Case Name: The Georgia National Bank, plaintiff in error, vs. Felix H. Henderson, defendant in error
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 1872-07
Citations: 46 Ga. 487
Docket Number: 
Parties: The Georgia National Bank, plaintiff in error, vs. Felix H. Henderson, defendant in error.
Judges: 
Reporter: Georgia Reports
Volume: 46
Pages: 487–508

Head Matter:
The Georgia National Bank, plaintiff in error, vs. Felix H. Henderson, defendant in error.
1. When a note, payable at bank, is placed in a bank for collection, it is the duty of the bank to see to it that it is properly presented for payment, and on its dishonor, to have it duly protested, and notice given to the indorsers.
2. When a bill of exchange payable at......, was sent to a bank for collection, and the bank treating it as a bank check, and not entitled to days of grace, presented it for payment, and had it protested, etc., on the day of its maturity, without days of grace, by means of which the indorser was discharged, and it was in evidence, that the bank was notified by the indorser at the time that he claimed the paper to have days grace :
Held, That the bank was liable to the person who deposited the paper for collection for damages, for its negligence in not presenting the check, as required by law, and causing notice of its non-payment to be given to the indorser.
3. The present holder of a negotiable promissory note or bill of exchange is prima facie, presumed to have acquired title thereto before its maturity, and in a suit by the holder against the bank to which the paper was sent for collection for failing to present it for payment, and failing to notify the indorser of its dishonor, the present holder is prima facie presumed to have been the holder at the maturity of the paper.
Protest. Rank. Days of grace. Bank check. Presumption. Before Logan E. Bleckley, Esq., an Attorney, presiding by consent. Fulton Superior Court. October Term, 1871.
Felix H. Henderson brought case against the Georgia National Bank, alleging the following facts: That on August 4th, 1866, Massey & Herty made the following instrument, in writing:
“Atlanta, Georgia, August 4th, 1866.
“Georgia National Banh, Atlanta, Georgia:
“ Ninety days after date, pay to F. R. Bell, or order, one thousand dollars. (Signed)
“ #1,000. MASSEY & HERTY.
“Indorsed: John D. Pope, F. R. Bell.”
That Bell indorsed said bill of exchange to Pope, and Pope indorsed the same to plaintiff; that plaintiff delivered said bill of exchange to defendant for collection; that on the 2d of November, 1866, the ninetieth day from the date of said instrument, said defendant presented said bill of exchange for payment, and protested the same for non-payment, without allowing days of grace on the same, by which illegal action the indorsers were discharged from all liability; that the drawers are insolvent; that, by this course of action, defendant has become liable to plaintiff for the amount of principal and interest due on said bill of exchange.
The defendant pleaded the general issue. It appeared from the evidence that the plaintiff had originally sued the drawers and the indorser, John D. Pope; that he failed to recover against Pope, on the ground that he was discharged from liability on the instrument sued on, because no days of grace were allowed on the same; that Pope received no notice of protest, except the one of date November 2d, 1866; that he notified the officers of the bank that said bill was entitled to days of grace, and requested that they should not demand payment of the same, or protest it for non-payment until after the three days of grace had expired; that Pope was solvent, and the drawers insolvent; that it was the custom of banks to charge for collections, unless the owner of the instrument to be collected kept a deposit account with the collecting bank.
The defendant moved for a non-suit; the motion was overruled and defendant excepted.
The jury returned a verdict for the plaintiff for the sum of $1,350.
The defendant moved for a new trial, because the Court erred in each of the following charges to the jury, to-wit:
“Three points present themselves for your consideration: 1st. Did the defendant owe the plaintiff a duty? 2d. Was that duty neglected, or negligently performed? 3d. What damage, if any, resulted from such negligence?
“Did the plaintiff own the bill at its maturity? On that question you may consider all the facts proven, including also the present possession of the bill by the plaintiff. Such possession alone would be sufficient evidence of title in a suit on the instrument itself, but is not necessarily so in an action, such as the one now on trial. You may or may not find it satisfactory, in connection with all the other facts of the ease.
“ If the plaintiff was the owner of the bill, did the defendant become his agent to collect it, or to take the ordinary measures to prevent the discharge of the indorsers on its dishonor? An agency of this kind might have been created between these parties, notwithstanding the fact that the de fendant was the person on whom the bill was drawn, or to whom the bill was addressed. It was competent for the defendant to accept such an agency, in respect to this bill, if it thought proper to do so, and if he did accept it, its duties and obligations would be the same as if it had had no previous connection with the paper. Whether the alleged agency existed, you are to determine from the evidence, and if the evidence discloses any act done by the defendant on the line of such an agency, you are at liberty to consult the act for what you may think it worth, as tending to prove the agency. If no such agency has been established to your satisfaction, your verdict will be for the defendant. If, on the other hand, you believe from the evidence that the defendant undertook this duty, was there any breach of his undertaking?
“On the dishonor of this bill, a protest was necessary, and the indorsers were entitled to notice, either verbal or written, of such protest. A protest for non-payment before the three days of grace would be a nullity, and a notice of that protest would not avail to bind the indorsers. If, in this case, there was no other protest, that could be no legal notice to the indorsers, and they are discharged.
“If you should find that the indorsers were discharged, and that this discharge resulted from the defendant’s negligence or breach of duty, while agent for the plaintiff, and that the drawers of the biil are insolvent, your verdict will be for the plaintiff for damages equal to the principal and interest of the bill.”
The motion for a new trial was overruled, and defendant excepted and assigns said rulings as error.
Collier, Mynatt & Collier, for plaintiff in error.
1st. The relation of principal and agent could not exist between .the parties: Smith’s Mer. Law, 140; Paley on Agency, 33; 1 Par. B. & N., 357-504. 2d. The act of the agent was ratified in bringing suit against Pope: Story on Agency, 243-259; 27 Ga. R., 172; 10 Ga. R., 362; 1 Ibid., 418; 5 McLean’s R., 569. 3d. The defendant was only bound to notify the holder of non-payment; 2 Am. L. C., 666; 3 Ala. R., 207; Smith’s Mer. Law, 145; 5 Mason’s R., 566 ; 8 Met. R., 79. The fault was not in nonfeasance but misfeasance: Paley on Agency, 71; 1 H. Black. R., 161. 4th. If indorser had notice no demand was necessary: 1 Par. B. & M., 367. 5th. Charge as to liability of bank was error : 1 Par. on B. & N., 480; 10 Cush. R., 582.
W.Ezzard; Hulsey & Tigner, for defendant.
1. Bank liable for defective notice given by which indorser is discharged : 6Hill. R., 648; 22 Wend. R., 214; 19 Barb. R., 391.

Opinion:
McCay, Judge.
1. The general principle that a bank or any other collection agent taking a negotiable paper for collection is under obligations to have it duly protested for non-payment, seems unquestionable. The agent has the possession of the paper; generally the owners are at a distance; the notary will present and protest only such papers as are presented to him, and if the duty is not on the agent to see to it, there is, ordinarily, nobody in a situation to do it. And such is the current of authority.
2d. This Court has decided, on' this very paper, that it is a bill of exchange, and not a bank check; that it was entitled to grace, and as it is payable at and by a chartered bank, that protest and notice are necessary to bind the indorsers : Henderson vs. Pope, 39 Georgia, 361. I do not propose to go over the reasons for that decision ; there is no doubt but that authorities may be found, and some of them of high character, in which such a paper as this has been held to be a bank check. One of the strongest of these cases is a decision by a no less able Judge than Judge Story. But the current of the decisions appears to be that if the element of credit enters into the paper it is not a bank check, and that the mere making of the paper payable at a future day, being of itself an element of credit, makes it a bill of exchange, and not a bank check. A check is an order to the bank to pay the money of the drawer to the payee — it is an appro priation of money — cash. A bill of exchange is a matter of credit. It is drawn, looking to the future. The element of credit enters into it. This paper was not only payable at a future day, but it was avowedly not drawn upon the drawePs funds, and this the bank well knew, since its own books informed it that he had no funds there. Besides, this paper was indorsed, guaranteed by two indorsers other than the payee, and this appeared on the face of the paper. There was, therefore, none of the elements of a check in this paper, except that it was drawn upon a banker. Payable at a future time, not drawn upon any funds and guaranteed by two indorsers, it was a bill of exchange, issued and taken upon the credit of the drawer and indorsers.
Assuming, therefore, that this is a bill of exchange, and that by the failure of the bank to have it duly presented on the third day of grace, and due notice to be given to the indorsers, they were discharged as we have decided in the case of Henderson vs. Pope, it follows that the holder has lost his right to go on the indorsers by the fault or negligence of the bank. Prima facie, the bank is liable for negligence just as other agents are. But it is said that agents of all kinds, except carriers and innkeepers, are only liable to ordinary diligence, and this is true. A lawyer, doctor, or mechanic, indeed, any agent is not bound at all events. Ordinary skill will excuse a mishap, even of a doctor or lawyer, and it is said that this being a doubtful matter, the bank having acted in good faith, is not liable, because it mistook the law. A case very much in point is cited, and cases laying down this general doctrine of the degree of diligence, required of agents undertaking to transact business, are numerous. For myself, I should have great doubt as to the liability of the bank, except for one thing. Whether this was a bank check or a bill of exchange may have been a doubtful matter — one upon which even lawyers, nay, Judges of great eminence, may differ. But the bank was distinctly informed by Mr. Pope, the indorser, that it was entitled to days of grace. In other words, that it was considered by him as a bill; as to him this would have clearly been a waiver of presentment on the first day of the three. A presentment and notice on the third day would have bound him in any event. This notice of .Pope to the bank should have put the bank officers upon their guard. It was easy to have presented it on both days, and given notice of the non-payment on both days. Admitting that it was doubtful whether it was entitled to days of grace or not, attention was called to the fact by Pope's notice. It was an easy thing, and one that would occur to any prudent man to present it on both days. The bank was not obliged to decide the doubt. It might well have managed so as to save the plaintiff's right against the indorser's, in either event. Pope notified the bank of his claim that it was a bill. Was it not ordinary prudence to so act as to bind Pope, even if it was a bill? If there was but one way open, and the right way doubtful, ordinary skill, in determining the right way, may be all that is required. But here there were two ways open. One of them was sure. It was easy to take both. Notice was given that the way proposed was wrong. In my judgment, ordinary prudence required both to be taken, and for that reason I think the bank liable.
3d. Prima facie, notes over due are not negotiated; they are dishonored — suspicious. Prima facie, every man who has the possession of a negotiable paper took it before due. Henderson has this paper now; the presumption is he had it before and at its maturity. And we think this is as well true in a suit of this kind as in a suit on the note. It was not necessary, therefore, for Henderson to prove that he was the holder of the paper at maturity.
Judgment affirmed.