pochelu desired Mr.. Blache TO return
him the check in question, and which had
been deposited on Saturday previous, say.
ing that he was going to sue out an injunc-
ton to prevent Blache from giving it up;
PIP. IS -. This occurred about 9 or 10 A.
of this check. The New Orleans Banking
Association had then failed. On the same
day this bank made exchanges with several
other banks; p. 20. The exchange of the
check in question was effected in the usual
form and according to the custom in such
matters; p. 81. The only difference being
that the exchange in this case was made
with the cashier directly, instead Of through
the Clearing House Association. Ev. p. 81.
Checks between banks are not paid in
money, but always by an exchange Of
checks. Ev. p 23 1t was customary at the
time of this transaction to use certified
checks-.payabls through the Clearing
House. Ev. p. "a. The State National Bank
had no interest in the check, it only collect
ed it az it had been left there for that pur.
pose. Ev. p. &c. The check for $1,000 was
not paid in money, but q check was taken
in lieu thereof. Ev. PIP. % %. The effect of
the suspension and failure of the New
Orleans Banking Association. and Of the
exchanging of certified checks, was the loss,
to the Louisiana Ice Manufacturing Com
pany, of the check for $1,000, which 1t had
deposited with that bank for collection.
The plaintiff now contends that whatever
custom the banks may adopt for their own
checks, that depositors are not go far
affected by 1t as to DO obliged to receive
such checks as payments. That as between
it 1.-THE plaintiffl and the Clearing House
Association and the State Bank. there was
no privity. and therefore it can not be con-
sidered estOpped from pursuing it, where,
as in this case. it was notified of the condi-
ton of the suspended bank, and of the
judicial proceedings instituted to restrain
it from exchanging the check in question;
that 1t deposited it for observation-disclosures
in currency; that the bank was its agent
for that purpose and for no other, and that
the exchange Of its good check for one that
was worthless, was not q collection of its
check, nor a payment on the part of the
State National Bank, quo ad the plaintiff;
that even if the exchange of checks should
be considered, under ordinary circum.
stances, as a payment, it could not be 40
considered. where the paying bank wae
informed, before it made the exchange,
that the depository had failed and sus-
pended payments, and where it had been
informed that q writ Of injunction had
already issued for the express purpose Of
and, finally, that from the moment the
New Orleans National Banking Association
suspended payments and failed, it ceased,
ips0 facto, to he the agent of the depositors.
G. c., 1927; Parker vs.. Smith, l6 East, 382
Minet vs.. Forester, Taunt, SAL; 2 Kent'e
CON-, p. GA; Pot. Contrat dc Mandat, N
Defendants counsel make the following
points:
l. That there was no privity between the
State National Bank and the Louisiana Ice
Company, and chat in the absence Of such
privlty, it must be very strong case to au'
thorize a recovery. He reminds the court
of the familiar axiom that one should not
be permitted to enrich himself at snother's
expense. He cites McWilliams vs.. Hagan,
4R T4, and McCauley vs. Hagan, 6 r. 359,
in support of it. There is no doubt of ite
soundness. The cases of McCullOch va. the
Commercial Bank, l6 L. 356, and of Oakley
ct al. VS.. Bank of Louisiana and William
Christy. II La. 1856, are referred to as estah
fishing the doctrine that the absence 0t
privity is fatal to right of action.
9. That the State National Bank defend.
ant herein) had NO pecunlary interest in the
transaction: that it held on deposit eundry
checks OF her own depositors, and that it
was its duty as agent to collect them; that
il they had not been exchanged (which, &C
cording to the custom of the banks, was the
sane as payment) the State Bank would
have protested the returned checks, and
the loss, if any, woald have fallen on the
parties depositing them, and for whom the
bank acted as collecting agent. may here
remark that being charged with the co!lec'
ton in currency Of particular check, ii
was tho absolute duty Of the bank to 90 80.
or to protest. Such is the law. The estab
lishment of clearing houses ia intended for
the benefit of the banks. Through them
their daily settlements with each
other are facilitated and simplifed
The depositor. have nothing to do
with them, nor can the banks change
or modify their liability to depositors by
establishing such private associations to
suit their own convenience. The banks en-.
tering into such an arrangement are bound
inter sese but the depositors are not 0rdi.
narily privy to such agreements, and, there
fore, can not be held bound by their action.
3. That the plaintiff intrusted the Bank
of New Orleans with power to collect, and
that this fact carried with it the right to
exchange checks, as was customary among
banks, either through the Clearing House OF
over it's counter. That if the plaintiff has
been injured it has been solely through the
fault Of it's own agent, to whom alone II
can look for redress. Reference is made to
Morse on Banks and Banking, PIP. 1924,
34l, 1874, 1863. This author lays down the
generally recognized doctrine, that bank
receiving paper for collection thereby be-
comes, as . rule, the agent of the deposit0r;
that in making the collection it must be
governed in all matters concerning the time
and mode of making the demand, giving
notice, etc, by the laws and customs pre-
vailing in the place of it's own situation
that it alone is responsible for any losses to
the depositor resulting from its negligence
etc. But I imagine that the laws and Gus
toms referred to must be- general and moi
exceptional. The agency conferred must
be legitimate and properly exercised.
The courts are not inclined to enlarge
the authority OF usage, but on the contrary
they limit it to its narrowest proportions
and uniformly "require the most perfec,
adaptation Of the facts OF the case to it. ;
Morse on Banks and Banking, p. 376. "The
customs and usages Of bank by which
persons outside Of the corporation can be
affected are only such as relate to its deal
ings with such outsiders" Ib. p. 36. They
are only for the convenience of the bank
Even if they are known to it's customers.
in which alone the customers can be sup
posed to be interested; they are the internal
arrangements, with which the customer
has nothing whatsoever to do. whether he
knows them or not, and whether he ap
proves them or not" Id. 377. This princi
pie, think, applies here: Usage can not
be shown to absolve bank from positive
and essential duty. "What it undertakes
to do it must do" 1t undertook to collect 9
check for $1,000 in this instance. Now, al
to tho denositor has it done so THE STATE