the drawee's check, and that such check was dishonored because of the defendant's failure to present it in proper time, but that the defendant had caused the drawer to be charged, and had secured and preserved as against the drawer all the rights and remedies of the plaintiff, the court after stating that the presumption, in the absence of proof, is that the drawer was solvent and responsible for the amount of the draft, said: "The result is that the plaintiff has recovered against the defendant, as damages for its negligence, the full amount of the draft. But the draft is not by this judgment transferred to the defendant, and it is not subrogated to plaintiff's rights and remedies thereon against the drawer; and the plaintiff still holds the draft, and, for aught that appears in this case, can enforce it, or has enforced it, for the full amount against the drawer. To justify such judgment, the plaintiff should have shown that the draft was wholly worthless, or that, for some reason, the responsibility of the drawer thereof was wholly unavailable to it. The plaintiff is entitled to indemnity, and no more, for the loss caused by the fault of the defendant, and it must show the extent of such loss." On the second trial of this action it was shown that under the laws of the state in which the drawer resided, and to which resort must be had to enforce any liability against him, the action of the bank in accepting the check and omitting to make due presentment discharged the drawer and deprived the owner of the draft of any remedy against it, and accordingly judgment was given for the full amount of the draft, and this judgment was affirmed in (1882) 89 N. Y. 412.

And in Citizens' Bank v. Houston (1895) 98 Ky. 139, 32 S. W. 397, it was held that a bank to which a check had been sent for collection incurred no liability by surrendering it to the maker after it had been dishonored, and accepting in its place a new check covering the amount of the original check, and the protest fees, although the second check was also dishonored, and the maker subsequently made an

assignment for the benefit of his creditors, as the original check was plainly worthless when it was surrendered, and consequently the act of the bank in giving it up did not injure the

owner.

In First Nat. Bank v. Fourth Nat. Bank (1893) 6 C. C. A. 183, 16 U. S. App. 1, 56 Fed. 967, where it appeared that one bank sent to another for collection a certificate of deposit issued by a third bank, and that the collecting bank sent the certificate directly to the issuing bank with a request for remittance, but, failing to get any response, thereafter wrote the first bank, requesting it to send on a duplicate certificate or a remittance to cover the amount, and still later, having received no reply to this request, notified the transmitting bank that it was charging its account with the item, and omitted the item in subsequent statements of accounts between the two banks, without any objection on the part of the transmitting bank until nearly a year later, and that in the meantime, but long after the date when the collecting bank had given notice that it was charging back the item, the bank which issued the certificate became insolvent, while the responsible indorser had been released by the delay, it was held that the collecting bank was liable to the other bank for nominal damages only.

It should be observed that in many of the foregoing cases it is evident that the actual loss was equal to the face of the paper, and hence that the same result would have been reached, whichever measure of the damages was followed. So, in the following cases, the full face of the paper seems to have been lost and to have been allowed as damages, but it does not clearly appear whether this was because the court regarded the face of the paper as in itself the proper measure of damages, or whether it was because the face of the paper coincided with the actual loss suffered.

In Merchants' Nat. Bank v. Goodman (1885) 109 Pa. 422, 58 Am. Rep. 728, 2 Atl. 687, affirming on the opinion below (1884) 17 Phila. 38, a bank was held responsible for the amount

of a check which it transmitted directly to the bank upon which it was drawn, and in payment for which it accepted a draft which proved worthless because of the failure of the bank which drew it.

So, a bank which took in payment of a note which it held for collection the acceptance of another bank, crediting the owner therewith and notifying him that it had been paid, was held liable for the amount of the note, where the accepting bank, which at the time the note was presented had sufficient funds of the maker to pay it, failed before the note had passed through the clearing house and reached it for payment. Albert v. State Bank (1912) 78 Misc. 56, 138 N. Y. Supp. 237.

And in Wingfield v. Security Nat. Bank (1917) 38 S. D. 491, 162 N. W. 309, a bank was held liable for the amount of a check which, it was conceded, would have been paid if it had been properly presented over the counter, and cash demanded, where it transmitted it directly to the drawee bank, and that bank remitted by draft, which was dishonored because the remitting bank became insolvent.

Similarly, a bank which, knowing that another bank, a check against which it held for collection, was in doubtful financial condition, failed immediately to protest the check as soon as payment in cash was refused, but accepted as tentative payment such bank's check upon a third bank for the balance due on the clearance of the transactions of the day, which included the check in question, was held liable for the full amount of the check, where the check so received was subsequently dishonored on account of the insolvency of the bank which gave it, the court taking the view that, even if such check did not constitute payment, the negligence of the bank in failing to take proper steps to protect its principal's interests would render it liable to that extent. Bank of Shaw v. Ransom (1916) 112 Miss. 440, 73 So. 280.

And in Parodi v. State Sav. Bank (1917) 113 Miss. 364, L.R.A.1918E, 325, 74 So. 280, it was held that a bank 19 A.L.R.-38.

which had received for collection a draft by a principal upon his agent, and had forwarded the money upon receiving a worthless check from the agent, must accept the consequences of its departure from the terms of its employment in accepting the check instead of the cash, and hence could not recover the money which it had paid over to the principal.

In Bank of Antigo v. Union Trust Co. (1894) 149 Ill. 343, 23 L.R.A. 611, 36 N. E. 1029, where it appeared that a bank, to which another bank had sent a note for collection, accepted a worthless check in payment thereof, the rule was laid down that "where the collection agent, not being thereunto authorized, accepts in payment of his principal's demand a check, or depreciated currency, and loss ensues thereby, he must bear it." It does not clearly appear, however, what measure would be applied in determining the loss.

f. Permitting party liable to get possession of paper.

Damages for putting paper into the possession and control of a party liable thereon have been allowed, in a number of cases, to the full amount of the paper.

Thus, in the syllabus to Pinkney v. Kanawha Valley Bank (1910) 68 W. Va. 254, 32 L.R.A. (N.S.) 987, 69 S. E. 1012, Ann. Cas. 1912B, 115, Miller, J., who delivered the opinion of the court in that case, said: "Where a collecting bank is negligent in transmitting a check for collection, and in forwarding it to the drawee bank, whereby such drawee, though in disregard of a special agreement, is enabled to debit the drawer of the check, and credit the collecting bank, and control of the check is lost by the collecting bank and it is never returned to the customer, the latter may, in an action of assumpsit, upon the common counts as for money had and received, recover the full amount of the check."

And in Briggs v. Central Nat. Bank (1882) 89 N. Y. 182, 42 Am. Rep. 285, it was held that a bank which receives for collection a check drawn upon another bank, which for a long period

of time has been its collecting agent, under an arrangement that all collections made by the drawee for the defendant should be credited to it in a collection account which was settled once a week, such collections including paper drawn upon the agent itself, transmits such check to the bank upon which it is drawn, and the drawee thereupon charges the check to the drawer and credits the transmitting bank with the amount in such collection account, and the next day suspends payment, the transmitting bank is liable to the owner of the check for the amount thereof, as for a collection effected.

So, also, a bank which sent a check which it held for collection directly to the bank on which it was drawn was held liable for the full amount thereof in Bank of Rocky Mount v. Floyd (1906) 142 N. C. 187, 55 S. E. 95, where the drawee bank marked the check "Paid," and charged it to the account of the drawer, who had sufficient funds on deposit to meet it, but did not send on the money, and then failed.

And the same holding was made in Smith v. National Bank (1911) 191 Fed. 226, with reference to a draft which the collecting bank sent to the drawee bank, which at the time had funds to meet it, and would have paid it if it had been regularly presented for the purpose by a third person, but which, as it was, merely charged the amount of it to the drawer and credited it to the collecting bank, and then failed the next day.

While in German Nat. Bank v. Burns (1889) 12 Colo. 539, 13 Am. St. Rep. 247, 21 Pac. 714, and First Nat. Bank v. Bank of Whittier (1906) 221 Ill. 319, 77 N. E. 563, 5 Ann. Cas. 653, banks were held liable for the full amount of certificates of deposit which they transmitted, to the banks by which they were issued, where the issuing banks failed after receiving the certificate, and before paying them.

But that actual loss must be shown appears from Farmers' Bank & T. Co. v. Newland (1895) 97 Ky. 464, 31 S. W. 38, in which it was held that a petition, in an action against a bank for

negligence in delivering a certificate of deposit, which was placed in its hands for collection, to the bank by which it was issued, and in failing to collect the amount of the certificate, was defective, where it failed to show that the bank could have collected the amount of the certificate at any time after it received it for collection, or that the surrender of the certificate prevented such collection, or that the bank which issued the certificate thereafter refused to surrender it, or any other fact indicating that the negligence caused the owner of the certificate to lose his debt.

And see Jefferson County Sav. Bank v. Hendrix (1905) 147 Ala. 670, 1 L.R.A. (N.S.) 246, 39 So. 295, which is set out supra, II. a.

While any liability at all is expressly made to depend, in German Nat. Bank v. Burns (Colo.) supra, upon the fact that collection would have resulted if the certificate had been presented by a third person at the time it was received by the issuing bank.

To the same effect are Givan v. Bank

of Alexandria (1898) Tenn. -47 L.R.A. 270, 52 S. W. 923, and First Nat. Bank v. City Nat. Bank (1896) 12 Tex. Civ. App. 318, 34 S. W. 458, in both of which cases recovery was denied, although the collecting banks were held to have been negligent in sending the paper directly to the drawee banks, because it appeared that the drawee banks were insolvent, and payment would not have been made if presentment had been made in the regular way.

In First Nat. Bank v. Fourth Nat. Bank (1893) 6 C. C. A. 183, 16 U. S. App. 1, 56 Fed. 967 (allowing only normal damages because of the acquiescence and laches of the owner of the paper); First Nat. Bank v. Fourth Nat. Bank (1879) 77 N. Y. 320, 33 Am. Rep. 618 (limiting the recovery to the actual loss); Merchants' Nat. Bank v. Goodman (1885) 109 Pa. 422, 58 Am. Rep. 728, 2 Atl. 687, and Wingfield V. Security Nat. Bank (1917) 38 S. D. 491, 162 N. W. 309 (in each of which a recovery equal to the face of the paper was allowed, but without clearly showing the measure

of damages applied); and Winchester Mill. Co. v. Bank of Winchester (1907) 120 Tenn. 225, 18 L.R.A. (N.S.) 441, 111 S. W. 248 (holding that the face of the paper is the prima facie measure of danger)-the banks not only sent the paper directly to the party liable thereon, but also accepted other paper in payment, and accordingly these cases are set out infra, III. e, 3.

g. Lost paper.

The measure of damages recoverable against a bank for losing paper intrusted to it for collection is generally held to be the actual loss resulting to the owner, although the face of the paper is sometimes held to be the prima facie measure, and, of course, the face of the paper is allowed in all cases where it coincides with the amount of actual loss.

Thus, in Spooner v. Bank of Donalsonville (1916) 144 Ga. 745, 87 S. E. 1062, an action for money had and received, in which the recovery sought was the amount of a check which had been lost in the mails through the negligence, either of the bank in which it was deposited, or of another bank to which the first bank sent it for collection, the court, in approving the direction of a verdict for the defendant, said: "In some cases it has been said that the measure of damages which the holder of a bill, note, or the like is entitled to recover, from a bank, or other collecting agent, which has been guilty of default in respect to it, is the actual loss which has been suffered; and that this is, prima facie, the amount of the bill or note placed in its hands. But in most of such cases an examination of the facts will show that there was some evidence that with diligence there was a reasonable probability of collection, or that by reason of the conduct of the bank there was a discharge of an indorser or drawer, or some financial failure of the drawer of a check, or of the drawee bank, after negligence in omitting due presentation, or some like facts; and the general statements must be considered in connection with the facts involved.

No case has come to our notice

of the loss in the mails of a check payable to the depositor, where it has been held that this alone showed even a prima facie case for the recovery of the full amount thereof. If the present case, therefore, should be treated as including an action for damages for negligence on the part of the defendant bank in the discharge of its duties as a collecting agent, there was evidence tending to show negligence on the part of itself or its correspondent in Savannah; and in this state the original bank is liable for damages arising from the negligence of its correspondent to whom it sends a paper for collection.

But there was no evidence tending to show any damage arising from such negligence. It did not appear that the drawer of the check had funds in the bank with which to meet it at the time when it was drawn, or that the drawee bank failed, or that the drawer became insolvent, or any other circumstance showing loss to the plaintiff arising from the negligence of the defendant, or its correspondent, in handling the check or in failing to promptly notify the plaintiff of its loss."

And in American Exp. Co. v. Parsons (1867) 44 Ill. 312, an action on the case against the express company for negligently losing a note which was intrusted to it for collection, it was stated in effect that the rule, applicable in all actions for loss, unaccompanied with circumstances which authorize the giving of punitive damages, that the true measure of damages is the amount of damage which the plaintiff really sustained, would apply in a case of this character, but that when the loss of the note due to defendants' negligence was proven, prima facie, the sum due on the note would be the actual loss sustained. It was further held that the fact that the owner of the note might still have a remedy in equity against the maker would not affect the case, but that the defendants might prove by any legitimate evidence that the damage was in fact less than the face of the note, as by showing that the maker was insolvent, or that there was any legal

defense to the note, or any other state of facts by which the loss was reduced.

While in Wakem v. Colonial Trust & Sav. Bank (1915) 195 Ill. App. 30, a bank which delivered a note with collateral attached to an indorser of the note, for the purpose of having him collect it from the maker, was held to be liable for any loss which resulted, where the indorser died, and neither the note nor the collateral could be found.

And in American Nat. Bank v. Savannah Trust Co. (1916) 172 N. C. 344, 90 S. E. 302, it was held that a bank which forwards to another bank a draft which has been deposited with it for collection cannot recover against the second bank merely upon proof that it has been negligent in respect to the collection intrusted to it, but it must also prove that it has sustained damage by reason of such negligence. On subsequent appeal in (1919) 177 N. C. 254, 98 S. E. 595, however, it was held that where the second bank, after giving credit to the sender for the check, delayed for forty days to inform it that the check had been lost or had not been paid, and in the meantime the drawer became insolvent, it could not recover back the amount of such credit, irrespective of whether or not the drawee bank would have paid the check if promptly presented.

A recovery for the full amount of a note was allowed against a bank to which it had been intrusted for collection, and which had negligently lost it, or permitted it to get into the hands of a third person who collected it, in McClure v. D. M. Osborne & Cɔ. (1899) 86 Ill. App. 465, the rule being laid down that, "when a banker receives a note for collection, he is bound to return it or to account for the amount of its proceeds."

And in First Nat. Bank v. First Nat. Bank (1878) 4 Dill. 290, Fed. Cas. No. 4,810, the court, after holding that the defendant bank, which had received from the plaintiff bank a sight draft for collection, and had forwarded it directly to the bank upon which it was drawn, was liable for its failure to make inquiry within a reason

able time as to the receipt of the draft, which, in fact, never reached the drawee, said: "Under the circumstances, I regard the rule of damages. as equally clear. The plaintiff had more than the amount actually on deposit, subject to draft, in the Kansas City Bank. The draft would have been paid if it had been presented in time; if plaintiff had been notified within a reasonable time that the draft had miscarried, it could have protected itself against loss. The Kansas City Bank has failed. There was no evidence what dividend, if any, its creditors will receive. The draft in question was drawn in favor of the defendant, and it had, and has, the legal title thereto. The plaintiff, when it drew the draft, credited it to the drawee and charged it to the defendant, and received, in turn, credit from the defendant therefor. The defendant, having the legal title to the draft, will be entitled to prove it as a lost instrument against the Kansas City Bank, and to receive all dividends which may be declared. Under these circumstances, the defendant is liable for the full amount of the draft, and will be entitled to hold the draft as its own, or to have a duplicate, if it desires. There is no other practicable rule of damages in the posture in which the case stands, and this rule cannot fail to measure the exact loss which may eventually ensue."

So, also, in Shipsey v. Bowery Nat. Bank (1875) 59 N. Y. 485, Heinrich v. First Nat. Bank (1916) 219 N. Y. 1, L.R.A.1917A, 655, 113 N. E. 531, and Harter v. Bank of Brunson (1912) 92 S. C. 440, 75 S. E. 696, banks were held liable for the face value of paper which was lost in transmission through the mail, where it appeared that they were negligent in failing to make inquiry as to it, or in failing to notify the owner of the loss, and that collection could probably have been made but for such negligence, but was rendered impossible by the parties liable upon the paper becoming insolvent during the period of delay caused thereby.

While a bank which lost or mislaid an accepted draft, and so failed to