This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 58.— A bill dated 30th August, at three months, drawn by A. in favour of B. on the —— Mfg. Co. in the State of New York, was endorsed by B. and discounted with a branch of the Y. Bank. It was forwarded at once by the Y. Bank to their branch at Niagara Falls for collection, and promptly sent on to the latter's Buffalo correspondents, who held it unaccepted until a few days before maturity. Acceptance was then refused, and the bill was protested and returned to the Y. Bank. The drawer and endorser claim to be released from liability because of want of diligence in the presentation of the bill. Could the amount be recovered from the Buffalo Bank, and if not, what is the position of the Y. Bank as regards the drawer and endorser ?
Answer.—The above question was submitted to counsel by the Y. Bank, and by their courtesy we are permitted to publish the opinion given in the matter, as follows:—
" On this state of facts, we cannot advise that the Buffalo Bank is liable to the Y. Bank for anything more than nominal damages. If the Buffalo Bank had been a holder of the bill in the same way as the Y. Bank, it would have been under no obligation to present the bill for acceptance. Any obligation on its part to do so, arose because of its duty to the Y. Bank, as agent of the latter for collection.
"We are of opinion that the Buffalo Bank should, as such agent, have promptly presented the bill for acceptance, such a presentation being advisable from the point of view of the Y. Bank, because of the further security it would obtain should the bill be accepted, and because, should it be dishonoured, a right of immediate recourse against the drawer and endorser would accrue, and that for its want of diligence in this respect the Buffalo Bank is liable to the Y. Bank in damages.
" But, beyond merely nominal damages, the Y. Bank could not, in an action against the Buffalo Bank, recover except for loss actually sustained by reason of the negligence of the latter bank, and, on the assumption that the bank's rights against the drawer and endorser have not been affected by the delay in presentation for acceptance, and that the drawer and endorser axe financially responsible for the amount, we do not think that the bank has, in fact, sustained any actual loss by the negligence of its agent. It must be borne in mind that the Buffalo Bank was the agent of the Y. Bank only, and not of the drawer and endorser. Had the Y. Bank been bound to the drawer and endorser to use diligence in presentation, so that failure to effect prompt presentation might have given the drawer or endorser a remedy against the bank, then, it might well be that the Y. Bank would have a corresponding remedy against its agent, but, on the state of facts given us, this does not appear to be the case.