Harlan F. Stone

“ Both plaintiff and defendant concede that it is the rule of the federal courts that a bank which receives commercial paper for collection is not only bound to use due care itself, but is responsible to its customer for a failure to collect, resulting from the negligence or insolvency of any bank to which it transmits the check for collection. ”

“ Triplett, 1 Pet. 25, 7 L. Ed. 37, where the undertaking of the initial bank was to transmit paper for collection.
From this the defendant argues that, under the rule applied in the federal courts, the First National Bank of Douglas became liable by its contract with plaintiff for the negligence of the defendant; hence that there was no privity of contract between plaintiff and defendant, and no basis for a recovery, even though defendant was negligent in accepting an exchange check from the Willcox Bank. See Federal Reserve Bank v. Malloy, supra, 164 (44 S.C.t. 296) . ”

“ It is not necessary to decide any of these questions here, for when paper is indorsed without restriction by a depositor, and is at once passed to his credit by the bank to which he delivers it, he becomes the creditor of the bank; the bank becomes owner of the paper, and in making the collection is not the agent for the depositor. ”