Apparently there is a different procedure in that Reserve district. In that case the bank did not look after the collection or renewal of rediscounted or pledged notes.The decision in that case rested upon the doctrine that authority to collect notes not sent to the bank, and not due, could not be inferred from authority to collect notes that were sent to the bank for collection on maturity. It appears quite clear that the facts in that case are different from those in the instant case, and therefore it is not controlling.
After determining the case on the facts as stated, the court cited certain cases generally applying to payment of written instruments, and from them determined and stated that by those cases certain rules were established, to wit: "(1) That the payee of negotiable paper who has assigned it to another is not the agent of the holder for collection, even though the paper be made payable at the banking house of the payee; (2) that payment of money due on a written instrument to such a payee, who has neither possession of the instrument nor authority to receive the payment, will not discharge the instrument; (3) that authority to collect particular instruments which are intrusted to an agent for collection does not confer authority to collect others of which he is not given possession, and one who pays to him the amount of an instrument not in his possession does so at his own risk; and (4) authority to receive payment of an instrument upon maturity does not carry with it authority to receive payment before the instrument is due." 81 F.2d 1003, at page 1005.
With these principles of law, we are in accord, but there are other rules of law applicable to the circumstances of the instant case, which apparently were not applicable to the facts in the case of Federal Reserve Bank of Richmond v. Kalin, supra.
The instant case was submitted to the jury to determine whether the bank, to which payment was made, had been constituted an agent of the plaintiff to receive payment on all notes which had been theretofore assigned by the bank to plaintiff as collateral security for a loan.
The proofs on this question, I believe, were sufficient to submit the case to the jury.
There was no express contract with relation to the note in question, but an agent may be authorized to collect the amount due on a note without express authority.
The general principle of law as to agency under the circumstances of the instant case is stated in 8 Corpus Juris, pp. 596, 597, § 830:
"Express authority is not necessary to render payment to a person as agent effectual, but authority to receive payment may be implied from facts and circumstances existing prior to, or in connection with, the payment; and the holder of paper may be estopped to deny the authority of one whom he has clothed, intentionally or through negligence, with ostensible authority. Authority to receive payment will not be implied, however, from the mere fact that an agent has authority to sell goods and to take a note in payment thereof in the principal's name; and authority to collect interest confers no authority to collect the principal. Nor does authority to lend money for another carry with it authority to collect a note taken for money loaned.
"Where the holder of a note permits one who has previously acted as his agent to continue so to act with apparent authority to receive payment of notes, and the maker of a note pays the same to him in reliance on his apparent authority, the holder will be estopped to deny such authority; and it can make no difference in such case that the agent has not possession of the note when he receives the payment."
Since the briefs were filed, my attention has been called to the case of Federal Reserve Bank of Philadelphia, a corporation, &c. v. Morris Gettleman et al., 117 N.J.L. 416, 189 A. 86. The issue there was similar to the issue in the instant case, with the two exceptions: That in the New Jersey court the party making payment to bank for defendants, did not demand notes, nor did the teller advise the party that they were pledged to the Federal Reserve Bank. In the instant case not only was demand made, but the representative making payment was advised of the fact that the Federal Reserve Bank held the note, and that the party receiving payment would arrange to have note returned. In the case in the New Jersey court, the check was not charged to the account of payor, whereas in the instant case the account of payor was debited with the amount of payment.
I do not think the principle applied in that case is controlling as to the facts in the instant case. The general principle of law stated in the quotation from 8 Corpus Juris, supra, is sustained in many cases.
Just what character of testimony, and how much, is required to justify the submission of a question of this kind to the jury is a matter determinable by a court in its best judgment. Cases are in the records where courts have refused to submit the facts to jurors, and there are cases where the facts have been submitted, and verdicts of juries sustained.
The proofs submitted in the instant case raised a question of fact which, I believe, justified the submission to the jury.
The rule will be discharged.
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