
    Reeves, Stephens & Co. v. The State Bank of Ohio.
    1. Where a bank in this state receives for collection a draft payable in New York, and for the same purpose forwards the draft to its correspondent in New York, the bank here is responsible to the owner for the conduct of such correspondent, and for the proceeds of the draft, immediately upon its-collection by such correspondent. Such correspondent is the agent of the bank here, and not the sub-agent of the owner of the draft; and payment to the agent is payment to the bank, unless there was some agreement or authority between the owner and the bank beyond the mere fact of the draft being received for collection.
    2. If, before the draft is collected, the bank here becomes insolvent, its agency may be revoked, and the agent of the bank made, by notice or otherwise, the agent of the owner of the draft, and chargeable to the owner with the proceeds of the draft afterwards collected.
    3. But if the bank here becomes insolvent after the draft is collected by the agent, and if, before such insolvency, various sums are collected by the agent on drafts forwarded to him for collection, and various sums are paid to the bank on such collections before insolvency, and, after the insolvency, a part of the-funds remaining from such collections in the hands of.the agent, is paid over to the assignee of the insolvent bank, the owner of such draft has no such specific lien or claim upon the funds in the hands of the assignee as to give him a preference over creditors of the insolvent bank.
    
      Civil Action. Reserved in the District Court of Lucas county.
    This action was commenced in the court of common pleas of Lucas county, April 2,1855, and at the July term, 1855, the defendant had judgment. The plaintiffs appealed to the district court, and that court reserved the cause for decision here.
    The case stands on petition and answer, and the evidence is contained in the agreed statement of facts.
    The petition states that the defendant has in its possession, five hundred dollars paid to it by the American Exchange Bank, of New York, for the use of the plaintiffs, proceeds of a draft on B. II. Buckingham & Co., of the city of New York, sent by the plaintiffs on the 14th of November, 1854, to M. Johnson, cashier of the Commercial Bank of Toledo, one of the branches of the State Bank, for collection. That said draft was forwarded, for collection, by said Commercial Bank to said American Exchange Bank, where said draft was paid by said Buckingham & Co., on the 21st day of November, 1854. That on the 27th day of November, 1854, said Commercial Bank became insolvent, and discontinued business; and, at the time of its suspension, said sum of five hundred dollars so paid on said draft, was in the hands of said Exchange Bank, and had not been charged on the books of said Commercial Bank to said Exchange Bank, or credited or remitted to the plaintiffs.
    And the plaintiffs say, that since such failure of the Commercial Bank, said American Exchange Bank has paid said sum of five hundred dollars to the defendant, but the defendant has failed and refused to pay any part of it over to the plaintiffs.
    Judgment is asked for $500, and interest, from November 21, 1854.
    The answer claims that the money which was in the American Exchange Bank, in consequence of the act of insolvency of the Commercial Bank, vested in the defendant, by operation of its charter, and denies that the money received by the defendant, of the American Exchange Bank, was for the use of the plaintiff's, and goes on to state matters of evidence which are repeated in the agreed statement of facts.
    It is agreed that the facts involved in this case are as follows :
    On the 14th day of November, 1854, the plaintiffs, residents of Cincinnati, sent, by letter, to the Commercial Bank of Toledo, a corporation duly incorporated and organized as one of the branches of the State Bank of Ohio, under and by virtue of the provisions of an act of the general assembly, to incorporate the State Bank of Ohio, and other banking companies, passed February 24, 1846, a draft for the sum of $500, drawn by the plaintiffs on B. H. Buckingham & Co., of New York. That said draft was owned by the plaintiffs, and was sent by them to the Commercial Bank for collection; indorsed to the cashier, and by it received in its corporate capacity.
    That the said draft, after its receipt by said Commercial Bank, was by it sent forward to the American Exchange Bank for collection, where said draft was, on the 21st of November, 1854, paid by said Buckingham & Co., and the amount thereof placed to the credit of said Commercial Bank on the books of said American Exchange Bank.
    That on the 27th day of November, 1854, said Commercial Bank committed an act of insolvency within the true intent and meaning of said act of incorporation, and by reason thereof, the assets of said Commercial Bank passed to the possession of the defendant, under and by virtue of the provisions of said act of incorporation.
    That on said 27th day of November, 1854, at the time of the failure of said Commercial Bank, the amount of said draft had neither been charged on the books of said Commercial Bank, to said American Exchange Bank, nor credited to the plaintiffs; nor did said draft appear on any of the books of said Commercial Bank, except on the collection book, where there was an entry of the receipt of said draft, and of its having been sent forward to said American Exchange Bank for collection.
    That at the time of the failure of the Commercial Bank, there was a balance in the American Exchange Bank to the credit of said Commercial Bank of $10,537.45; and that in January, 1855, $4,800 of said balance was paid over by said American Exchange Bank to the defendant. That $1,340.08 has been collected by the defendant from the paper belonging to the American Exchange Bank, in the Commercial Bank for collection at the time of its failure. That the remainder of said balance in the American Exchange Bank is involved in litigation, the same having been attached by other creditors of said Commercial Bank, and has never been paid to the defendant; and that there was remitted to the American Exchange Bank, by the Commercial Bank, after the 21st day of November, a very much larger amount than the balance due from said American Exchange Bank to the Commercial Bank, at the time of its failure.
    
      Hill § Pratt, for plaintiffs.
    
      M. B. Waite, for defendant.
   Brinkerhoff, J.

It is conceded on all hands, that under the provisions of the act of February 24,1845, “ to incorporate the State Bank of Ohio, and other banking companies,” on the commission of an act of insolvency by the Commercial Bank of Toledo, the State Bank of Ohio, the defendant in this case, became, by operation of law, the assignee of the Commercial Bank, and, as regards every thing in contest here, substituted to its rights.

The plaintiffs seek, in this action, by a recovery against the State Bank, to obtain a preference over general creditors of the Commercial Bank. On the other hand, if they fail in this, and are held to be, in fact and in law, but general creditors of the Commercial Bank, they will, under the provisions of the act referred to, be postponed until the claims of certain other classes of creditors are first satisfied.

It seems to us that the plaintiffs in this case have lost none of their rights from the fact — supposing it to be so —that their money has been paid over by the American Exchange Bank to the defendant. If it was the plaintiffs’ money in the hands of the former when paid over to the latter, the fact of that payment does not make it otherwise. Nor does the question whether or not the defendant, at the time it received the money from the American Exchange Bank, had notice of the plaintiffs’ rights, have, as we conceive, any bearing upon the rights of the parties before us. The defendant, when it received the money, did not stand in the situation of a purchaser, or other party capable of acquiring new rights distinct from those of the party from which it received the money. And standing in the relation of an assignee in law simply, whatever rights the plaintiffs had against the American Exchange Bank, they still have against the defendant; and the question of notice has nothing to do with the case. If the plaintiffs, immediately before the money was received by the defendant, could have sustained an action like this against the American Exchange Bank, then they are entitled to their present action, and if not, not.

Our inquiries may be somewhat simplified, therefore, and the case relieved from complication, by supposing the American Exchange Bank to be the defendant here, and the action to have been brought immediately before the payment made by it to the defendant.

In the case supposed, then, would the plaintiffs be entitled to recover against the American Exchange Bank ?

In the prosecution of this inquiry, the leading question is, whose agent was the American Exchange Bank ? Was it the agent of the plaintiffs, or of the Commercial Bank of Toledo alone?

"We are not aware that this question has ever been decided by the court of last resort in this state, and the cases in other states are not uniform. A leading case on the point is Allen v. Merchants’ Bank of New York, 15 Wend. 482. That was an action by the owner of a bill of exchange to recover its amount as damages from the Merchants’ Bank of New York, with which he had deposited it for collection, on account of the negligence of a bank in Philadelphia, where the bill was payable, and to which it had been transmitted by the defendant, in failing to take the requisite measures to charge the drawer and indorsers. It was held by the supreme court of New York, that the Philadelphia bank was the agent of the owner of the bill, and not of the Merchants’ Bank of New York; and that when the latter received the bill for collection, in the absence of any special agreement, no other agreement was implied than that it shoidd be forwarded with due diligence to some competent agent, to do what should be necessary in the premises.” The judgment of the supreme court in this case, on appeal, was reversed by the court of errors, which held that the secondary agent was, in the case stated, and in the absence of a special agreement or controlling usage, the agent of the primary agent, and not of the owner of the bill; and that “ a bank receiving for collection a bill drawn here, upon a person residing in another state, is liable for any neglect of duty occurring in its collection, whether arising from the default of its officers here, its correspondents abroad, or of agents employed by such correspondents.” 22 Wend. 215. After-wards, in The Bank of Orleans v. Smith, 8 Hill 560, the supreme court virtually adhered to its former decision, notwithstanding the reversal of its former judgment by the court of errors. In the subsequent case, however, of Montgomery County Bank v. Albany City Bank, 3 Seld. 459, the court of appeals held, that “ where a country bank sends to its corresponding bank at Albany for collection, an indorsed bill of exchange payable in New York, and the latter bank indorses and transmits it to its own corresponding bank in New York for the purpose, the Albany bank alone is answerable for any negligence in presenting the bill by which the indorser fails to be charged;” the court of last resort thus again overruling the doctrine attempted to be maintained by the supreme court. And the case in 3 Seld. was followed and approved by the court of appeals, in Commercial Bank of Pennsylvania v. Union Bank of New York, 1 Kern. 203, in which, “ where the Bank of Wilmington was the owner of a bill of exchange, payable at sight at Troy, and indorsed and transmitted it to the plaintiff under an arrangement by which the latter collected and retained the proceeds of paper thus remitted to it, and with the same redeemed the circulating notes of, and paid drafts drawn by, the bank of Wilmington; and the plaintiff indorsed and transmitted the bill to the defendant, its correspondent in New York, for collection, and the same was by the latter sent to the Troy City Bank for the same purpose;” it was held, “ that the plaintiff could recover of the defendant the amount of the bill if collected by the Troy City Bank, or if the same was lost by the omission of the latter to charge the drawer and indorsers.” And this seems now to be the settled doctrine of the courts of New York. The same doctrine is asserted by Story, J., in Taber v. Perrot, 2 Gall. 565. While the controversy was still pending in the courts of New York, and before the reversal of the judgment of the supreme court by the court of errors, the doctrine of the former court was followed by the courts of Connecticut and Massachusetts, in East Haddam Bank v. Scovil, 12 Conn. 303, and Fabens v. Mercantile Bank, 23 Pick. 330.

Erom the first we have felt the question to be one of much difficulty, and we have given it an unusual share of attention. In the midst of the conflict of authorities, we have been rather bewildered than aided by the adjudications in other states, except so far as the discussions resulting from the conflict tend to throw light upon the principles involved in it.

I do not know that the arguments upon the question, pro and con, can he more fairly presented than in the language of Chancellor Walworth and of Senator Verplanck, in the court of errors, in Allen v. The Merchants’ Bank.

The Chancellor says:

“It is a general rule-of law, that hanks and other corporations, as well as individuals, are liable for the acts or omissions of their general officers and servants, in relation to any business entrusted to the corporation or individual to be transacted. Hut this rule does not apply to a case where, from the nature of the business to be performed, it cannot be done by any of the ordinary officers or servants of the corporation or individual, but must be entrusted to a sub-agent employed for that special purpose; or where by the usages of trade it is customary to employ a special agent for the purpose of transacting the business. Here, from the very nature of the business to be transacted, and from the general usage in such cases, it was necessary to employ a bank or other agent in Philadelphia for the special purpose of negotiating this bill of exchange, and of receiving the payment thereof, if it should be duly honored. Prima facie the risk of the neglect of such foreign bank or other special agent to negotiate the bill properly, should be upon the owner of the bill who has impliedly authorized the employment of such special sub-agent. I admit that if it had been the custom of the banks to receive a commission or compensation for the collection of such bills and notes, beyond the difference of exchange between the two places and the actual expenses of negotiation, it might very properly have been considered as in the nature of a del credere commission, so as to render such banks legally liable for the loss which might be occasioned by the negligence or misconduct of their corresponding banks or agents. The incidental benefit which the bank in New York might receive, in having the money collected through that institution, from the chance of its remaining there as a deposit for a short time after it was collected, was undoubtedly a sufficient consideration for an implied agreement on the part of the bank, that the bill should not be lost to the plaintiffs by reason of any negligence on the part of the bank, or of its officers or servants; and such was the decision of this court in the case of The Bank of Utica v. McKinster, 11 Wend. 478. But it certainly would be going very far to say that this mere chance of benefit to the bank was in fact a del credere commission, from which an agreement to warrant the plaintiffs against loss from the mistakes and negligence of the corresponding bank or agent, could legally be inferred. I therefore conclude, that there was nothing in the law or in the facts of this case, which could entitle the plaintiffs to recover against the defendants, on the ground that the bank in New York was answerable for the negligence of the Philadelphia bank or its notary to give notice of the dishonor of the bill, when it was returned to that bank, on the day of its presentment noted for non-acceptance.”

In reply, Senator Verplanck says:

“It is well settled in this state that there is an implied undertaking by a bank or banker receiving negotiable paper deposited for collection, to take the necessary measures to charge the drawer, maker or other proper parties, upon the default or refusal to pay or accept. Smedes v. Bank of Utica, 20 Johns. Rep. 372, and S. C. in this court, 3 Cow. 663; McKinster v. Bank of Utica, 9 Wend. 46; 11 Id. 473, S. C. The ground of this rule is, that the acceptance of negotiable paper thus deposited for collection, forms an implied undertaking to make the demands and give the notices required by law or mercantile usage, for the perfect protection of the holder’s rights against all previous parties; for which undertaking the use of the funds thus temporarily obtained, or of the average balances thereof, for the purposes of discount or exchange, forms a valuable consideration. Had we no express authority on this head, I should consider the acceptance by a bank of paper for collection from a customer, in the usual course of his business, as sufficient evidence of a valuable consideration. The whole ordinary business of a bank with its dealers, is one of mutual profit or accommodation, and must be taken together (unless some part is separated by express understanding), and it is not for a bank to allege or for a court to consider (as the chief justice seems to do), that a collection in a particular place must be regarded as a gratuitous favor. If accepted at all, the general profits and advantages of the business of which this may perhaps be an unproductive part, form a good consideration for the undertaking. * * *

“ "What then is the ordinary undertaking, contract or agreement of a bank with one of its dealers, in the case of an ordinary deposit of a domestic note or bill, payable in the same town received for collection ? It is a contract made with a corporate body having only a legal existence, and governed by directors, who can act only by officers and agents; or if it be with a private banker, he too is known to carry on his business by clerks and agents. The contract itself is to perform certain duties necessary for the collection of the paper and the security of the holder. But neither legal construction nor the common understanding of men of business can regard this contract (unless there be some expi’ess understanding to that effect) as an appointment of the bank as an attorney or personal representative of the owner of the paper, authorized to select other agents for the purpose of collecting the note, and nothing more. There is a wide difference made as well by positive law as by the reason of the thing itself, between a contract or undertaking to do a thing, and the delegation of an agent or attorney to procure the doing the same thing — between a contract for building a house (for example), and the appointment of an overseer or superintendent, authorized and undertaking to act for the principal, in having a house built. The contractor is bound to answer for any negligence or default in the performance of his contract, although such negligence or default be not his own, but that of some sub-contractor, or under workman. Not so the mere representative agent, who discharges his whole duty if he acts with good faith and ordinary diligence in the selection of his materials, the forming his contracts and the choice of his workmen. Now in the case of the deposit for 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 defense for the bank if it could shew that the directors had employed ordinary care and caution in selecting their officers; or any similar defense 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 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 guaranty 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 contraced to do, the employer becomes civily 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 Mod. Rep. 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, sec. 452, and authorities cited in note 3. £ The maxim is,’ says Lord Kenyon, £JRespondeat 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 Term Rep. 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, sec. 454, and cases there cited in note. It is this distinction, on which I have already insisted as founded in the reason of contracts, between the undertaking to perform any thing, 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 Taunt. 147,148. If it be not a mere representative agency, hut 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 defaults injurious to his own interest. '

Such then being the general law, the banak, in undertaking to collect negotiable paper, is answerable for the neglect of its ordinary agents. Is there any 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 he necessary in the premises. The language and acts of the parties fairly import so much, but nothing beyond it. The person leaving the note is aware that the bank cannot personally attend to the collection, and that it must therefore be sent to some distant or foreign agent.’ This seems to me to assume the very question in dispute. In a deposit of a note for collection, payable in tbe same place, tbe holder is equally aware tbat tbe bank cannot personally attend to tbe collection, and its management must be left to some one or more competent agents. But be makes an implied contract with tbe bank tbat tbe proper and expedient means shall be used to collect bis note. So be does as to a foreign debt; and in each case be alike presumes tbat proper agents will be employed. In neither case has be any knowledge of tbe 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 tbe other. Tbe bank, if its officers think fit, and tbe dealer will consent, may vary tbat liability in either case. It may receive tbe paper only for transmission to its correspondents. Tbat would form a new and different contract, and would limit tbe responsibility to good faith and due discretion in tbe choice of an agent. But if this be not done, or unless there be some implied understanding on tbe subject, I see no difference between tbe responsibility assumed in tbe undertaking to collect foreign bills, and tbat for collecting domestic paper, payable at home. It is assumed in tbe same manner, in tbe same words, and on tbe same consideration. If tbe reasoning of tbe supreme court be correct, I cannot perceive bow, either in tbe case of domestic collection, or in any other case, tbe principal is to be made liable for tbe default of bis own agent, if, from tbe nature of tbe business, it was evident tbat some under agent must be employed, and tbat tbe principal could not do tbe business without aid. On this principle, tbe ship owner would not be answerable for tbe negligence of the captain, whom all tbe world knows be must employ. Tbe 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 tbe work be contracts to have executed. The same reasoning which would here make tbe New York bank merely an agent £ to select other agents abroad for tbe party to become bis 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 1 all parties knew must intervene before 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 know 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 dot. 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 ? ”

In controverting the idea of the chancellor, that a bank, in making collections for a customer, renders a gratuitous service, it seems to me that the learned senator’s statements are hardly as strong as the facts will justify, especially in reference to collections made by banks in the west of bills payable in the east. Such collections, being a means of acquiring eastern exchange, which is always in demand at a premium, although ostensibly gratuitous, is so far from being gratuitous in fact, that it constitutes a lucrative branch of the business of banking, and is so desirable that the allowance of a small premium for the privilege of making such collections is not unusual.

There is another matter not unworthy of notice. Balances on the books of a solvent bank in New York in favor of a western bank are equivalent to deposits in such eastern bank; and these, by the provisions of the fifty-fifth section of the act “ to incorporate the State Bank of Ohio,” etc., (Swan’s Stat. 97,) are made equivalent to specie in them own vaults as a basis of the circulation of the branches of the state bank, of which the Commercial Bank of Toledo was one.

The doctrine of the New York court of errors seems also to have been distinctly held and settled by the British House of Lords, in Mackasy v. Ramsays, 9 Cl. and Pin. 818, 850, cited in Broom’s Legal Maxims, 645. In that case, “M. employed R. & Co., bankers in Edinburgh, to obtain for him payment of a bill drawn on a person resident at Calcutta. R. & Co. accepted the employment and wrote, promising to credit M. with the money when received. R. & Co. transmitted the bill, in the usual course of business,- to C. & Co., of London, and by them it was forwarded to India, where it was duly paid. R. & Co. wrote to M. announcing the fact of its payment, but never actually credited him in their books with the amount. The house in India having failed, it was held that R. & Co. were the agents of M. to obtain payment of the bill; that payment having been actually made, they became ipso facto liable to him for the amount received, and that he could not be called on to suffer any loss occasioned by the conduct of the sub-agents, as between whom and himself no privity existed. “ To solve the question in this case,” said Lord Cottenham, “it is not necessary to go deeper than to refer to the maxim, ‘ quifacit per aliumfacit per se.’ R. & Co. agreed, for a consideration, to apply for payment of the bill; they necessarily employed agents for that purpose, who received the amount; their receipt was, in law, a receipt by them, and subjected them to all the consequences. The appellant, with whom they so agreed, cannot have anything to do with those whom they so employed, or with the state of the account between different parties engaged in this agency.”

On the whole, looking at the question in the light of principle, and of what seems to us to be a sound legal policy, we prefer to adopt the doctrine of the courts of England and New York, as now established.

"We hold, then, that the American Exchange Bank was the agent of the Commercial Bank of Toledo, and not the sub-agent of the plaintiffs. And it follows that the payment of the bill to the American Exchange Bank, and the entry of its proceeds on the books of that bank to the credit of the Commercial Bank of Toledo — the Commercial Bank of Toledo being at the time apparently a solvent institution, and the American Exchange Bank having no notice but that the bill and its proceeds were the absolute property of the Commercial Bank of Toledo — was a payment to the Commercial Bank of Toledo. Erom the moment of such payment, the Commercial Bank of Toledo became the debtor of the owners of the bill, and they might, eo instanti, have maintained an action against it for the amount of its proceeds.

The agreed statement of facts shows that subsequent to this payment of the bill to the American Exchange Bank, and prior to the bankruptcy of the Commercial Bank of Toledo, large mutual dealings, amounting to more than twenty fold the amount of this bill, occurred between these banks; and that thus the proceeds of this bill became, on the books and in the vaults of the American Exchange Bank, inextricably and indistinguishably mingled in the general accounts and general assets of the Commercial Bank of Toledo. In this state of things, the application of the rule as stated in Parsons’ Mercantile Law 802, seems to be inevitable, that “what a bankrupt holds in the right of another, does not pass to the assignee. If, therefore, the bankrupt has collected a debt for another, and has kept the sum so collected apart, it belongs, generally speaking, to him for whom it was collected. But if it is merged indistinguishably into the general assets of the bankrupt, the owner has only a claim for it to be proved like other debts. So, if the bankrupt sold goods for his principal, and they are not paid for, the principal can collect the debt, and sue in his own name. Or, if the bankrupt has received payment for the goods, and has kept that payment apart, the owner, generally, could reclaim it; but not if it were merged in, and mingled with, his assets.”

If the foregoing views be correct, there was, as between the plaintiffs and the American Exchange Bank, no privity in virtue of which the plaintiffs could, on the state of facts existing between them, at any time have maintained an action against it. And moreovei’, whatever balances existed on the books of that bank in favor of the Commercial Bank of Toledo, the agent of the plaintiffs, were indistinguishably mingled with the general assets of the latter; and the plaintiffs could have had no claims against it at all distinguishable from those of a general creditor of the Commercial Bank of Toledo. It can hardly be said that the proceeds of the plaintiffs’ bill were paid over by the American Exchange Bank to the defendant; the most that can be said, is that the proceeds of the plaintiffs’ bill formed a somewhat remote and inconsiderable element in a general account between the Commercial Bank of Toledo and the American Exchange Bank, an undistinguishable portion of a balance of which general account was, after a course of subsequent dealings between the said banks, paid over to the defendant. And, under the circumstances of the case, we think the American Exchange Bank had a right to make the payment, and the defendant had a right to receive it.

There is a class of cases which, at first blush, seem to run counter to the conclusions at which we have arrived, but which, on closer inspection, will be seen to be clearly distinguishable in principle from the case before us, and in no way inconsistent with our conclusions upon it. I refer to such cases as Lawrence v. Stonington Bank, 6 Conn. 521; Bank of Metropolis v. New England Bank, 1 How. 234; Gordon v. Kearney, 17 Ohio Rep. 572; and Wilson Co. v. Smith, 3 How. 763.

These were all cases in which suits were brought by the owners of bills or notes deposited with banks or bankers for collection, against a secondary agent to whom they had been ti-ansmitted by the primary agent; and in all of them the plaintiffs were held entitled to recover, subject, however, in some of the cases, to the right of the secondary agent to retain for a general balance existing in his favor against the primary agent. But all these cases are distinguishable from that under consideration, in the following important particulars:

That the secondary agent had notice, before the payment of the bill or note to Mm, of the bankruptcy of the primary agent, and that the bill or note was the property of the plaintiff.

That no dealings occurred between the primary and secondary agent subsequently to the payment of the bill or note to the secondary agent.

These cases seem to establish the doctrine, that on the insolvency of the primary agent, and before payment to the secondary agent, and, of course, before any undistinguishable commingling of assets occurs, the principal may, by notice, make the secondary agent his own; and thus, except as to the right of the secondary agent in certain cases to retain as aforesaid, to render the receipt of the proceeds of the bills or notes by the secondary agent, in any other character than that of immediate agent for the principal, wrongful as against the principal, and so to entitle him to recover. This doctrine we have neither disposition nor occasion to controvert, for it has no application to the case before us.

Judgment for defendant.

Swan, C. J., and Scott and Peck, JJ., concurred.

Sutliff, J.,

dissenting:

I am unable to concur in the opinion expressed in this case, and will here state the grounds upon which I dissent.

The bill of exchange or draft upon P. H. Buckingham & Co., of New York, for the $500, it is admitted by the agreed statement, was the property of the plaintiffs, when sent to the cashier of the Commercial Bank. It was put into the possession of that bank to be collected by their agency for the plaintiffs. ’When forwarded to the American Exchange Bank, and while held by that bank, it continued to be the property of the plaintiffs, and was, in fact, evidence of that amount of money in hands of the drawees belonging to the plaintiffs, the drawers; and I maintain that in law, as well as morals, the money, when paid, belonged to the plaintiffs; and a right to demand and receive it of whomsoever held, remained to the plaintiffs. If the draft had been put into the hands of an attorney for collection, by the bank at Toledo, or the bank at New York, and the money thereby collected, the plaintiffs would have had the right to demand and receive the money so collected of the attorney. If the attorney had deceased before paying over the money to the bank from which he had received the draft, the plaintiffs, upon proof of the facts of the case, could have recovered the money from the executor or administrator of the attorney. It is true that if the money had been remitted by the American Exchange Bank to the Commercial Bank before notice and demand by the plaintiffs, their right of action would have been lost against the American Exchange Bank, just as in this case, and just as it would have been in the case supposed against an attorney collecting the money, if he had before notice and demand paid it over to the bank from whom he received the draft. And I think this results from the fact that the money which the draft expressed before paid, when paid remained the property of the plaintiffs in the hands of whomsoever held the fund, in the same sense as it belonged to them while in the hands of Buckingham & Co., and while the draft remained unpaid.

If this is not true, that the money, when paid in upon the judgment, and when receipted by the attorney from the clerk or sheriff’ and so on, in whosever hand it chanced to be, continued of right to be a credit of the plaintiffs, in the hands of the holder of the funds, it must follow that the title of plaintiff's in the draft and in the credit while unpaid by the drawees, had passed from the plaintiffs to the Commercial Bank. But when did the title pass ? Certainly not on indorsement and delivery of the draft, for neither.the plaintiffs nor the Commercial Bank regarded the draft as sold to or purchased by the bank. The Commercial Bank entered in their book the memorandum of having received the draft for collection; and the plaintiffs do not seem to have treated it as any thing different than a delivery to the bank for collection. And certainly, the draft, until paid, remained entirely at the risk of the plaintiffs. If the draft had been burnt, or had miscarried when forwarded by mail, or if the drawees had become insolvent, so that at maturity only part of the amount could be collected, or so that nothing could be collected on the draft, the loss would have all fallen on the plaintiffs and not upon the Commercial Bank.

But it is insisted that the fact of the American Exchange Bank having placed the amount, when collected by that bank, to the credit of the Commercial Bank, was equivalent to paying over the money to that bank.

If this be so, I will concede that the judgment in this case is right, for I do not pretend an action can be maintained for the money if it ever in fact passed to the Commercial Bank. But the statement of facts shows that the money was paid into the American Exchange Bank on the 21st of November, and there is nothing in the statement to show that any part of the amount had afterwards, and before the 27th of that month, been paid over or remitted to the Commercial Bank. But there is an express statement that, at the time of the failure of the Commercial Bank on the 27th, it had a balance on the books of the American Exchange Bank of $10,537.45, and which must, from all that is shown in the statement, have been made up, in part, by the amount collected upon the draft upon Buckingham & Co. It is true that in the conclusion of the agreed statement, it is said that there was remitted by the Commercial Bank to the American Exchange Bank, after the 21st day of November, a very much larger amount than the balance due from said American Exchange Bank to the Commercial Bank at the time of failure. But this, however adroitly introduced, really signifies nothing. There is no statement of the amount during the same time remitted by the American Exchange Bank to the Commercial Bank, nor whether the amount so remitted to the American Exchange Bank entered into their account, of which the balance is so stated. If at any time previous to the assignment of the Commercial Bank from the time of the collection of the draft there had not existed a balance upon the books of the American Exchange Bank in favor of the Commercial Bank equal to the amount so collected upon the draft, it was a material fact for the defense, and would have been as easily, and doubtless more readily stated, than the amount of remittance, which could only have been stated as a circumstance tending possibly to such an inference.

But we all agree, in this case, that the merits of the suit are the same that they would have been had the suit been instituted against the American Exchange Bank by the plaintiffs previous to the defendant so receiving the balance due from that bank to the Commercial Bank. If, upon the 28th day of November, 1846, the plaintiffs had the right to demand and receive from the American Exchange Bank, the amount received by that bank upon their said draft, we are unanimous in opinion that the plaintiffs ought to recover in this action.

Nor can the case be regarded as at all to the prejudice of the plaintiffs that the American Exchange Bank had carried the amount collected upon the draft to the credit of the Commercial Bank in a general account with other credits, that the $500 so collected upon the draft, instead of being the only credit given to the Commercial Bank by the American Exchange Bank, showing simply a balance of $500 on the 28th of November, constituted a part of the larger balance of $10,537.45, so in fact existing. This follows from the fact that money, having no ear mark, neither the attorney collecting, nor the bank receiving the money upon the draft, if liable at all, would be liable for the identical money collected, but only for the like amount of money so collected and belonging to tbe plaintiffs. Eor illustration, suppose the American Exchange, in one case, to have given no other credit to the Commercial. than that for the $500, and to have had no other dealings with that bank, that fact would only give a right of action for 'money had and received in favor of the party to whom the money belonged. But suppose, again, that the entire amount of the $10,537.45, except the $500 so collected upon the draft, had been, by the American Exchange Bank, paid over to the assignee or creditors of the Commercial Bank, obviously the bank so then retaining the $500 would have stood in precisely the same relation to the plaintiffs as in the case first supposed. It follows, therefore, that the fact of there having been large dealings between the two banks, and a balance of $10,537.45 against the bank so having received the $500 of plaintiffs’ money upon their draft, does not at all affect the question. The case, then, remains, and is to be regarded precisely as if the only dealings between the two banks had been the collection of the $500 upon the draft on the part of the American Exchange Bank and setting the same to the credit of the Commercial Bank, and that this suit had then been brought against the bank so holding the money for its recovery. And, under such circumstances, it seems to me that no unsophisticated mind could hesitate, if asked to whom that credit honestly belonged, in answering that it belonged to the owners of the draft, unless the property be changed hy some subtle rule of law. And if such change of property has been effected by any rule of law, it obviously has been done without any consideration received by plaintiffs, and results in wrongfully depriving them of their own, .and must be certainly a sorry illustration of the maxim, that law is the perfection of reason. But I deny that the law, when properly understood and applied to this case, is obnoxious to any such reproach. By the most unanswerable reasoning, and that common sense of right entertained by every one, and, as I verily believe, by the best precedents and authorities in law, the plaintiff's in this case ought to recover.

No one will pretend that any different rule obtains in this case by reason of artificial persons, banks, being parties. . Apply the state of facts presented in this case to natural persons, and let us see the result. Suppose these plaintiffs to have forwarded their draft to an attorney or a broker at Toledo for collection, and the person so receiving the draft had forwarded it to an attorney in New York for collection, who had collected it and set the same to the credit of his correspondent, and the man to. whom the draft had been sent at Toledo had died insolvent; the .plaintiffs in that case would or would not be entitled to demand and receive from the attorney collecting their draft the amount so collected and held by him. If the plaintiff's would, in that case, be entitled to the money so collected upon their draft, and held by the attorney at New York, in preference to the administrator of the insolvent lawyer or broker at Toledo, then are the plaintiffs entitled to recover their demand in this case. But if, under such circumstances, the plaintiff's could not recover, but in law the money would belong to the administrator of the insolvent lawyer or broker to whom the draft had been so sent for collection, then, in such case, and not otherwise, I concede the plaintiff's, are not entitled to recover in this suit. But I think a denial of their right to recover in the case supposed would he regarded as a manifest wrongful deprivation of their money.

But let us recur to the precedents and authorities which should govern the case. And, firstly, I will recur to the rule in this state. Eor if a rule has been established in this state, it is entitled to respect, and should goVern this case, unless such rule fails to do justice between the parties, and for that cause may be set aside by a new rule to be established more in accordance with justice.

The case of Gordon v. Kearney, 17 Ohio Rep. 572, presents nearly the same question presented in this- case. Gordon had indorsed his draft to Warrick, Martin & Co., bankers at Pittsburgh, for collection; and they indorsed and forwarded the same to Kearney, a broker at Zanesville ; an,d Warrick, Martin & Co., who shortly after became insolvent, being indebted to Kearney in more than the amount of the draft forwarded to him, the defendant was notified shortly after, that the draft belonged to plaintiff, and was requested to return it. But the defendant refused to do so, and collected the same, carrying the amount to the credit of Warrick, Martin & Co., and the plaintiff brought suit to recover the amount. The majority of the court were of opinion that, under the circumstances, the plaintiff was not entitled to recover. In pronouncing the opinion,; Judge Birched, after remarking that “ it looks like a hardship for the actual owner of the bill to lose it for the bare error of intrusting its collection to irresponsible money brokers,” says: “ It would be equally a case of hardship if the defendant should be compelled to lose the amount, when but for the credit by this means given to Warrick, Martin & Co., he would probably have taken measures to secure the balance of account due him. The rule in such cases is, that when one of two persons must sustain loss, he shall be the sufferer who placed the means of imposition in the hands of the wrong-doer. Between two innocent persons, he shall suffer who incautiously gave the means of obtaining the false credit.” And the judge then refers to the doctrine held in the case of The Bank of the Metropolis v. The New England Bank, 17 Pet. Rep. 174, as expressing the rule recognized and followed by the court in the opinion expressed.

It is thus seen that the Supreme Court of this state, in the case referred to, clearly recognized the right of the owners of a draft indorsed and forwarded for collection to a party, and by that party indorsed and forwarded to another party, who collected the same, to maintain an action for the recovery of the money against the party so collecting the draft, as in this case; and that right of recovery was suffered to be defeated by the defendant only by showing in himself an equitable claim to tbe money paramount to the legal right of the plaintiff, the owner of the draft. No one can read that case without perceiving that the only cause preventing a recovery by the plaintiff in the case was the fact that the balance was in favor of Kearney as between him and "Warrick, Martin & Co., from whom he had received the draft, and credited the proceeds when collected. Had not Kearney set up this equitable defense, the court, recognizing as they did the legal right of Gordon, the owner of the draft, to the proceeds after collected by Kearney, would have given judgment in his favor as a matter of course. And under the opinion of the court expressed in that case, it would be absurd to say that, if the balance had been against Kearney, and in favor of "Warrick, Martin & Co., so as to make the case parallel with this, the court would have suffered the assignee of Warrick, Martin & Co., after their insolvency or bankruptcy, to have recovered the money from Kearney against the claim of Gordon.

The facts in the case of the Bank of the Metropolis v. The New England Bank, 17 Pet. Rep., were quite similar to those in the case of Gordon v. Kearney, but with the additional proof that the course of dealing between the Bank of the Metropolis and the Commonwealth Bank had been to mutually remit for collection such promissory notes or hills of exchange as either might have, payable in the vicinity of the other; which, when paid, were credited to the party sending the same in the account current kept by such bank, and regularly transmitted from one to the other, and settled accordingly. On the 24th of November, 1837, the Bank of the Metropolis was indebted to the Commonwealth Bank in the sum of $2200; and in the latter part of that year, the Commonwealth Bank transmitted to the Bank of the Metropolis for collection in the usual way, notes, drafts, etc., falling due in the ensuing months of February, March, April, May and June, indorseel by G. P. Clark, cashier of New England Bank, to C. Hood, cashier of Commonwealth Bank, and by the latter indorsed to G. Thorn, as cashier of the Bank of the Metropolis. On the 13th of January, 1838, the Commonwealth Bank failed, and on that day the cashier of that bank wrote a letter to the Bank of the Metropolis directing them to hold the paper which he had forwarded as mentioned, subject to the order of the cashier of the New England Bank, it being the property of that institution.” "When this letter was received, the account between the Commonwealth Bank and the Bank of the Metropolis exhibited a balance in favor of the latter in the sum of $2900; and the Bank of the Metropolis thereupon insisted upon their right to apply the proceeds of such paper toward the payment of said balance. The New England Bank brought the suit against the Bank of the Metropolis in the circuit court and recovered judgment for the amount of the proceeds of the notes and bills of exchange. To reverse that judgment, the case was brought before the supreme court by a writ of error. Chief Justice Taney, in delivering the opinion of the court, used the following language: If this were a question between the two Boston banks, and the case depended upon their respective rights, the plaintiff’ in the court below would undoubtedly have been entitled to recover,” etc. And yet the Bank of New England stood in precisely the same relation to the Commonwealth Bank that the plaintiffs in this case would towards the Commercial Bank, if the balance had been in favor of the American Exchange Bank instead of against that bank, and the proceeds of the draft applied upon such balance. The holding of the supreme court of the United States in the case referred to, would, therefore, determine, under the application of the same rule to this case, the right of the plaintiffs to the proceeds of the draft while in the hands of the American Exchange Bank, as against the right of the Commercial Bank, and of course as against the assignee of that bank, to the proceeds of the di-aft.

The same doctrine is maintained by the supreme court of the United States in the case of Wilson & Company v. Smith, 3 How. 763. The facts in that ease were as follows: The plaintiffs wore the owners of a draft drawn by Henry B. Holcombe of Augusta, Georgia, upon one Charles E. Mills of Savannah, and placed the same in the hands of Daniel "W". St. John, at Augusta, as their agent, for collection. St. John forwarded the same to his agent, Smith, at Savannah, for acceptance and collection. The di'aft was accepted and paid to Smith, the defendant, and credited by him to the account of St. John, who was at the time indebted to him, Smith. "When the draft was so sent to Smith he was not apprised to whom it belonged, nor were any directions given him as to the money when collected. The suit was brought under these circumstances by the plaintiffs, as the owners of the draft, against Smith, for the amount collected by him thereon. The case was certified into the supreme court from the circuit court. Chief Justice Taney, in pronouncing the opinion of the court, at the January term, 1845, said: “ It is admitted that the bill was the property of the plaintiffs, and was transmitted to St. John at Augusta for collection, and by him transmitted to the defendant at Savannah, where the drawer resided, and that no consideration was paid for the bill, either by the defendant or St. John. According to the usual course of dealing among merchants, the transmission of the paper to St. John gave him an implied authority to send it for collection to a sub-agent at Savannah; for it could not have been expected by the plaintiffs that St. John was to go there in person, either to procure the acceptance of the bill, or to receive the money, nor could St. John have so understood it. So far, therefore, as the question of privity is concerned, the case before ns is precisely the same with that of the Bank of the Metropolis v. The New England, Bank. * * * Upon referring to the case, it will be seen that the court entertained no doubt of the right of the New England Bank to maintain the action for money had and received against the Bank of the Metropolis ; and the difficulty in the way of its recovery was not a want of privity, but arose from the right of the Bank of the Metropolis to retain, under the circumstances stated in the case, for its general balance against the Commonwealth Bank. "We think the rule very clearly established, that whenever, by express agreement between the parties, a. sub-agent is to be employed by the agent to receive money for the principal, or where an authority to do so may fairly be implied from the usual course of trade, or the nature of the transaction, the principal may treat the sub-agent as his agent, and when he has received the money, may recover it in an action for money had and received. * * * The right to retain in that case depended upon the fact that credit was given. But in the case at bar, (eontinues_ the Chief Justice), this fact is expressly negatived, and there is no ground, therefore, upon which he can retain, according to the principles decided in the case referred to.”

Under a fair application of this rule of law thus expressed by the supreme court of the United States, and adopted by the supreme’ court of this state in the case of Gordon v. Kearney, there could be no doubt of the plaintiffs’ right to have recovered the amount received upon their draft from the American Exchange Bank at any time before that bank had paid it over to defendant. But I maintain that the rule I insist upon adhering to, is not only sustained by the high authority of the supreme court of the United States, but by other courts of the highest respectability; and was only adopted by that court as the law applicable to such cases, deduced from the weight of well considered opinions and authority in this country and in England.

. The case of Lawrence, etc., v. The Stonington Bank, 6 Conn. Rep. 531, in which the plaintiff was allowed to recover, was a much stronger case for a defense than the present case. The facts of that case were briefly as follows: The plaintiffs, residing in the city of New York, on the 2d of September, 1825, drew a bill of exchange for $156 on P. Denison of Stonington, who was indebted to them in that sum, payable to their order twenty days after date, for the purpose of collection, indorsed it in blank, and lodged it in the Phoenix Bank in New York. The cashier of that bank indorsed the bill in blank, and sent it to the Eagle Bank of New Haven for collection; and the cashier of that bank indorsed it in blank and sent it to the Stonington Bank for collection. No consideration was paid by either of the banks, and they had no interest, except to collect and remit the avails. On the 20th of September, the Stonington Bank learned of the failure of the Eagle Bank, which was indebted to them in sixty dollars, and whose bills to the amount of $180 they had in possession. On the 25th of September, Denison paid to the defendants, the Stonington Bank, and was by them credited to the Eagle Bank. It was not known by the defendants that the bill of exchange was not the property of the Eagle Bank. On the 80th of September, the plaintiffs drew for the money, and also presented to defendants an order from the Eagle Bank, which being refused, the plaintiffs commenced suit to recover the same. The case was tried at Norwich, at the January term, 1827, before Daggett, J., who, upon the facts stated, gave judgment against the defendants. At the July term, 1827, the case came before the supreme court of that state for revision. O. J. Hosmer, in delivering the opinion of the court, remarked as follows: “ The defendants, to use the very appropriate expression of O. J. Eyre, were in privity with the Phoenix Bank, and the testimony, which was drdy admitted, shows that they have no title to the avails of the bill. All the indorsers were merely agents of the plaintiffs for the collection and transmission of the money. * * * .There is neither law nor equity in taking the plaintiffs’ property and setting it off against the demands due from the Eagle Bank. * * * * * * In conclusion (says the Chief Justice), I would apply the expressions of Lord Mansfield in Buller v. Harrison, Cowp. 565, 568. No new credit was given, no acceptance of new bills, no alteration in the situation which theadefendants' and the Eagle Bank stood in towards each other, after the failure, or collection of the money. The defendants ought not to say, ‘ this is a hit; we have got the money and we will keep it.’ The Eagle Bank the defendants knew was insolvent. No prejudice has arisen to them from the collection of the bill; and, in common honesty, they ought not to shelter themselves from loss by casting their own misfortune on an innocent man, who ought not to bear it. In my opinion, the crediting of the money to the Eagle Bank does not alter the case a straw.”

The same doctrine is expressed by the supreme court of that state in the case of East Haddam Bank v. Scovil, 12 Conn. Rep. 303.

The decisions in the State of Massachusetts are to the same effect. See the case of Barker v. Prentiss, 6 Mass. Rep. 430; also, the case of Fabens v. Mercantile Bank, 23 Pick. 330. But in the latter case, it will be perceived, the note was received by the hank not only for collection, but as collateral security, and its proceeds, when collected, were to be applied upon the plaintiff’s note, held by, and payable to, that bank.

It is said, however, that the application of the rule expressed by the foregoing cases, and others which might be referred to, necessarily depends upon the question of agency; and that a recovery can only be had by the owner of the bill or draft, of the party collecting and holding the money upon it, when such holder of the money is the agent of the owner of the paper.

I do not so understand the law. The question of agency has not, necessarily, anything to do with the case. This action is one commonly denominated an action for money had and received. And who ever heard that the right to maintain that action depended, in such cases, upon the relation of agency subsisting between the parties. I understand the law in such case to require no further privity of contract, or implied promise, to support the action, than what necessarily arises from the fact of the defendant having money belonging to the plaintiff and which he has not a right in equity and good conscience to retain. It is utterly immaterial to inquire whether the defendant received the money in the relation of agent, and then refused to pay over to his principal, or whether, being a stranger, he found the money or received it on deposit from a wrong doer, or, in short, in what manner he received the money'. It does not at all affect the right to recover that the defendant received the money rightfully; the action depends only upon the two facts, the right of property and the right of possession. If the money rightfully belongs to the plaintiff, and the defendant has not a right to retain it from him, the plaintiff has a right to recover in such an action; otherwise, he has not. See cases of Buller v. Harrison, Cowp. Rep. 565; Cox v. Prentiss, 3 M. & S. Rep. 344; Mowatt v. McLelan, 1 Wend. Rep. 173; Mason v. Waite, 17 Mass. Rep. 560, and Hall v. Marston, 17 Mass. Rep. 575. In the latter ease, C. J. Parker says: “ There are many cases in which that action (for money had and received) is supported without any privity between the parties other than what is created by law. Whenever one man has in his hands the money of another, which he ought to pay over, he is liable to this action, although he has never seen or heard of the party who has the right. When the fact is proved that he has the money, if he cannot show that he has legal or equitable ground for retaining it, the law creates the privity and the promise.”

Indeed, the action for money had and received has always been regarded as peculiarly applicable to such cases as that under consideration. And the authorities even go to the extent to authorize the owner of goods sold by the factor who has collected payment, and become bankrupt, to recover the money so collected, if it had been kept apart from other moneys by the factor. And so, too, if the factor sell goods for his principal and become bankrupt before payment, and the assignee of the bankrupt receive the payment for them (as they have the proceeds of the draft in this case), it has always been held, I believe, that the owner of the goods might recover of the assignees the amount in an action for money had and received. Upon the same principle, the owner is allowed to recover in an appropriate action from the assignee any goods or chattels of his held by the bankrupt, and passed to the assignee. See authorities Tooke v. Hollingworth, etc., 5 Term. Rep. 215; Rowton ex parte, 17 Ves. Rep. 426; Sollers ex parte, 18 Ves. Rep. 259; Godfrey v. Furzo, 3 P. Williams 185. Parsons’ Mercantile Law 302, and note upon same page.

So far then from the leading question in this case being, whose agent was the American Exchange Bank, in receiving and holding the money collected upon the draft, I regard that question as in nowise affecting the merits of this case; nor in any manner determinate of the right of the plaintiffs to recover in this action. Suppose it should be conceded that the view taken by the courts of New York, of the relation of the parties in such a case, is a more sensible one than that which obtains in the courts of Massachusetts, Connecticut, and in the supreme court of the United States and in England, if in fact there be any difference in the rule expressed by the authorities. Suppose all this be conceded, what follows ? Certainly, nothing further than that the plaintiffs in this case could not maintain a very different action from this, to wit, an action on the case, for negligence or misfeasance, against the American Exchange Bank, if a case should have arisen for such action.

I admit that, where one has undertaken with the owner to collect for him a bill, and for the performance of such undertaking has employed his clerk or some other person, Such clerk or person employed to present the bill, etc., may not be responsible, for his nonfeasance or misfeasance, to the owner. The reason is obvious. There may, in such case, be no privity of contract between the employer of the agent and the owner. The clerk or person employed by the agent may have presented the bill at the precise time and place directed by his employer, and yet the obeying such instructions may have resulted in a loss of the bill to the owner. In such a case, there would evidently be wanting that privity of contract, between the owner and employee of the agent, necessary to enable the owner to maintain an action against the employee for nonfeasance or misfeasance. In such a case, the maxim, respondeat superior, might well apply. But in the case supposed, if the employer had collected the bill, and while retaining the money the agent had died or become bankrupt, I deny that the law is such that the owner could not, upon notice and demand, recover the money from the employee, as against the claim of the administrator or assignee of the agent for the same.

But this action being one for money had and received, and not an action to recover for damages sustained by the plaintiffs, by reason of any neglect or misfeasance of the American Exchange Bank in making the collection, the action might just as well have been sustained against that bank if it had continued to retain the money, not being the agent of the plaintiffs, as it could if it were such agent. Indeed, I know of no exception to the doctrine, that where an agent has received money from a third person for his principal, and the person from whom he has received the money, or to whom it belongs, becomes for any cause entitled to recall it, on notice to the agent before he has paid over the money to his principal, or any change in his situation on account of the receipt of the money has occurred, the agent is legally bound to repay the same to the person so having the right to reclaim the money. See 2 Liverm. on Agency 260, 261; Story on Agency, sec. 300, etc.

The cases, Allen v. Merch. Bank of New York, 22 Wend. Rep. 215; The Bank of Orleans v. Smith, 3 Hill’s Rep. 562; Montgomery County Bank v. Albany City Bank, 3 Seld. Rep. 459, and Commercial Bank of Penn. v. Union Bank of New York, 1 Kern. 203 ; also the case of Faber v. Perrot, etc., and that of Mackasy v. Ramsays, 9 Clark and Ein., seem to me wholly irrelevant to the question arising in this case. Not one of the cases referred to was an action brought, like this, by the owner of a bill to recover the proceeds from the party holding the same. They were all cases turning upon the liability of a principal for the acts of his agent. Nor is there even a dictum in one of those cases expressing any disapprobation of the rule governing the right to recover, on the part of the owner of the bill, in an action against the party holding the proceeds of it, in such a case as the present. No authority has been found regarding the credit of the money given to the Commercial Bank by the American Exchange, as a paying over of the money to the Commercial Bank, so as to toll the plaintiffs’ right of action in this case. But the authorities are express to the contrary. Not a single authority is presented in conflict with the rule expressed by the decisions of the-courts of the States of Connecticut and Massachusetts, and by the supreme court of this state, in the case of Gordon v. Kearney, and by the supreme court of the United States, establishing the right of the plaintiffs to recover in this case.

I regard the departure from the rule so hitherto obtaining in this state, and, as I think, generally in other states, as much opposed to sound policy and good morals as it is to authority. It takes from the owner of eastern bills of exchange and drafts, all security for the payment of the money to him when collected, except the continued life and solvency of the party who does him the favor to transmit his paper to some responsible party east for collection. If the broker or lawyer so transmitting the bill, die before payment is actually received by the owner of the bill, the proceeds must, under this change of the rule, go into the hands of the administrator and there await the settlement of his estate. And in case of the bankruptcy of the party so transmitting the bill for collection, the proceeds must, as in this case, necessarily pass to his assignee. Nor is the contemplated additional security, of making the party transmitting the paper liable in case of the insolvency of the party to whom transmitted for collection, any fair equivalent; as every one knows, even the most irresponsible parties here are careful to select responsible banks and persons, to whom to transmit .such paper, in the eastern cities. The result of the rule adopted by the majority of the court, it seems to- me, must be necessarily to deprive the owner, in all similar cases, as in this, of the money honestly belonging to him, but for at best an arbitrary principle of law, and giving to a party having no moral right to it, and whose legal right depends entirely upon the rule.

For the foregoing reasons, I am unable to concur in the opinion pronounced by the other members of the court in this case.  