LIABILITY OF BANK FOR FAILURE TO GIVE NOTICE OF PROTEST TO ENDORSER UPON NOTE RECEIVED FOR COLLECTION.
That it is the legal obligation of a bank, which receives a note for collection to use all diligence to give notice of its dishonor to all endorsers is set forth in a decision of the Appellate Division of the New York Supreme Court (Howard vs. Bank of Metropolis, 95 App. Div. 342).
One H., who was the owner of a promissory note made by one S., and indorsed by G., delivered the note to a bank for collection and left with it a card giving G.’s full name and address, stating that he wished the note carefully protested as he expected to hold the endorser, the maker not being responsible, and that he would not be in the city when the note fell due. The maker of the note having failed to pay it when due, the bank sent it to its Notary for protest, but failed to deliver to the Notary the card bearing the name and address of the endorser, and informed the Notary that the endorser’s address was unknown. The Notary made out two notices of protest, one directed to H. and the other to G. Both notices were placed in an envelope and sent to H., who did not receive them, being out of town.
The Court held the bank responsible and in rendering its opinion referred to a prior New York case entitled First National Bank vs. Fourth National Bank (77 N. Y. 320) and quoted “it is the duty of an agent who receives negotiable paper for collection, in case such paper is not paid, so to act as to secure and preserve the liability thereon of all the parties prior to his principal, and if he fails in this duty and thereby causes loss to his principal, he becomes liable for such loss.”
Opinion No. 99.