First Nat'l Bk. at Paris v. Ihle , 202 Ark. 46 ( 1941 )

Brieein Smith, C. J.

The case is similar to First National Bank at Paris v. McKeen, 197 Ark. 1060, 127 S. W. 2d 142. In the instant litigation appellee¹ received from her customers two checks issued by 'Blue Ribbon Coal Company, drawn on appellant bank, amounting to $123.06. They were acquired by appellee in due course of business February 29,1936, and were part of a $422.09 deposit made Monday, March 2.

Late in the afternoon of March 2 appellant received information that certain out-of-state checks deposited with it by Blue Ribbon Coal Company had been dishonored. The items comprising the deposit (referred to in the McKeen Case) were re-charged to the coal company’s account leaving an overdraft, although a credit balance of $2,475.80 appeared on the bank’s ledger.

Appellee’s bookkeeper testified to having made the deposit before noon. Nothing was said about conditional acceptance.² The two checks in question were charged to appellee’s account the day received and were returned to her the following afternoon.

When asked whether checks deposited on former occasions had been charged back and their return accepted, appellee’s bookkeeper said such checks would be taken to the bank “. . . just as I took these checks —list them and make a deposit. Later the check [if] found not to be good [would be] returned to us.” Bank officials testified to the same practice.

On the statement furnished appellee monthly there was printed: “All items are credited subject to final payment.”

The bank teller did not examine any of the thirteen checks comprising the deposit except 'as to indorsements, but on the contrary received the deposit ticket as prepared by appellee, and the checks, and entered the credit.³

On the deposit, slip ⁴ was a printed condition permitting the bank to recharge any item drawn on it not good at the close of business on day of deposit.

The court found that the charge-back occurred March 3. There is no testimony to support this finding, although it is conceded that the checks were not returned until the day after deposit.

In the McKeen Case the depositor testified that in his dealings with the bank “They checked [the list], and if there was- [a check] not good they would hand it back to me.” On cross-examination this testimony was materially weakened by admissions of a different custom.

There is this statement in the McKeen Case: “By [the testimony of McKeen] it is sought to raise a legal presumption that the bank conditionally accepted Blue Ribbon checks. If such custom prevailed, it is immaterial whether items comprising the charge-back were cashed on Saturday,⁵ or were included in the Monday deposit. If, on the other hand, the right to charge arises solely on account of reservations expressed on the deposit ticket, such right must have been exercised not later than the close of business of the day of conditional acceptance.”

The first headnote to the McKeen Case summarizes the opinion in this way: “Where a check is deposited in the bank on which it is drawn, the bank has the right, as against such depositor, to accept or reject it or to conditionally receive it, but if it is unqualifiedly accepted, and placed to the credit of the depositor, it cannot thereafter, in the absence of fraud or collusion, be repudiated. ’ ’

The question here is, Was there a repudiation of a completed transaction?

It must be remembered that the bank reserved the right, by its contract of deposit, to recharge bad checks during the day of receipt. That is what was done. Also, we are of the opinion that a custom of conditionally accepting appellee’s deposits was show. In these respects the case differs from First National BanJc v. McKeen, supra.

The judgment is reversed, and the cause is dismissed.

1 Appellee owns and operates the Economy Store at Paris.

2 The deposit consisted of thirteen checks. The deposit slip was made out by appellee’s bookkeeper.

3 In response to a question by the court, appellee’s bookkeeper testified it was the bank’s policy, when a check was in doubt, to look up the amount in the account of the drawer.

4 The same notation appears on a “pass book” sometimes used by appellee.

5 It was McKeen’s contention that the checks were cashed Saturday, February 29, with others, and that he received $898 in cash. On this point .the opinion states the evidence is not clear — that is, whether the checks were cashed on Saturday, or were, part of a deposit made on Monday.