[*45]

*4. But losses occasioned by the fraud or failure of third persons, to whom an agent has given credit

recover it back, notice must be given on the very day on which the pay. ment is made. See Cocks v. Masterman, 9 B. & C. 902; Danson & Lloyd, 329+ || The importance of this decision warrants a fuller statement than has been given by Mr. Lloyd. The facts in the case and the principle decided appear from the opinion of Bayley, J. who delivered the judgment of the court. "This was an action brought by Cocks & Co. bankers in London, to recover a sum of money paid by them to the defendants, on the ground that they, having paid the money in mistake and ignorance of the facts, were entitled to recover it back. The bill was presented the 24th of May, the day on which it became due. The plaintiffs paid it, not knowing that it was not the genuine acceptance of Sewell & Cross. On the following day it was discovered that the acceptance was a forgery, and the plaintiffs on that day gave notice to the defendants. It was insisted that the plaintiffs were not entitled to recover, because they, being bankers, ought, before they paid the bill, to have satisfied themselves that the acceptance was genuine. On the other hand it was said that the plaintiffs, having given notice of the forgery to the defendants on the day next after the bill had been paid, were entitled to recover back the money, on the ground that they had paid the money under a mistaken supposition that the acceptance was the genuine acceptance of Sewell & Cross, and the case of Wilkinson v. Johnson, [ubi supra,] was relied on. That case differs from the present in one material point, viz. that the notice of the forgery was given on the very day when payment was made, and so as to enable the defendant to send notice of the dishonor to the prior parties on that day. In this case we give no opinion upon the point, whether the plaintiffs would have been entitled to recover if notice of the forgery had been given to the defendants on the very day on which the bill was paid, so as to enable the defendants on that day to have sent notice to other parties on the bill. But we are all of opinion that the holder of a bill is entitled to know, on the day when it becomes due, whether it is an honored or dishonored bill, and that, if he receive the money and is suffered to retain it during the whole of that day, the parties who paid it cannot recover it back. The holder, indeed, is not bound by law, (if the bill be dishonored by the acceptor) to take any steps against the other parties to the bill till the day after it is dishonored. But he is entitled so to do, if he thinks fit, and the parties who pay the bill ought not by their negligence to deprive the holder of any right or privilege. If we were to hold that the plaintiffs were entitled to recover, it would be in effect saying that the plaintiffs might deprive the holder of a bill of his right to take steps against the parties to the bill on the day when it became due." A bank, or banker, paying a forged check, must sustain the loss. Smith v. Mercer, 6 Taunt. 76; Smith v. Chester, 1 Term Rep. 650; Levy v. Bank of United States, 1 Binney, 27; Laborde v. The Consolidated As

pursuant to the regular and accustomed practice of trade, are not chargeable upon him: as the following instances exemplify.

A banker who had received bills of exchange from his correspondent to procure payment, instead of receiving payment in money, took the acceptor's check, and delivered up the bills. The check was dishonored; but as it appeared that the banker had only pursued the usual course of business, Lord Kenyon declared himself clearly of opinion that he was not answerable for the event.(g)

The receiver of Lord Plymouth's estate took bills in the country, of persons who at the time were reputed to be of credit and substance, in order to return the rents in London. The bills were dishonored, and the money lost; and yet the steward was held to be excused.(h) This was mentioned by Lord Hardwicke, in support of his opinion, that if a trustee appoint rents to be paid to a banker at that time in credit, and the banker afterwards breaks, the trustee. is not answerable. And none of these cases, his Lordship observed, are on account of necessity, but *because the persons acted in the usual method of [*46] business.(i)(4)

In an action for money had and received, the facts were,

sociation, 4 Robinson's (La) Rep. 190; The President, &c. of the Glouces ter Bank v. The President, &c. of the Salem Bank, 17 Mass. Rep. 33; 3 Kent's Comm. 86, n. a.||

(g) Russell v. Hankey, 6 T. R. 12.

(h) Knight v. Lord Plymouth, 3 Atk. 480. || So an agent who places his principal's funds in the hands of a third person subject to his principal's drafts for the amount, is not liable for a loss of the funds by the insolvency of the depositary, if he has exercised reasonable prudence in the choice of the depositary. Hammond v. Cottle, 6 Serg. & Rawle, 290.||

(i) Ex parte Parsons, Ambl. 219. And see 1 Br. Ch. R. 452; 3 Ves. Jun. 566; 6 Ves. Jun. 226, 266; 5 Ves. Jun. 331, 839.

(4) [The rule here laid down corresponds with that of the Civil Law, which is thus stated in the Digest: "Si res pupillaris incursu latronum pereat, vel argentarius cui tutor pecuniam dedit, cum fuisset celeberrimus, solidum reddere non possit: nihil eo nomine tutor præstare cogitur." Dig. lib. xxvi. tit. 7, s. 50.]

that the plaintiff had engaged the defendant, as his agent, to receive money due to him from his customers, directing him to remit by the post a bill for these and other sums due to him. A bill was accordingly remitted to him by the post; but the letter was suppressed, and the money upon the bill received at the banker's by some unknown person, and was not recovered. Lord Kenyon said, had no directions been been given about the mode of remittance, still, this being done in the usual way of transacting business of this nature, I should have held the defendant clearly discharged from the money received as agent. It was so determined in Chancery forty years ago.(k)

However, it may be collected from a case recently decided in Chancery, that if an agent place his principal's

money to his own account with his general banker, [*47] without any mark by *which it may be specified

as belonging to the trust, and the banker fail, the agent will not be excused; because he cannot so deal with his principal's money as that, if the banker's solvency continue, he may be in a condition to treat it as his own, and if insolvency happen he may escape by considering it as belonging to his principal.(1)

(k) Warwick v. Noakes, Peake, N. P. C. 68.

(1) Wren v. Kirton, 11 Ves. Jun. 382. And see Massey v. Banner, ante, p. 10, (2); Fletcher v. Walker, 3 Mad. 73; ante, p. 10, n. (2). Preparatory to the final winding up of a trust, the agent and solicitor of the trustee, paid the trust money to his bankers, to the credit of his general account with them, and informed the cestui que trust, that the money was lying idle at his bankers. The cestui que trust took no notice of the information; and more than a month afterwards the bankers failed. It was held that as the agent did not inform the cestui que trust that the money had been paid to the credit of his general account, and as the payment to the bankers was not necessary to the winding up of the trust, the agent and the trustee were jointly liable for the money. MacDonnall v. Harding, 7 Sim. 178. So, Walworth, Ch. says: "Executors and trustees must be made to understand that it is their duty to keep the funds of their trust separate and distinct from their other funds and business; that they should, upon no consideration, use the trust moneys themselves, or permit it to be mingled with their own moneys or property. In no other way can they save themselves from trouble, litigation and censure. If they neglect this obvious duty, they have no reason to complain if they meet with trouble

And a loss occasioned by an unauthorized disposal or adventure of the principal's money, and not prescribed by the usage of business, though intended for his benefit, is chargeable to the agent.(m)

SECTION 9.

It is one of the chief duties, and is implied in the contract of an agent, to keep a clear account, and communicate the results of it from time to time; and, when called upon, to account without suppression, concealment, or overcharge.(a) It has been laid down as a rule in the Court

and expense, and sometimes with heavy loss. The protection of the rights of those who are not in a situation to protect themselves, makes it the duty of courts of justice to require fiduciaries to make good all losses which have been occasioned by their neglect." Case v. Abeel, 1 Paige, 402. Abbot, C. J. in a case at Nisi Prius, disposes of the subject, so far as he assumes to do so, in a satisfactory manner. He says: "There are three modes which a person may adopt, when the money of others is placed in his hands. The first is, for him to keep it in his own house; what the consequences of that mode are, it is at present unnecessary for me to state. Another mode is, for the party to pay it into his banker's, on his general account; but the third, and the correct mode is, for the party to open a new account in his own name for this particular purpose. The defendant should have paid the money into a banker's hands, by opening a new account in his own name, for the credit of Robinson's estate,' and so to earmark the money, as belonging to that estate: then it would have been kept separate. But if the person having the money mixes it with his own, he thereby makes himself personally debtor to the estate. Here the defendant has mixed the money with his own, by paying it to the credit of his private account at his banker's; and he is, therefore, liable in this action. This is a very hard case, and all suspicion against the defendant is quite out of the question; but one of two innocent parties must lose the money, and under the circumstances of this case, I think, that the plaintiff is entitled to a verdict." A verdiet was rendered accordingly. Robinson v. Ward, 2 Carr. & Payne, 59; S. C. Ryan & Moody, 274.||

(m) Ante, Ch. I. Part I. Sec. 2, || p. 3. n. (a)||

(a) Lord Chedworth v. Edwards, 8 Ves. Jun. 49; Lord Hardwicke v.

of Chancery, not to be departed from but upon very special circumstances, that an agent is bound to keep regu[48] lar accounts of his transactions on behalf of his employers not only upon his own part, accounts of payments, but also on the part of his employers, accounts of his receipts.(b) And an account has been decreed after a lapse of more than twenty years.(c) (1) Where an agent had for many years neglected to keep accounts, and had

Vernon, 14 Ves. 510; † Topham v. Braddick, 1 Taunt. 572.4 || The circumstance that the agent is a professional man, renders it the more imperative upon him to be cautious in this respect. "As a professional man, he must have known that it was his duty to keep a regular account of his receipts and payments." Jenkins v. Gould, 3 Russ. 393; Philips v. Belden, 2 Edw. Ch. Rep. 16. A refusal to render an account lays the agent open to the most unfavorable presumptions. Pope v. Barret, 1 Mason, 119, 127. The duty to account does not, however, depend upon a demand for an account having been made; it may arise from the nature of the agency itself. So, in Clark v. Moody, 17 Mass. Rep. 145. Parker, C. J. says: "It is also the duty of factors to account to their principals in a reasonable time, without any demand, in cases where a demand would be impracticable or highly inconvenient so that a factor abroad, who should receive goods to sell, without special directions as to the mode of remittance, would be held, according to this course of business, to give his principal information of his progress in the transaction; and if he should neglect unreasonably to forward his account to his employer, this negligence would be a breach of the contract and subject him to an action." See Reid v. Rensselaer Glass Factory, 3 Cowen, 437; Dodge v. Perkins, 9 Pick. 387. (b) White v. Lady Lincoln, 8 Ves. 369; (Morgan v. Lewes, 4 Dow's Rep. 52.)

(c) Lady Ormond v. Hutchinson, 13 Ves. 47, 53; || Wedderburn v. Wedderburn, 2 Keen, 722; 4 Myl. & Cr. 41. An instructive case in many respects.||

(1) [Where a reasonable time has elapsed, and the circumstances do not repel the presumption, a jury may presume that a principal has demanded an account, and that the agent has accounted. In Topham v. Braddick, supra, n. (a),|| the space of fourteen years was considered as affording sufficient ground for an inference that an account had been rendered, and payment made of the sum due on the footing of the account.] || So, on the other hand, if a servant has left his service for a considerable time, the presumption is, that all his wages have been paid. Sellen v. Norman, 4 Carr. & Payne, 80. It will appear in the sequel that there are many analogies between the law of principal and agent, and that of master and servant.]]