
    WINGFIELD, Public Examiner, Appellant, v. SECURITY NATIONAL BANK, of Sioux Falls, Respondent.
    (162 N. W. 309.)
    (File No. 4052.
    Opinion filed April 2, 1917.
    Rehearing denied May 23, 1917.)
    1. Banks and Banking — Bank Checks, Collection of — Presentation to Pay ox’ Bank, Not Thi’ough Collectoi’ — Negligence.
    Where hank checks were sent hy one holding hank, which, sent them to another hank, for collection and credit, which latter hank, instead of sending them to the express company in the town of payor hank, there ‘being no other hank in said town, sent them direct to payor hank, which remitted its draft on a fourth hank, such draft being dishonored, held, that the collecting hank was negligent -in sending checks directly to payor, it appearing -that if they had been sent to the express company they could and would have been presented for payment and paid in cash; which rule applies with additional force in the case of cashier’s check.
    2. Same — Checks on Insolvent Banks — Ignorance of Insolvency by Collecting Banlcs — Presumption of Non-payment, When Applicable.
    Although it will be presumed that an insolvent hank would .refuse payment of a presented check, such legal presumption has no standing against an admitted fact; and where it is admitted that payor hank, though insolvent, would have paid the checks in cash if .presented and cash demanded, hut, through negligence of collecting hank, they were sent directly to payor hank instead of being sent to an express company in the same town (there being no second hank therein), and were not paid, the presumption in question would not apply; and collecting hank1 was liable1 to. holder of checks, who did not know- of insolvency-of payor hank on the day when the checks, if properly presented, would havei been paid.
    3. Same — Negligence of Collecting Bank, Consequent Loss — Burden of Proof re Diligence.
    In a suit by holder of hank checks against collecting hank, for negligence in presenting checks to payor hank for payment, the collecting hank has burden of proving due diligence on its part, or of establishing that the loss would have been the same if it had used due. diligence.
    Appeal from Circuit Court, Minnehaha County. Hon. Joseph W. Jones, Judge.
    Action hy J. E. Wingfield, as Public Examiner, and Ex-Officio Superintendent of Banks and Trust Companies, against the Security National Bank of Sioux Falls, S.-D., to recover for the amount of check® alleged to have ¡been improperly presented by defendant bank for payment. From an order sustaining demurrer to the complaint, plaintiff appeals.
    Reversed.
    
      Bdzaard B. Wagner, for Appellant.
    
      Aikens & Judge, for Respondent.
    (i.) To point one of the opinion, Appellant cited: Pikney v. Kenawaha Valley Bank, (W. Va.) 23 Ann. Cases 115; Minneapolis Sash & Door Co. v. Metropolitan Bank, (Minn.) 44 L. R. A. 504, 78 N. W. 980; Farley National Bank v. Pollock (Ala.) 8 Ann. Cases, 370-; Pickett v. Baird Investment Co. (N. D.) 133 N. W. 1026; Panset v. Garden City Bank, 24 S'. D. 248; Jefferson County Bank v. Hendricks,. (Ala.) 1 L. R. A. (N. S.) 246; Givan v. Bank, (Tenn.) 52 ¡S. W. 923, 47 L. R. A. 270; Anderson v. Rogers, _ (Kan.) 27 D. R. A. 248, 36 Pac. 1067.
    (2.) To point two of the opinion, Appellant cited: Lamro State Bank v. Farmers State Bank of Winner and J. D. Wing-field, Public Examiner, 34 S. D. 417.
   W'H’ITIN'G, J.

Appeal from an order sustaining a demurrer to a complaint. The following is a statement of the facts admitted by the demurrer. Bank A, holding two checks against Bank B (one a cashier’s check executed by bank B), sends them to Bank C for collection and credit. In the town where bank B was located, there was no other bank, but there was an office of an express company, which company was engaged in the business of collecting and transmitting money. Instead of sending the checks to the express company for purpose of collection, bank C sent them direct to bank B, which bank remitted its draft on bank D' in payment of such checks. This draft'was dishonored. If bank C had sent the checks to the express company, the same could and would have been presented for payment on November ioth. Up to November 13th bank B paid all checks and demands drawn and mad'e upon it, and it would have paid these checks in cash if they had been presented1 and payment in money demanded on or before November 131th. Bank B was insolvent on November ioth, at the time said checks could, in regular course of business, have been presented by the express company, and it has ’•emained insolvent and unable to pay its obligations- in full. On November 13th it passed into the charge of the public examiner. Bank A passed into the charge of the public examiner prior to the bringing .of this action.

Appellant claims that bank C is liable for the amount of said checks, owing to its negligence in sending said checks to- the payor bank and accepting from it a draft instead of sending the checks to the express company and thus procuring cash. Respondent claims: First, that it was not negligent in sending the checks direct to payor bank; second, that, inasmuch as the payoi bank was in fact insolvent when such checks would have been presented if presented by the express company, the payor could not rightfully have paid such checks in full, and therefore appellant has suffered lm damage.

That it was negligence for bank C, under the admitted facts, to send the checks to the payor bank is clearly the law. 3 R. C. L. 627; Michie, Banks and Banking, 1045; Winchester Milling Co. v. Bank of Winchester, 120 Tenn. 225, 111 S. W. 248; 18 L. R. A. (N. S.) 441, and note; Givan v. Bank of Alexandria (Tenn.) 52 S. W. 923, 47 L. R. A. 270; Pinkney v. Kanawha Valley Bank, 68 W Va. 234, 69 S. E. 1012, 32 L. R. A. (N. S.) 987, Ann. Cas. 1912B, 115, and note; First Nat. Bank v. Bank of Whittier 221 Ill. 319, 77 N. E. 563, 5 Ann. Cas. 653, and note; Farley Nat. Bank v. Pollock, 145 Ala. 321, 39 South. 612, 2 L. R. A. (N. S.) 194, 117 Am. St. Rep. 44, 8 Ann. Cas. 370, and note; Carson, Pirie, Scott & Co. v. Fincher, 129 Mich. 687, 89 N. W. 570, 95 Am. St. Rep. 449. This rule applies with additional force in the case of the cashier’s check. First Nat. Bank v. Bank of Whittier supra, and notes 5 Ann. Cas. 658; Anderson v. Rogers, 53 Kan. 542, 36 Pac. 1067, 27 L. R. A. 248.

It appears that the decision of the trial court sustaining the demurrer to the complaint was based upon the holding of this court in Lamro Bank v. Bank of Winner, 34 S. D. 417, 148 N. W. 851. In that casé this court held that, when a check upon an insolvent bank is 'presented for payment, the holder of such check is “entitled to only its pro rata share with the other creditors in the assets of the * * * bank.” We also held that it would be presumed that an insolvent bank would refuse payment if a check was presented. A legal presumption has no standing as against an admitted fact. Here it is admitted that the payor bank, though insolvent, would have paid the checks in cash if such checks had been presented and cash demanded. There is nothing to show that either bank A or C knew of the insolvency of hank B prior to November 13th. If neither of the other banks knew of such insolvency on November roth and hank B had paid the checks, other creditors of bank B could not have held bank A liable to restore the -proceeds of same to' the insolvent 'bank. Michie, Banks and Banking, 507; 3 R. C. L. 646; Livingstain v. Columbian Bkg. & T. Co., 81 S. C. 244, 62 S. E. 249, 22 L. R. A. (N. S.) 445; Stone v. Jenison, 111 Mich. 592, 70 N. W. 149, 36 L. R. A. 675; McGregor v. Battle, 128 Ga. 577, 58 S. E. 28, 13 L. R. A. (N. S.) 185.

It follows that bank C is liable under the facts conceded. It is incumbent on it to prove facts establishing due diligence on its part or else to establish that the loss would have been the same if it had used due diligence. 3 R. C. L. 628; Michie, Banks and Banking, 1407; cases cited in note 8 Ann. Cas. 373; cases cited in note Ann. Cas. 1912B; 123.

The order appealed from is reversed.  