Dale v. Hepburn

This action was brought to recover .the value-of legal services alleged to have been rendered by plaintiff as the attorney for the defendant, on her retainer, in proceedings had in the circuit court of the United States for the Horthern district of Illinois. The answer denies the retainer, and that the plaintiff rendered her any services. At the close of the plaintiff’s case a motion to dismiss was denied, and a similar motion made at the close of the trial was granted, on the ground that no cause of action was made out against the defendant, and this raises the principal question to be considered. From the evidence it appears that. Hubbell & Go. is a collection agency in this city, whose business it is to collect all kinds of claims, as well as notes, drafts, and other negotiable instruments ; that defendant, through her agent,, placed a draft drawn by Lewis E. Parsons on L. F. Hepburn, and paid by her, in their hands for collection, and agreed to pay them

“We are of the opinion that these authorities fix the rule in the class of cases we are now considering, to wit, that of attorneys employed, not by the creditor, but by a collection agent who undertakes the collection of the debt. They establish that such attorney is the agent of the collecting agent, and not of the creditors who employed that agent.”

In Bank of Clark County v. Gilman, 81 Hun, 487 ; 63 St. Rep. 299 , it is said :

“In some other jurisdictions it has been held to be within the implied authority of the collecting agent, when paper is to be collected at some place remote from that of the" business, for such agent to employ a sub-agent in that locality to make collection on account of the owner. But in this state the rule is otherwise, and, in the absence of any undertaking or agreement to the contrary, it

is to the effect that the collecting agent is deemed to employ such other .collector on his own account. Thus the collecting agent becomes chargeable to his principal for the conduct of the bank or individual to whom he transmits the paper for collection.”

In this case the evidence is clear that there was no understanding or agreement on the part of the defendant about the employment of the plaintiff for or on her account or as her attorney, but, in our judgment, it is conclusive that he was employed by the Hubbell agency in the course of their business as a collecting agency. We think that if banks into whose care negotiable instruments are placed for collection are regarded as principals, so much the more should a collecting agency, whose sole business it is to collect claims placed in its hands, be so regarded. We are aware that the liability of banks in such case has been much discussed, and that there is a great conflict of authority on the subject. It has been held, on the one hand, that the bank first receiving the paper is answerable for the neglect, omission, or other misconduct of the bank or agent it may employ, following the general rule of law that an agent is liable for the acts of a sub-agent employed by him. This is the doctrine established by the decisions of the supreme court of the United States, of this state, Hew Jersey, Ohio, Indiana, and the courts of England. Exchange Nat. Bank, v. Third Nat. Bank, 112 U. S. 276 ; Allen v. Merchants' Bank, 22 Wend. 215 ; Smedes v. Bank of Utica, 20 Johns. 384 ; Montgomery County Bank v. Albany City Bank, 7 N. Y. 454 ; Commercial Bank v. Union Bank, 11 N. Y. 203 ; Ayrault v. Bank, 47 N. 570; Titus v. Bank, 35 N. J. Law, 588 ; Reeves v. Bank, 8 Ohio St. 465 ; Tyson v. Bank, 6 Blackf. 225 ; Abbott v. Smith, 4 Ind. 452 ; Kent v. Bank, 13 Blatchf. 237 , Fed. Cas. No. 7,714; Van Wart v. Woolley, 3 Barn. & C. 439; Mackersy v. Ramsay, 9 Clark & F. 818. In 112 U. S. 276 , Judge Blatchford said:

“The bank is not merely appointed an attorney authorized to select other agents to collect the paper. Its undertaking is to do the thing, and not merely to procure it to be done. In such case the bank is held to agree to answer for any default in the performance of its contract, and whether the paper is to be collected in the place where the bank is situated, or at a distance, the contract is to use the proper means to collect the money, and the bank, by employing sub-agents to perform a part of what it has contracted to do, becomes responsible to its customer.”

In 35 H. J. Law, 588, Chancellor Zabriskie said:

“A dealer, who deposits a draft on a distant env in a bank in his own town, has no choice of their agent or correspondent. It is the business of the bank to provide proper agents or correspondents for this service, when they adopt it, as most banks do, as a part of their regular business. If they have no such correspondent they should refuse to take paper for collection, and then the holder could choose whether he would leave it for transmission. He would then be led to inquire about the agent to whom it would be transmittéd. The English and Hew York rule is much better adapted to the convenient dispatch of business. It is no hardship .on the bank. It can always look to its corres

But it is held, on the other hand, that the liability of a bank, under such circumstances, extends merely to the selection of a suitable and competent agent at the place of payment, and to the transmission of the proper instructions, and that the corresponding bank is the agent of the holder, and that the transmitting bank is not liable for the default of its correspondent, when selected with due care. This view has been adopted by the courts of Massachusetts, Connecticut, Pennsylvania, Illinois, Louisiana, and Missouri. Mr. Morse in his work on Banks, approves of the latter doctrine (Morse, Banks, 2d Ed., 414) ; 'while Mr. Daniel, in his work on negotiable Instruments, maintains the doctrine established by the courts of this state (1 Daniel Meg. Inst., 3d Ed., § 342). Whatever the views of the courts of other states may be, the liability of the bank receiving the paper to the owner is too well established in this state to need further discussion.

It therefore follows that the learned judge who tried this case properly dismissed the complaint, and the judgment entered thereon should be affirmed, with costs.

All concur.