UNIV. OF MICH. LAW LIBRARY, ON THE MODERN BY ALBERT S. BOLLES, Ph. D., LL. D. AUTHOR OF BANKS AND THEIR DEPOSITORS; BANK OFFICERS; BANK VOL. II. PHILADELPHIA LAW PUBLISHERS AND BOOKSELLERS 1907 The right to make collections is an incident of banking;1 and its exercise has formed a feature of the business from early days. Various advantages accrue from doing the business besides the use of the money which forms a good consideration.2 The contract becomes operative from the time of accepting the paper. For the purpose of making collections, therefore, a collecting bank is the real holder, which includes the right to I Mound City Paint Co. v. Commercial Nat. Bank, 4 Utah 353; Exchange Nat. Bank v. Third Nat. Bank, 112 U. S. 276; Merchants' Nat. Bank v. Goodman, 109 Pa. 422. 2 Kershaw v. Ladd, 34 Or. 375; Bailie v. Augusta Sav. Bank, 95 Ga. 277; Titus v. Mechanics' Nat. Bank, 35 N. J. Law 588; Yerkes v. Nat. Bank, 69 N. Y. 382; Mechanics' Bank v. Merchants' Bank, 6 Met. (Mass.) 13, 20; Dyas v. Hanson, 14 Mo. App. 363, 373; Young v. Noble, 2 Dis. (Ohio) 485; German Nat. Bank v. Burns, 12 Colo. 539; Manhattan Life Ins. Co. v. First Nat. Bank, 80 Pac. (Colo.) 467; Exchange Nat. Bank v. Third Nat. Bank, 112 U. S. 276, 288. 3 Young v. Noble, 2 Dis. (Ohio) 485, 487; Allen v. Merchants' Bank, 22 Wend. (N. Y.) 215, 228. make demand, protest notes for non-payment, sue, in short, to take action like the real owner to obtain payment.* Among banks definite contracts to collect and send remittances are usually made by them.5 Usage plays a prominent part in the business; and a depositor who avails himself of the use of a bank is bound by any reasonable usage that exists among the banks in that place, whether it was actually known by him or not. Thus by making a note payable at a particular bank, the parties are presumed to consent to be governed by the custom prevailing in the institution in demanding payment.7 One limitation to the sway of usage may be noticed. No general or specific usage will excuse a collecting bank from exercising all reasonable diligence in making collections.8 In like manner banks in doing business with each other must have due regard to known usages or customs. Therefore, if a bank instruct another employed in making a collection to 4 Warren v. Gilman, 17 Me. 360; Hartford Bank v. Barry, 17 Mass. 94. See $20. 5 See §10, note 8, and §11. 6 Chap. III. §§11-16; Davis v. First Nat. Bank, 118 Cal. 600; Farmers' Bank v. Newland, 97 Ky. 464; Freeman's Nat. Bank v. National Tube Works Co., 151 Mass. 413, 418; Dorchester & Milton Bank v. New England Bank, 1 Cush. (Mass.) 177; National Bank v. Johnson, 6 N. Dak. 180; Savings Bank v. National Bank, 98 Tenn. 337; Kershaw v. Ladd, 34 Or. 375; St. Nicholas Bank v. State Nat. Bank, 128 N. Y. 26; Kent v. Dawson Bank, 13 Blatchf. (U. S.) 237. Contra. To bind a customer in sending a draft for collection by a particular custom, he must have known of it at the time of sending his draft. Bank v. Miller, 105 Ill. App. 224, affd. 202 Ill. 410. See also Chap. III. §14. 7 Harrison v. Crowder, 6 Sm. & M. (Miss.) 464. 8 Bank v. Miller, 105 Ill. App. 224, affd. 202 Ill. 410, and cases cited. "Usage can only regulate the manner of the performance of required acts; it cannot excuse nonperformance." Citizens' Nat. Bank v. Third Nat. Bank, 19 Ind. App. 69; Adams v. Otterback, 15 How. (U. S.) 539. Parties "have the right to stipulate against the ordinary liabilities of the business" of collection. Walker, J., Fay v. Strawn, 32 Ill. 295, 302. |