titled to receive the principal, although he was actually authorized to receive the interest and to take a new note for the principal.s

01

89

If a bank is named in an instrument as the place of payment, it is not thereby constituted the agent of the holder to receive payment for him." But if a check drawn upon one bank is deposited in another, and credited on the depositor's pass book, the bank of deposit becomes a collecting agent for the holder, and is not liable to him as upon a cash deposit. And if a check is mailed for collection to the bank upon which it is drawn, the bank be comes the agent of the holder; and payment to it by the check of another bank, which is afterwards protested, will discharge the original drawer.92 But an agent who holds a check for collection cannot make the bank upon which it is drawn his agent by for warding the check to it by mail, and so relieve himself from lia bility for failure to make due presentment, if the bank pays it by a worthless draft, and afterwards fails, but would have paid the check if duly presented over its counter."

93

Ratification and Revocation of Agency.

§ 1452. If payment is made to an agent who has no authority to receive it, and the money subsequently comes to the hands of his principal, the payment will be thereby ratified. So, if the agent.

89 Doubleday v. Kress, 50 N. Y. 410.

90 See § 1119, supra; unless the note is there for collection, Cheney v. Libby. 134 U. S. 68, 10 Sup. Ct. 498; Bank of Montreal v. Ingerson (Iowa) 75 N. W. 351; First Nat. Bank v. Chilson, 45 Neb. 257, 63 N. W. 362; Glatt v. Fortman, 120 Ind. 384, 22 N. E. 300. So, a fortiori, if the place named is a private office, Callanan v. Williams, 71 Iowa, 363, 32 N. W. 383; although interest had been previously paid there, Klindt v. Higgins, 95 Iowa, 529, 64 N. W. 414; or merely a town designated generally, First Nat. Bank v. Free, 67 Iowa, 11, 24 N. W. 566.

21 National Gold Bank v. McDonald, 51 Cal. 64.

92 Farwell v. Curtis, 7 Biss. 160, Fed. Cas. No. 4,690.

93 Drovers' Nat. Bank v. Anglo-American Packing & Provision Co., 18 Ill. App. 191.

94 Schaffner v. Edgerton, 13 Ill. App. 132; although the principal is a guardian and receives the payment as such, Baughn v. Shackleford, 48 Miss. 255. So, if a messenger receives payment of a check without authority by direc tion of the holder's confidential clerk (who had the authority), and pays it over to the clerk, who misappropriates it, it will bind the principal, Johnson

who received the payment without authority, was in possession of the note for safe-keeping without indorsement, and the payment was acquiesced in by the holder's silence for several years after it came to his knowledge."5

96

Payment to an authorized agent may be countermanded by his principal. And after his authority is revoked, payment to him by one having actual or implied notice of the revocation will be without effect.97

Crossed Checks.

§ 1453. In England the practice of crossing a check, and thereby requiring its payment through a banker, has been known for many years under the common law." By this practice, if a check is crossed either generally or specially (by designating a particular bank), it cannot be paid to any holder or agent other than a banking house or the particular banking house designated, except at the risk of the payor. It is believed that this practice has never obtained in the United States. The statute regulating it in England applies in terms only to "bills drawn on a banker payable on demand." In practice, however, other bills of exchange payable in Great Britain are not unfrequently crossed in like manner.

Previous to the present English statute regulating the subject, it was held that a negotiable check was not made specially payable to the bank which was named in the crossing, and that the crossing of the check did not amount to an indorsement to the bank or restrict the negotiability of the check." The drawer was still bound, although the original crossing was struck out by the payee, V. Donnell, 90 N. Y. 1; and the holder may sue the drawer for money paid nim by the acceptor to take up the bill, Baker v. Birch, 3 Camp. 107.

05 Wardrop v. Dunlop, 1 Hun, 325.

** Lee v. Zagury, 8 Taunt. 114.

99

97 Chit. Bills, 444; 2 Daniel, Neg. Inst. 260; 2 Edw. Bills & N. § 739; 2 Pars. Notes & B. 210; Story, Bills, § 413. So, payment to an attorney in possession, after revocation of authority by his client's death. Lochenmeyer v. Fogarty, 112 Ill. 572. But see, as to an indorsement by the payee's agent after his death to his widow, and payment to her without notice of his death, Brennan v. Bank, 62 Mich. 343, 28 N. W. 881.

* Byles, Bills, 26. The reader will find a review of the object and origin of crossed checks by Parke, B., in Bellamy v. Marjoribanks, 7 Exch. 402.

* Bellamy v. Marjoribanks, 7 Exch. 402.

and the check crossed to his banker, and afterwards paid through him.100 So, if a check crossed to D. & Co. was afterwards fraudulently negotiated by a clerk of the drawer, and subsequently crossed to G. & Co., it still remained negotiable; and payment to a bona fide holder through the later crossing was sufficient.101 The crossing of a check did not render it nonnegotiable, but if it was afterwards stolen, and paid to a bona fide holder, it would defeat the original payee. 102 And before the passage of the recent acts the alteration of a crossing did not amount to forgery. 103 But an act was passed in 1876, enabling a drawer or holder to render a crossed check nonnegotiable by writing the word "Nonnegotiable" on it, and also making the alteration or obliteration of the crossing a forgery.104 This statute was practically re-enacted by the Bills of Exchange Act now in force, which applies by its terms only to bills "drawn on a banker payable on demand.” 105

Payment to Agent in Notes.

§ 1454. An agent can, in general, only take money in payment,10€ and the maker of a note, who knows the holder's character as an agent, must inform himself as to the extent of his authority.107 So, giving a bank credit to the collecting bank, with notice of the capacity in which it holds the paper, is not a payment.108 So, if

100 Byles, Bills, 25, 520; Chit. Bills, 267; Stewart v. Lee, Moody & M. 158; Bellamy v. Marjoribanks, supra.

101 Carlon v. Ireland, 5 El. & Bl. 765.

102 So held under Acts 19 & 20 Vict. c. 25, and 21 & 22 Vict. c. 79; Smith v. Bank, L. R. 1 Q. B. 31, affirming L. R. 10 Q. B. 291.

103 Simmons v. Taylor, 4 C. B. (N. S.) 463, under 19 & 20 Vict. c. 25. 104 The Crossed Checks Act, 1876, 39 & 40 Vict. c. 81, repealing 19 & 20 Vict. c. 25, and 21 and 22 Vict. c. 79; Bills of Exchange Act, §§ 76-82.

105 Clarke v. London & County Banking Co. [1897] 1 Q. B. 552, under § 82. But if for one not a customer, it is a conversion. Kleinwort v. Comptoir National D'Escompte De Paris [1894] 2 Q. B. 157; Lacave v. Credit Lyonnais [1897] 1 Q. B. 148.

106 Mudgett v. Day, 12 Cal. 139; Scott v. Gilkey, 153 Ill. 168, 39 N. E. 265. 107 He cannot receive goods. Howard v. Chapman, 4 Car. & P. 50S. 108 Crane v. Bank, 173 Pa. St. 566, 34 Atl. 296; Moore v. Pollock, 50 Neb. 900, 70 N. W. 541; Bank of Montreal v. Ingerson (Iowa) 75 N. W. 351; and the original collecting bank which directs credit to be given to it will be liable to the principal on failure of its subagent, First Nat. Bank of Omaha v. First Nat. Bank of Moline (Neb.) 75 N. W. 843. And see § 1457, infra.

a collection bank takes a certificate of deposit as payment, it must do so at its own risk.109 In like manner, an auctioneer who sells for cash has no authority to bind his principal or discharge the purchaser by receiving a bill of exchange in payment.1 So, if a collecting agent takes a note in payment, it will not bind his principal. And if an agent, employed to settle claims, takes a note, and sells it before maturity for less than its face, he will be liable for the balance due on the note to his principal.1

112

110

One who pays an agent by a bill or a note, with full knowledge that he has no authority to receive anything but cash, will still be liable to the principal.113 And this is true, although he pays in the notes of a third party.114 An agent cannot surrender a note secured by vendor's lien, and take another note in payment from a new purchaser.115 And if an attorney holding a claim for collection receives a note and retains it, and the claim is afterwards paid to him without authority from the principal, and without surrender of the note, the payment will be no defense against an indorsee of the note for value before maturity.116

109 Essex Co. Nat. Bank v. Bank of, Montreal, 7 Biss. 193, Fed. Cas. No. 4,532; or a county warrant, Herriman v. Shomon, 24 Kan. 387.

110 Williams v. Evans, L. R. 1 Q. B. 352; although the auctioneer transferred the bill, fraudulently, to a third party, Sykes v. Giles, 5 Mees. & W. 645. 111 Moore v. Newbury, 6 McLean, 472, Fed. Cas. No. 9,772; Scott v. Gilkey, 153 III. 168, 39 N. E. 265; Robinson v. Anderson, 106 Ind. 152, 6 N. E. 12; Spence v. Rose, 28 W. Va. 333.

112 Allen v. Brown, 51 Barb. (N. Y.) 86.

113 2 Daniel, Neg. Inst. 294; Scott v. Surman, Willes, 400. On the other hand, if the note is collected before it is due, by the assignee of the agent, the amount may be recovered from him by the principal, and a satisfaction of the original judgment, on receipt by the agent of a note for it, will not be binding on the principal. De Mets v. Dagron, 53 N. Y. 635. So, the payment of a collateral insurance policy to an agent, by a draft which was not paid and which he had no authority to receive, will not discharge the note secured by the policy. Drain v. Doggett, 41 Iowa, 682.

114 Browning v. Sledge, 38 Tex. 192; Jones v. Ransom, 3 Ind. 327. So, Popley v. Ashly, 6 Mod. 147.

115 Scott v. Atchison, 38 Tex. 384. And the agent is liable if he takes a simple renewal, and surrenders the note, on instructions to take a renewal with a good indorser. Central Georgia Bank v. Cleveland Nat. Bank, 59 Ga.

667.

116 Cundiff v. McLean, 40 Tex. 391.

If an agent, selling goods for a commission merchant on credit, takes the purchaser's negotiable note, payable to himself or order within the time limited for the credit, he will not be liable to his principal for negligence, although the purchaser becomes insolvent before the note matures.117 So, an agent employed to collect rents in the country may receive bills of well-reputed persons in pay ment.118

Payment to Agent in Bank Notes.

§ 1455. It has been held that an agent is not liable for receiving bank notes in payment, although the bank fails two days afterwards; 119 and even that a sheriff may receive current bank bills in payment of an execution, notwithstanding instructions of the judgment creditor to the contrary.120 But in Vermont, where a sheriff was not authorized to receive bank notes, it has been held that the creditor could not be obliged to take them the next day (the bank having failed in the meantime), and that such bank notes were not a payment of the judgment.121

If an agent receives current funds in payment without special authority, he must account for the amount received, although the funds have since depreciated in value, and although his taking them was in accordance with a special custom of bankers.122 So, if an agent has authority to receive cash "in New York or Baltimore funds," it will not amount to an authority to receive the bill of an insolvent drawer.123 And if an agent fraudulently receives "cotton money" without authority, the principal (who was then absent in the war) may dissent after the war is over, and still hold the maker liable on the note.124 So, an agent cannot, in general, receive Confederate currency in payment of a bill or note payable in mon

117 Goodenow v. Tyler, 7 Mass. 36.

118 Knight v. Lord Plimouth, 3 Atk. 480. 119 Union v. Greene, 1 Hurl. & N. 884.

120 Ex parte Board, 4 Cow. (N. Y.) 420.

121 Wainwright v. Webster, 11 Vt. 576.

122 Marine Bank of Chicago v. Chandler, 27 III. 525.

123 Goldsborough v. Turner, 67 N. C. 403.

124 Burrows v. Cook, 17 Iowa, 436.