Bank of Washington vs. Triplett & Neale. collection of a domestic note or bill, payable in the same town, no one can imagine that this, instead of being a contract with the bank to use the proper means for collecting the paper, is a mere delegation of power to act as an attorney for that purpose. If this were so, and it should happen that by the fraud, the carelessness, or the ignorance of a clerk or teller, the only responsible parties were discharged, or the note itself lost or destroyed, it would be a sufficient defence for the bank if it could show that the directors had employed ordinary care and caution in selecting their officers; or any similar defence which would be good in the mouth of an attorney in fact, or a steward acting in good faith for his principal who had been defrauded in any transaction. If such were the understanding of this business, and the merchant had to look to the responsibility of the teller or a clerk through whose hands his paper may pass, and not to that of the bank which employs them, few deposits for collection would be made, and it would soon be found expedient to deal only with banks or bankers who would guarantee their officers. But the natural and general understanding of men of business is surely not this; it is that of an implied agreement with the bank itself, of whose officers and agents they have no knowledge, and with whom they have no privity of contract. "The decisions of our own courts, above cited, call this transaction a contract, and treat it as such. Then the law is clear, that by the employment of under agents or servants, for his own convenience, or to perform part of what he has contracted to do, the employer becomes civilly responsible to those with whom he contracts or deals in his business. The general principle of Lord Holt has always been cited with approbation, though the correctness of its application to a political office was denied, that where a trust is put in one person, and he whose interest is intrusted is damnified by the neglect of such as that person employs in the discharge of that trust, he shall answer to the person damnified.' 12 Modern R. 490. The same doctrine is thus summed up by Judge Story, from a long succession of authorities: 'It is a general doctrine of law, that the principal is held liable to third persons in a civil suit, for the frauds, deceits, misrepresentations, torts, negligences and other malfeasances, or misfeasances, and omissions of duty of his agent in the course of his employment, although the principal did not authorize or justify, or indeed know of such misconduct, or even if he forbade them, or disapproved of them.' Story on Agency, ch. 17, § 452, and authorities cited in note 3. The maxim is,' says Lord Kenyon, 'Respondeat superior-The principals are responsible for the acts of the servants in those things that respect their duty under them, though not answerable for things that do not respect their duty.' 8 T. R. 531. This rule sums up the doctrine with great force, clearness, and precision. Thus the carrier is liable for the negligence of his agent, by which goods committed to his care are damaged. So the ship owner is liable to the shipper for damages caused by reason of the neglect or misconduct of the master or mate. This liability,' says Judge Story, 'extends not only to the injuries and wrongs of the agent immediately employed in a particular business (as in this case to the Merchants Bank itself), but also to the injuries and wrongs done by others who are employed by that agent under him, or with whom he contracts for the performance of the business; for the liability reaches through all the stages of the service.' Story on Agency, 454, and cases there cited in note. It is this distinction, on Bank of Washington vs. Triplett & Neale. which I have already insisted as founded in the reason of contracts, between the undertaking to perform anything, and the mere receiving a delegation of authority to act for another, which reconciles many decisions evidently equally just in themselves, but apparently clashing in words and conflicting in authority. I include among these, in addition to the class of cases already cited or referred to, those in which persons dealing or contracting with an agent or contractor, and trusting to his credit, have endeavored to charge his principal, with whom, however, they themselves had no privity; see, for instance, the two cases in 6 Taunton, 147, 148. If it be not a mere representative agency, but a contract or undertaking to do the business, the original principal is answerable; and for the same reason he is to look to the immediate contractor with himself, and not to the inferior and distant under contractors or agents, for faults injurious to his own interests. 6 collect negotiIs there any "Such then being the general law, the bank, in undertaking to able paper, is answerable for the neglect of its ordinary agents. thing in the mere fact of the paper being payable in another city, and therefore requiring the aid of other agents, sufficient to take that case out of the general rule? I mean irrespectively of any agreement or implied understanding as to the matter. The Chief Justice, in delivering the opinion of the Supreme Court, holds that there is, and says: A note or bill left at a bank, and received for the purpose of being sent to some distant place for collection, would seem to imply, upon a reasonable construction, no other agreement than that it should be forwarded with due diligence to some competent agent, to do what should be necessary in the premises. The language and acts of the parties fairly import so much, but nothing beyond it. The person having the note is aware that the bank cannot personally attend to the collection, and that it must therefore be sent to some distant and foreign agent.' This seems to me to assume the very question in dispute. In a deposit of a note for collection, payable in the same place, the holder is equally aware that the bank cannot personally attend to the collection, and its management must be left to some one or more competent agents. But he makes an implied contract with the bank that the proper and expedient means shall be used to collect his note. So he does as to a foreign debt; and in each case he alike presumes that proper agents will be employed. In neither case has he any knowledge of the agents, or privity with them. I can perceive no reason for liability or exemption from liability in either case, which does not equally apply to the other. The bank, if its officers think fit, and the dealer will consent, may vary that liability in either case. It may receive the paper only for transmission to its correspondents. That would form a new and different contract, and would limit the responsibility to good faith and due discretion in the choice of an agent. But if this be not done, or unless there be some implied understanding on the subject, I see no difference between the responsibility assumed in the undertaking to collect foreign bills, and that for collecting domestic paper payable at home. It is assumed in the same manner, in the same words, and on the same consideration. If the reasoning of the Supreme Court be correct, I cannot perceive how, either in the case of domestic collection, or in any other case, the principal is to be made liable for the default of his own agent, if from the nature of the business it was evident that some under agent must be employed, and that the principal could not do the busi Bank of Washington vs. Triplett & Neale. ness without aid. On this principle the ship owner would not be answerable for the negligence of the captain, whom all the world knows he must employ. The master mechanic, who must (as those who contract with him are well aware) employ sub-contractors, journeymen, and laborers, would no longer be liable for their negligence in the work he contracts to have executed. The same reasoning which would here make the New York bank merely an agent 'to select other agents abroad for the party, to become his agents in the collection,' would equally make the ship owner and the contracting builder mere agents to select masters, mates, journeymen, and laborers for those with whom they deal. If it be 'unreasonable' to suppose, as the Chief Justice holds, that the bank assumed 'to become responsible for the fidelity of agents abroad,' who, 'all parties knew must intervene before the collection,' and when the plaintiffs 'knew that others must be trusted,' it must be quite as unreasonable in the case of domestic collections, and of all other transactions, where the parties knew that 'agents must intervene and others be trusted.' But in all these cases, the parties are not governed by the mere rule of personal representative agency, but are subject to the responsibilities imposed by the law of commercial contracts, of bailment or of shipping. In all these cases, we are not to look to the necessity of the employment of distant or under-agents. We are to look to the contract itself. Legem enim contractus dat. We are to look whether the contract be only for the immediate services of the agent, and his acting faithfully as the representative of his principal, doing for him, in the business confided to his care, what the principal is not able or willing to do for himself, or whether the contract looks mainly to the thing itself to be done, and the undertaking be for the due use of all the proper means for its performance. In the one case, the responsibility ceases with the limits of the personal services undertaken; in the other, it extends to cover all the necessary and proper means for the accomplishment of the object, by whomsoever used or employed. "Again: it is not true, in the usual and well-known course of trade, that there is no other agreement implied than that deposited paper payable abroad shall be forwarded with due diligence, or, as Judge Oakley charged, that the banks are only bound to transmit such paper in due form and in due time.' By the known ordinary usage of business, unless when altered by some special agreement or usage, the banks undertake something more than this. This the holders of paper could do for themselves. But the banks also undertake to receive and pay the funds here, when collected elsewhere. The foreign bank does not know the owner of the bill so as to open an account with him, and to authorize him to draw upon his funds when collected. They know only the bank from which the paper was received, and that bank has at least undertaken to manage the business of exchange between the places. On what ground, then, is the bank receiving for collection, to be answerable only for the first and last stages of the transaction, and to be discharged from any liability as to all intermediate steps?" The Court, in their judgment, declare the law to be, that in the absence of any express contract, a bank in New York, receiving for collection a bill of exchange drawn there upon a person in another State, is liable for any neglect of duty occurring in its collection, whether arising from the default of its officers at home, or its correspondents abroad, or of agents employed by such Bank of Washington vs. Triplett & Neale. correspondents; and that the neglect of a notary, who is a commissioned public officer, does not vary the rule. The same rule has also been settled in South Carolina, as New York: Thompson vs. the Bank of the State of South Carolina, 3 Hill's S. C. R. 77. The other question arose in the case which we have before cited from 6 Metcalf. A post note, issued by the Franklin Bank at Boston, had been sent to the Merchants Bank of the same city for collection. It had been the practice of the Franklin Bank, so long as it remained solvent, to pay such notes at their maturity, without days of grace. The question as to the right to days of grace had not been raised, and the defendants, under an impression that the usual practice was valid and proper, presented the note in question at maturity, and on its being dishonored, gave notice thereof to the endorsers, whereby they were discharged, the bank being afterwards held to be entitled to grace. The Supreme Court of Massachusetts decided that under the circumstances, the point of law being doubtful and unsettled, the Merchants Bank was not responsible. The following general remarks state the principles upon which the judgment of the Court was founded. "In general, the rules of law in relation to the presentment of bills of exchange and promissory notes for payment, and for giving notice to endorsers, are so plain and simple, so well known by notaries public, cashiers of banks, attorneys, and brokers, that any failure to comply with them by any agent, acting in behalf of another, would carry with it such proof of either want of skill, or want of ordinary diligence, as to render him liable to his principal. It is, therefore, often laid down in general terms, that when the holder of a bill or note has lost his remedy by these means, against a responsible party, and thereby sustained the damage, he has his remedy against his agent. But the specific question to be considered is whether an agent in all cases is bound to know the rules of law, and conform to them, at his peril, in the transaction of his employer's business, although the course of proceedings may depend upon statute provisions, so recently passed as not to be generally known, or decisions of those courts whose judgments are usually regarded as precedents and rules of practice, either not promulgated at the time, or so recently given as not to be generally known among business men. It is undoubtedly a salutary maxim that every man is bound to know the law, and that ignorance of the law excuseth no one; yet these maxims must be confined to the cases for which they were adopted. In the criminal law, a man is estopped from setting up his ignorance of the law as an excuse for its violation, because it is his duty to inform himself. So, in regard to his own rights, in dealings with others, he must, at his peril, ascertain his legal rights, and must be presumed to act in conformity to them; otherwise, there would be no safety for others in dealing with them. But the maxim has no application to the duties of those from whom ordinary skill only is required. Reasonable skill and knowledge only are demanded in every other branch of science; why should absolute knowledge and consummate skill be required in a department where it is often impossible to know the law, in its application to a particular state of facts, until it has been authoritatively declared? Take, for instance, on this very point as to the legal mode of demanding payment of a bill of exchange, the case of Rowe vs. Young, 2 Brod. and Bing. 165, and 2 Bligh. 391, decided in the House of Lords ance. Elliott vs. Swartwout. in 1820. It was the case of a bill of exchange, payable at a certain day, drawn generally on A. B., and by him accepted, payable at the house of a banker, specially designated by the acceptance. The question was, whether it was necessary to aver and prove, in order to maintain an action against the acceptor, that payment had been demanded at the banker's, at the maturity of the acceptThe Court of King's Bench had decided the question one way, and the Court of Common Pleas the other, and in the House of Lords, on a reference to the twelve judges, there was great diversity of opinions, and most of the judges stated the grounds of their respective opinions at great length. It was ultimately held that it must be averred and proved that it was demanded at the house of the banker designated in the acceptance. Now suppose, before that decision, a banker in London had received from his correspondent in the country such an acceptance, and following a series of decisions in the Court of King's Bench, had presented it, at maturity, not at the house of the banker, but to the acceptor personally at another place; but before any recovery had on the bill, this decision of the House of Lords had occurred; would it be reasonable to hold such an agent personally responsible for the knowledge of so doubtful a point of law? If it would, it would be holding him for a degree of skill, greatly beyond that required by the general rule. But after such a decision, a decision of so much importance, that it would be likely to be soon known to men conversant with that branch of business, it would not be unreasonable to hold, that not to be acquainted with it, or not acting conformably to it, would be negligence or ignorance, rendering such an agent liable." ELLIOTT VS. SWARTWOUT. * Liability of a public agent who has paid over to the government, money improperly collected. THIS was an action of assumpsit, to recover from the defendant the sum of three thousand one hundred dollars and seventy-eight cents, received by him for duties, as collector of the port of New York, on an importation of worsted shawls with cotton borders. Among other points in the cause, the judges of the Circuit Court were divided in opinion upon the two following questions of general interest. 1. Whether the collector is personally liable in an action to recover back an excess of duties paid to him as collector, and 10 Peters, 137. |