Collecting Agent in United Kingdom

Meaning of Collecting Agent or Agency

The following is an old definition of Collecting Agent or Agency [1]: A collection to be made by a collecting agent imports an undertaking by such agent himself; not that he receives a claim for transmission to another for collection, for whose negligence he is not to be responsible. For collection. Indorsed on negotiable paper, restrains negotiability. The indorser may prove that he was not the owner and did not mean to give title to it or to its proceeds when collected. Such indorsement is not intended to give currency or circulation to’ the paper; its effect is limited to an authority to collect. There is a marked difference of opinion, expressed in the adjudged cases, respecting the liability of a collecting banker for the manner in which the notary, to whom notes are delivered for presentment and protest, discharges his duty. . . The supreme court of New York, in Allen v. Merchunts’ Bank of New York, said that “a note or bill of exchange left at a bank and received for the purpose of being sent to a distant place for collection, would seem to imply, upon a reasonable construction, no other agreement than that it should be forwarded with due diligence to a competent agent to do what should be necessary in the premises. The person leaving the note is aware that the bank cannot personally attend to the collection, and that it must therefore be sent to some distant or foreign agent,” and that there was nothing which could imply an assumption for the fidelity of the agent. The case being carried to the court of errors, the foregoing decision was reversed, and the doctrine declared that the bank was responsible for all subsequent agents employed in the collection of the paper. The reversal was by a vote of fourteen senators against ten. The decision has since been followed in New York, and its doctrine adopted in Ohio. But in the courts of other States it has been generally rejected and the views expressed by the supreme court approved. In Dorchester and Milton Sank v. New England Bank it was held by the supreme court of Massachusetts that when notes or bills, payable at a distant place, are received by a bank for collection, without specific instructions, it is bound to transmit them to a suitable agent at the place of payment, for that purpose; and that when a suitable sub-agent is thus employed, in good faith, the collecting bank is not Uable for his neglect or default. In the supreme courts of Connecticut, Maryland, Illinois, Wisconsin, and Mississippi, the doctrine of the supreme courts of New York and Massachusetts, in the cases cited, has been approved and followed. The indorsement upon a check ” For collection; pay to the order of A,” is notice to purchasers that the indorser is entitled to the proceeds. Whether a stipulation in a note for the payment of the expenses of collection is enforceable under statutes allowing costs or statutes against usury, or whether such stipulation renders the instrument so uncertain as to destroy its negotiable quality, are questions not uniformly settled.

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Notes and References

1. Concept of Collecting Agent or Agency provided by the Anderson Dictionary of Law (1889) (Dictionary of Law consisting of Judicial Definitions and Explanations of Words, Phrases and Maxims and an Exposition of the Principles of Law: Comprising a Dictionary and Compendium of American and English Jurisprudence; William C. Anderson; T. H. Flood and Company, Law Publishers, Chicago, United States)