August 11, 1916. The opinion of the Court was delivered by J.P. Barber lived at Cameron, S.C. On the 26th day of February, 1912, he went to the Bank of Cameron and deposited his check on the Lexington Savings Bank, at Lexington, S.C. for $1,000. On the same day the Bank of Cameron forwarded the check to its "clearing house," Southern National Bank, of Wilmington, N.C., for collection. The Wilmington bank sent the check direct to the Lexington Savings Bank for collection. The books of the Lexington Savings Bank showed an overdraft of Barber of about $300, but it marked the check "paid" and surrendered it to Mr. Barber. This left an overdraft of about $1,300. The Lexington Savings Bank did not send the money to the Wilmington bank. The Lexington Savings Bank failed on March 22, 1912. On the 4th of March the Bank of Cameron notified Mr. Barber of the nonpayment of the check. Mr. Barber is dead, and this is a suit to settle his estate, and in this suit the Bank of Cameron presents its claim for the face of the check and interest. The Lexington Savings *Page 163 Bank was not an incorporated bank, but was the private business of Mr. W.P. Roof. Mr. Roof had other business enterprises, and among them was a cotton business. Mr. Barber sold to Mr. Roof a large amount of cotton, amounting to some $13,000. There were various items of indebtedness on both sides, but, after deducting the debts, including this overdraft, Mr. Roof was still indebted to Mr. Barber, on the various counts, about $6,000. Mr. Roof, with all of his business, went into bankruptcy, and Mr. Barber's claims were proven. In those proceedings the check in question was charged against Mr. Barber as paid. There was another bank in Lexington, but the Wilmington bank sent the check to the Lexington Savings Bank on which it was drawn. This bank marked it "paid," charged it to Barber's account, and delivered it to him. The question between the Bank of Cameron and Mr. Barber's estate is, which shall lose the money? In Harter v. Bank, 92 S.C. 444,75 S.E. 697, we find:
"The principal question of law involved was settled against appellant, and in accord with the decision of the Circuit Court, in Bank v. Cooper, 91 S.C. 91, 74 S.E. 366, where the Court said: `In 1884, the Supreme Court of the United States adopted the English rule that a bank receiving a draft or bill of exchange for collection is liable for neglect of duty occurring in its collection, whether arising from the default of its own officers, or from that of its correspondent, or an agent employed by such correspondent, in the absence of any express or implied contract varying such liability. ExchangeNat. Bank v. Third Nat. Bank, 112 U.S. 276 (5 Sup. Ct. 141), 28 L.Ed. 722. * * *' We adopt this rule as the just one, because it is in accord with the common understanding of bank and customer in their dealings. In depositing his paper the customer ordinarily surrenders all control of it, and has nothing to do with the means taken by the bank to collect. On the other hand, the bank undertakes the collection for its own profit, takes its own methods, and selects *Page 164 collecting bank or any of the intermediate banks as agents of the depositor, or to put upon him loss due to their default." its own agents. It seems, therefore, illogical to regard the
In order to arrive at a just determination of this case, it is well to eliminate certain misleading names. The Lexington Savings Bank was not in any true sense a bank. It was W.P. Roof. The cotton business was W.P. Roof. It was merely a matter of bookkeeping to call the balance on the bank books an overdraft. The dealings were with Mr. Roof, an individual. Mr. Barber was not overdrawn on his accounts with Mr. Roof by $6,000. There is a conflict of authorities as to whether it is or is not negligenceper se to send a check for collection to the bank on which it is drawn. The weight of authorities is that it is negligence to do so, and when it is done and loss occurs, the bank, and not the depositor, shall lose. This is a stronger case. There was a bank in Lexington, which was not a bank in name only. The Wilmington bank, of its own free will, sent the check on Mr. Roof to Mr. Roof. Mr. Roof marked it "paid," and surrendered it to Mr. Barber. It may be said that Mr. Roof had no right to substitute his own irresponsibility for Mr. Barber's responsibility. That sounds well until we note in the record that Mr. Shealy, with a cashier's check of the "Lexington Savings Bank" failed to get his money even after repeated presentations at the "Lexington Savings Bank." If the bank account had shown that Mr. Barber had money enough to his credit to have paid the check, would it have made any difference? It did not in Mr. Shealy's case. The check was given on the 26th of February. It was delivered to Mr. Barber, marked "paid," on the 4th of March, and not until the 14th of March was Mr. Barber notified that the Bank of Cameron had not received its money. Mr. Barber, or his representatives, proved claims against the bankrupt estate, but got no dividends on this $1,000. The record does not show that any *Page 165 notice of this claim was given until Mr. Barber was dead and his estate in process of settlement. The bank in Wilmington trusted Mr. Roof to collect a claim against himself. Charters are made a subject of public record, and the collector is charged with knowledge that it is dealing with an unchartered institution, and when the collector puts himself completely in the power of the debtor, it must take the consequences.
The judgment is affirmed.