Industrial Trust, Title & Saving Co. v. Weakley , 103 Ala. 458 ( 1893 )

HABALSON, J.

1. A bank check is payable immediately on presentation and demand. Its drawing pre7 supposes the deposit of a sum in bank to the credit of the drawer, sufficient to pay it, and amounts to an absolute appropriation by the drawer of that much money, in the hands of his banker, to the holder of the check, to remain on deposit, so appropriated, until called for, and it can not, afterwards,-be properly withdrawn.— Tiedeman on Com’l. Paper, § 433; 3 Kent’s Com. 104, n.; 2 Daniel on Neg. Instr., § 1597; Morse on Banks & Banking, § 373; In the Matter of Brown, 2 Story, C. C. B. 511-518; Conroy v. Warren, 3 Johns. Cases 259; Kinyon v. Stanton, 28 Amer. Rep. 601.

So strong is this presumption of a check being drawn against an existing deposit, that when one is presented and paid, it has been held, not to be evidence of money lent or advanced by the banker to the customer, but, on the contrary, it is prima facie evidence of the repayment to the customer by the banker, to the amount of the check, of money previously deposited by him in the banker’s hands. — Lancaster Bank v. Woodward, 57 Amer. Dec. 620; Fletcher v. Manning, 12 Mee. & W. 571.

'2/ A check being payable instantly on demand, and on funds, which are represented, by the bare fact of drawing, to be on deposit in bank, with which to pay it in full — and which funds, in the eye of the law, are appropriated by the drawer for that purpose — it follows, as a correct principle of business dealing, that the holder should present it for payment, within a reasonable time, otherwise the delay Is at his peril. What is reasonable time will depend upon circumstances; but it is a principle of general recognition, that if the bank on which the check is drawn, be in the same place where the payee receives it, it should be presented for payment within banking hours on the day it is received, or on the following day. If in the meantime, the bank fails, the loss will fall on the drawer. — 3 Amer. & Eng. Encyc. of Law, 213 and cases cited; 2 Daniel on Neg. Instr., § 150; 2 Morse on Banks & Banking, § 421; Boone on Banking, § 172; Taylor v. Wilson, 11 Metc. 44, s. c. 45 Amer. Dec. 180; Morrison v. Bailey, 5 Ohio. St. 13, s. c. 64 Amer. Dec. 632; Smith v. Janes, 20 Wend. 192, s. c. 32 Amer. Dec. 528..

3. The payee takes a check with the legal obligation to present it for payment within reasonable time, and failing so to do, if the drawer has funds on deposit sufficient to pay it, he must suffer all the loss which arises from such failure; but if the drawer has no funds in bank, at the time of drawing the check, or, having them, subsequently withdraws them, he can not be said to suffer any loss or damage from the holder’s delay or failure to present or give notice of non-payment. He is liable in such case, without presentment and notice, and may be sued immediately. — 2 Daniel on Neg. Instr., § 1590; Culver v. Marks, 122 Ind. 554, s. c. 17 Amer. St. Rep. 377; Boone on Banking, §§ 172, 181.

And the drawer is not discharged by the laches of the holder in not making due presentment of the check, or in not giving due notice of its dishonor, unless he has suffered some loss or injury thereby as by the intermediate failure of the bank, and then, only pro tanto. — 3 Amer. & Eng. Encyc. of Law, 215, and authorities cited; Morse on Bank & Banking, 421 d; 2 Daniel on Neg. Instr., § 1587; Boone on Banking, supra.

4. But, it sometimes happens, as in the Gase at bar, that the drawer has a portion only of the amount in bank necessary to pay his check, and the question then presents itself, whether the deficiency of his deposit is an excuse for want of presentment and notice. Mr.Daniel says: “We should unhesitatingly say that the drawer of an over-check is bound without demand or notice. A check is intended to be the representative of cash. It is the business of the drawer to know the state of his accounts with the bank, and whether through fraud or carelessness he makes the representation that he has cash to meet it, as he does by the act of drawing it, it would put' a premium upon looseness in commercial transactions to permit him to shield himself behind the plea of want of presentment or notice.” — 2 Daniel on Neg. Instr., § 1597.

The bank, says Judge Story, “is not bound to pay unless it is in full funds; and it is not obliged to pay, or to accept to pay, if it has partial funds only; for it is entitled to the possession of the check on payment; and, indeed, in the ordinary course of business, the only voucher of the bank for any payment is the production and receipt of the check, which the holder can not safely part with, unless lie receives full payment, nor the bank exact, unless under the like circumstances. The holder is not bound to accept part payment, even if the bank is willing to pay in part; for he has a claim to the entirety.” — In the Matter of Brown, 2 Story’s C. O. R. 519 ; Morse on Banks & Banking, § § 294, 446, 450,455 ; Dana v. Third Nat. Bank, 13 Allen, 445: Murray v. Judah, 6 Cow. 490.

5. Subject to some exception, it is a correct general proposition, that a bank has no right to allow drawers of checks to overdraw their balances, and pay checks out of funds of other depositors,-or the money of the stockholders. Overdrawing even to persons of good standing with the bank, does not find sanction in sound usage, except under special conditions. — Culver v. Marks, 122 Ind. 554; Lancaster Bank v. Woodward, 57 Amer. Dec. 620.

As to overdrafts, Mr. Morse says, there is power in the bank to allow them; that a customer, by negotiating with the authoi'ized and proper officials, may make a legal and binding agreement by which his overdrafts to a certain amount named, and under the circumstances agreed upon, shall'be honored; that such a dealing is in the nature of a loan, and is placing money at his disposal or control. — 1 Morse on Banks & Banking, § 368..

6. Upon the same subject, Judge Story, — after stating the rule, which seems to be everywhere admitted, that the drawer is liable in all cases for the dishonor of a check, whether it has been duly presented or not, or, whether he has had due notice of the dishonor or not, where he has sustained no damage on account of the omission, and after giving his dissent to the proposition, that if the drawer has any funds in the hands of the drawee, he is entitled to due presentment and notice of failure to pay, — says, that he understands the true doctrine to be, “that if the drawer has a right to draw, in the belief that he has funds, or in the expectation that he shall have funds at the time of the presentment for acceptance, by reason of arrangements with the. drawee, or putting his funds in transitu, then, and in such cases, he is entitled to due' notice'. — In the Matter of Brown, supra. In this case, the principle seems to be recognized, that when the drawer, from any arrangement he may have, made with the bank for him to draw, or where, as between'him and the bank, there was an open account, with, a fluctuating or shifting balance between them, and he did not know that he was drawing without any right to draw, and had the right to believe his check would be paid, and especially, if the payee had assurances that the check would be paid, then, the drawer would be entitled to due presentment and notice.” As supporting his view he refers to the cases of Thackray v. Blackett, 3 Camp. R. 163; Orr v. McGinnis, 7 East. 359, and Legge v. Thorpe, 12 East. 171. These expressions of Judge Story find approval with the Virginia Court of Appeals, in the case of Purcell v. Allemong, 22 Gratt. 739; Smith’s Merc. Law, 237.

7. In the United States, says Mr. Daniel, although it was at one time decided to the contrary in England, an agent, holding a bill or note for collection, would act at his peril in delivering it up on receipt of a check for the amount; and that if the debtor did not pay the amount in money, and the drawer or endorser were not duly notified, they would be discharged, and the loss would fall on the collecting agent. — 2 Daniel on Neg. Instr., § 1625; Whitney v. Esson, 99 Mass. 308; Turner v. Bank, 42 N. Y. 425 ; Fifth N. B. v. Ashford, 123 Pa. St. 212; Smith v. Miller, 43 N. Y. 171; Rathburnv. Steamboat Co., 76 N. Y. 376 ; Chouteau v. Rowse, 56 Mo. 65.

In the case of Smith v. Miller, supra, the court of appeals in New York hold, that when a check is taken instead of money by one acting for others, a delay of presentment for a day, or for any time beyond that within which, with proper and reasonable diligence, it can be presented, is at the peril of the party thus retaining the check and postponing presentment. This, says Mr. Daniel, seems to be the correct doctrine, for the agent exceeds authority in taking the check, and therefore acts at his peril. — 2 Daniel on Neg. Instr., § 1625; 2 Morse on Bank & Banking, § 421.

8. The evidence in the case before us, is without conflict. One Moore was indebted to the appellant, plaintiff below, in the sum of $229, due by note, which had been sent by plaintiff to Mr. W. J. Nelson of Florence, Ala., as agent for plaintiff, for collection. John B. Weakley, the defendant and appellee, of the same town, was the agent and attorney of said Moore. Said Moore had sent this sum of money to defendant, with which to pay said note. All of Mr. Nelson’s transactions for the coilection of the note were with the defendant. On the 16th June, 1891, the defendant gave his check, on the Florence National Bank, for $229, payable to the order of W. J. Nelson, “For payment of Moore notes.” On the same day, said Nelson endorsed the check — “Pay to the Industrial Trust, Title & Savings Go., of Phila.,” — and sent it to plaintiffs in the mail, and it was forwarded by them, when received, through various banks for collection. The Florence National Bank suspended and closed its doors on the 22d of June, 1891, at about 10 o’clock A. M. On the 23d of June, the check was presented to the defendant, who refused to pay, and it was duly protested.

The plaintiff examined the defendant as a witness, who testified, that he drew and delivered the check about 10 o’clock of the day it bears date, and when he handed it to Mr. Nelson, he asked him to take it to the Florence National Bank and get his money; that the bank was located in the town of Florence, and. he and Nelson both resided there at the time the check was given ; that said bank was located almost opposite to the witness’s office across the street; that at the time of the suspension of said bank, there appeared, by the books of the bank, to his credit, out of moneys deposited by him in the bank, and not drawn out by check, the sum of $154.64; that in addition thereto, the bank was indebted to him at the time, in the sum of $75, for legal services rendered by him to the bank, and was also indebted to him in the sum of $60, due by check drawn in his favor by a depositor of said bank, on the 10th June, 1891; that he proved his claims against the bank, after its suspension, before the receiver, and in the account, he charged the bank, with the sum of $154.64, due him on deposit account, with the amount due him for legal services, and the unpaid check for $60; and gave it credit for the $229, being for the check given to said Nelson, and $25, which had been paid to him .on account of services rendered, and there remained due to him, the sum of $60.64 for which he holds a receiver’s certificate, and this sum, besides the other amounts specified, the bank owed him, at the time he gave said check to Nelson ; that at that time, his account with said bank, as stated, was unsettled, and what it owed him for services and for the unpi’esented check, had not appeared on its books, and a balance ascertained. About tbe time of drawing this check, or a short time before, he went to the bank and started to the cashier, Mr. Tice, that in the course of a few days he would check upon his account rather heavily, and that it might appear overdrawn on the books,' but that the bank was indebted to him for services rendered, arid'that lie had some checks on hand against the bank, and hé would in a few days, come in and have a settlement, but in the meantime, he desired him to pay his checks, as they were (would be) drawn against the sum the bank owed him, and Mr. Tice consented to do so7 He further testified, that from the time the check "was delivered to Mr. Nelson, till the suspension of the bank, it was indebted to him in an amount greater than the amount of said check, and that the bank still owes him, after crediting it with the amount of said check, the sum of $60.64.

It thus appears that there was an unsettled account between the defendant and the bank, at the date of the giving of said check ; that the bank, at that time, did owe him an amount greater than a sum sufficient to pay said check; that he did not draw the same without knowing he had funds in the bank with which to pay it, but had the assurance of the cashier of the bank that his check would be paid, and, therefore, the most reasonable exr pectation that it would be paid. He acted with commendable caution in reference to the matter, that he might do neither the payee nor the bank any injury, and Mr. Nelson had every reason to believe that the check was good and would be paid, for the defendant did what is not usual when one gives another a check on the bank — requested him to take it to the bank and get his money; and this is just what he ought to have doné, and failing, took all the peril of a failure of the bank, before the presentment of the check. Can any one doubt, if Mr. Nelson had gone to the bank, the day he received this check, or the following day, he would have been paid by the bank? He, himself, had every reason to believe it, and had no suspicions, even, to the contrary) for he received a check which acknowledged payment of, the notes'he had in-hand for collection. -He must', therefore — and so must his client, the appellant, so far as appellee is Concerned —suffer the consequences of, a disobedience of defendant’s request to present the, check, and Ms failure to do so till after the bank had failed. As to when giving a check will operate as a payment of the debt for which it was given,-see Boone on Banking, § 181, and authorities cited.

9. It remains to be considered, what damage did defendant suffer from a failure of the holder, to make due presentment of said check for payment. He can be shielded from the consequences of the holder’s neglect, as we have seen; only to the extent he was damaged. It is contended, that defendant owes, at least, the difference between what he had in the bank — $154.36—-and the amount of the check he gave — $229—which is $74.36. But we are unable to see that defendant was damaged by the failure of the drawee to present his check, only to the extent of $154.36, — the amount to his deposit account at the time. He had the right, under the circumstances, to draw for the $229.00, and the failure to present the check in time, cancelled it as to him, and made it a payment of the Moore note in full. We can not divide the $229. Defendant must be regarded as having paid the whole or no part of it. The bank got the benefit of it, and owes it to some one, certainly not the defendant, against whom it was properly charged by the receiver in his ascertainment of the balance due by the bank to defendant.

We fail to see that the $74.36 has any thing to do with the case, or that there was any pro tatito or other damage to defendant, less than the whole amount of the check, growing out of the holder’s failure to present it.

The charges requested by plaintiff, as applicable to the evidence, were properly refused, and the general charge in favor of the defendant was properly given.

Affirmed.