Case Name: Brookside Mills v. Railway Express Agency
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1936-06-13
Citations: 170 Tenn. 325
Docket Number: 
Parties: Brookside Mills v. Railway Express Agency.
Judges: 
Reporter: Tennessee Reports
Volume: 170
Pages: 325–336

Head Matter:
Brookside Mills v. Railway Express Agency.
(Knoxville,
September Term, 1935.)
Opinion filed June 13, 1936.
Lee, Cox, Meek & Hiee, of Knoxville, for Brookside Mills.
Johnson & Johnson, of Knoxville, for Railway Express Agency.

Opinion:
Mr. Chief Justice Geeen
delivered the opinion of the Court.
This suit was brought by plaintiff to recover of defendant $741.13, the amount alleged to be due for express charges on goods transported by plaintiff from points in the state of New York to the defendant in Knoxville. There was a judgment for the plaintiff below, affirmed by the Court of Appeals, and we have granted the writ of certiorari.
The plaintiff, as its name indicates, is an express company carrying packages over railway lines throughout various states of the Union. The declaration avers that its principal office is in Atlanta, Georgia. However, it has an office and agency in Knoxville and did business in the latter city amounting to about $1,200 a'day at the time of the transactions out of which this suit arose.
On January 17,1933, or on previous days, two consignments of goods were delivered by plaintiff to the defendant. On one of these shipments, consisting of 119 pieces, the express charges were $726.35. On the other shipment the charges were $14.78, 'making a total of $741.13. The agent of the Express Agency called at the Brookside Mills about 11 A. M. on January 17 to collect these charges. Not having enough cash on hand to pay the charges, Brookside Mills gave its check to the agent of the Express Agency. This check- was drawn on the East Tennessee National Bank of Knoxville for the amount due.
It seems that Bailway Express Agency did not keep a hank account in Knoxville at this time, although it had previously done so. The check, drawn to its order by Brookside Mills, was forwarded by an agent of the Express Agency at Knoxville to the Atlanta office and reached Atlanta on the next day after it was drawn. It was deposited by the Express Agency in an Atlanta bank as soon as practicable and forwarded without delay, except for an intervening holiday by the Atlanta bank to the Federal .Beserve Branch Bank at Nashville, to be forwarded by the latter institution to Knoxville for payment.
The East Tennessee National Bank was open for business all of the day of January 17, 1933, the day the check was issued, and all of the succeeding day, January 18, 1933. During these two days the bank met all legitimate demands presented but did not open its doors on January 19. During the two days Brookside Mills had a balance to its credit in the East Tennessee National Bank of approximately $20,000.
So it was, before the check involved reached Knoxville, the East Tennessee National Bank had closed its doors. The check would not have gotten back to Knoxville in time for presentation before the East Tennessee National Bank closed had it been deposited in Atlanta and sent directly for collection instead of having been sent for collection through the Federal Reserve Branch Bank at Nashville.
The general rule prevailing in Tennessee and in other states is that the payee has until the close of the next business day to present a check for payment where the bank on which the check is drawn is in the same place where the payee receives the check. This was the rule prior to the adoption of the Negotiable Instruments Law and has not been changed by that statute. Schoolfield & Hanauer v. Moon, 56 Tenn. (9 Heisk.), 171; Andrews v. German National Bank, 56 Tenn. (9 Heisk.), 211, 24 Am. Rep., 300; Kirkpatrick v. Puryear, 93 Tenn., 409, 24 S. W., 1130, 22 L. R. A., 785; Binghampton Pharmacy v. Bank, 131 Tenn., 711, 176 S. W., 1038, 2 A. L, R., 1377. Cases from other jurisdictions are collected in a note, 91 A. L. R., 1191.
In Kirkpatrick v. Puryear, supra, it is said that, if the bank on which the check is drawn is not located in the same town in which the check is received, it is the duty of the payee to forward the check for collection on the day after its receipt. This rule prevails in other jurisdictions in the absence of special circumstances. See cases collected in a note, 91 A. L. R., 1199.
Section 7510 of the Code, section 186 of the Negotiable Instruments Law, provides:
"A. check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay."
Section 7517 of the Code, section 193 of the Negotiable Instruments Law, provides:
"In determining what is a 'reasonable time' or an 'unreasonable time,' regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case."
Under ordinary circumstances what is a reasonable time for the presentation of the check is determined according to the cases just above cited. The case before us is different. While the check was received in the same town where the drawee bank was located, it was received by an agent of the plaintiff to whom plaintiff had not intrusted authority to indorse such instruments for collection. It was duly forwarded, apparently, to the nearest agent of plaintiff having such authority.
If the receipt of this check by an agent of plaintiff in Knoxville had been an isolated transaction, as the collection of an account for his employer by a traveling salesman, or if the defendant had been advised of plaintiff's method of handling checks received in Knoxville, we would agree that the lower courts had reached a correct conclusion. Upon such facts the conclusion of the lower courts would be fully sustained by the authorities upon which plaintiff relies. Lewis, Hubbard & Co. v. Montgomery Supply Co., 59 W. Va., 75, 52 S. E., 1017, 4 L. R. A. (N. S.), 132; Balkwill v. Bridgeport Wood Finishing Co., 62 Ill. App., 663; Rosenthal v. Ehrlicher, 154 Pa., 396, 399, 26 A., 435; Petty v. Ozark Grocer Co., 187 Ark., 595, 61 S. W. (2d), 60.
We are referred to no case precisely in point. As heretofore stated, Eailway Express Agency does a considerable business in Knoxville and maintains an agency and office there. Its collections in that city, amount to about $1,200 a day, and 40 per cent of those collections consist of checks. This means that the plaintiff takes in checks aggregating about $480' each day in Knoxville, or checks amounting to about $175,000 during tbe course of tbe year.
We are of opinion that tbe plaintiff maintaining an agency in Knoxville, such as it does, doing so large a business there, and handling so many checks there, should be required to conform to custom and law that control the transactions of other individuals and institutions doing business in that city.
We do not think that the plaintiff, with the organization it maintains in Knoxville, doing such a volume of business there, accepting checks in the prosecution of its business to such an extent, should be relieved of the ordinary obligation with reference to presentation resting upon the payee of a cheek drawn on a bank in the city in which it is received. We do not feel that plaintiff is entitled to exceptional treatment because for its own convenience it chooses to collect checks received in Knoxville and drawn on Knoxville banks through an agency maintained in another city.
As above noted, more than half of the daily collections by plaintiff in Knoxville are in cash. It is the custom of the Knoxville agent each day to send the cash collected and the checks received to the Atlanta office. The money and checks are forwarded through a messenger of Railway Express Agency on one of its cars running daily over the Louisville & Nashville Railroad Company's line from Knoxville to Atlanta. We see no particular hazard or burden that would be imposed upon the plaintiff in consequence of authority to its Knoxville agent to indorse and collect its Knoxville checks and send the proceeds along with his cash collections. Indeed, the company is not required to take checks at all if it finds such a custom too inconvenient.
We think the principle applicable to this cage has been stated by the Supreme Judicial Court of Massachusetts. A co-operative bank in that state, which appears to be an institution somewhat like a building and loan association, collected fixed periodical installments from its members each month for the purpose of lending its accumulations to its members and otherwise investing funds not so needed. The collections of the co-operative bank involved amounted to approximately $75,000 monthly divided into four thousand small payments substantially all made during the week of the monthly meeting and by far the greater proportion on the day of the meeting and the Saturday following. More than one-third of these payments were made by check. Upwards of five hundred checks would be so received, and it was practically impossible for the institution with the force it kept to list and deposit all these cheeks so as to have them presented to banks in the same city on the day of their receipt or the day after. Other facts are recited in the opinion of the court and the co-operative bank was denied a recovery against one of its customers from whom it had taken a check, which check was not presented to the drawee bank in the same city within the time permitted by the usual rule. The court said:
' ' Commonly, one who deals extensively in the receipt of checks for collection in its ordinary business must conform to the general rules of law as to their presentment and collection. " Lowell Co-operative Bank v. Sheridan, 284 Mass., 594, 188 N. E., 636, 639, 91 A. L. R., 1176.
Considering "the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case" as required by section 7517 of the Code, we do not think that the check here involved was pre sented for- payment within a reasonable time after its issue as required by section 7510 of tbe Code.
Reversed and dismissed, on authority of Betterton v. Roope, 71 Tenn. (3 Lea), 215, 31 Am. Rep., 633, and Kirkpatrick v. Puryear, supra.