Dean v. Iowa-Des Moines Bank , 227 Iowa 1239 ( 1938 )

The supplemental opinion, Justice Mitchell speaking, cites several cases and concludes that the statute of limitations began to run upon the draft for the reasons that are given in the cases cited. Examination of those of the reasons so given that are in point makes it evident that the decision announced in the supplemental opinion is based on either (1) the doctrine of laches, or (2) an assumption that the rule, to the effect that the statute of limitations runs upon a promissory note from its date, applies by analogy to other demand negotiable instruments. My reasons that neither is a sound basis for the decision are the following:

In espousing laches the majority cites Wrigley v. Farmers, etc., Bank, 76 Nebr. 862, 108 N.W. 132, a typical case. It was a suit upon a draft the presentment of which to the drawee bank for payment had long been delayed. The action was held barred. The salient portion of the opinion was this:

"The reason for the rule is that it was the right of the creditor by his own act to make the demand payable. He might by such act have perfected his cause of action, and it would be bothunjust and unreasonable to hold that he could postponeindefinitely the time for enforcing his claim." (Italics supplied.)

This application of the doctrine of laches to a situation in which the court recognized, at least impliedly in the language it used, that the statute of limitations could not be invoked because the cause for an action had not been perfected and consequently had not accrued, may have been justified by reason of unjustness or unreasonableness shown by the facts or assumed by the court in that particular case, and it may not have violated the law of that jurisdiction with respect to that doctrine. But the holding falls far short of being an authority on which can rightly be decided the case here before us, and for at least two reasons. One is that in the instant case the defendant bank suffered no loss by virtue of any delay in presentment of the draft for payment. This all-important fact defendant admits. It so admits by demurring. Clearly the Wrigley case rests entirely upon a fact situation of unjustness or unreasonableness in fact shown or assumed by the court. No such facts are shown in the instant case, nor can they be assumed in order to furnish support for the supplemental opinion. The very contrary of unjustness and unreasonableness is a verity in the case at bar. If the real equities were to be considered in light of the facts they would be found to be with plaintiff, whose money the defendant admittedly possesses and in honesty owes to him, and can pay to him without any loss on account of any delay there may have been. The other reason the Wrigley case is unsound as an authority for the majority's decision lies in the fact that in this jurisdiction laches constitute no defense in a law action (as is this) in the absence of proof of injury. Doyle v. Burns, 123 Iowa 488,99 N.W. 195; Thomas v. Holmes, 142 Iowa 288, 120 N.W. 636. So far as founded on laches the supplemental opinion unfortunately ignores (1) the unquestioned facts in this case, and (2) the law in this jurisdiction with respect to laches as a defense in law actions, and (3) the issues in this case in that defendant saw fit to rely solely on the statute of limitations, without mention of laches in its demurrer.

Adverting now to the assumption designated as (2) in the first paragraph of this dissent. Lovrien v. Oestrich, 214 Iowa 298,242 N.W. 57, was an action on a promissory note payable 30 days after demand. The statutes of limitations were pleaded. The court applied the ancient rule, holding that the statute began to run at the end of the 30 days. The majority cites this case as an authority for interpreting the same statute of limitations as in like manner affecting the cause of an action upon a draft. But it has frequently been recognized by the courts that it has been an ill-considered tendency to apply by analogy to demand instruments other than notes the ancient rule that the statute of limitations begins to run upon demand promissory notes at the date of the instrument. Difficulty has been experienced in even according the rule any good reason for its origin. This court has offered as an explanation the fact that the duty of a debtor owing a demand promissory note is to seek the payee and pay him, and his duty so to do being complete from the date of the note the cause of an action has immediately accrued. Clearly this character of duty is peculiar to the maker of a demand promissory note. No one would say that the defendant-drawer of the draft in suit was under duty to seek the payee and pay him. The analogy breaks down, and affords no good or even discernible reason that the rule pertaining to promissory notes affects other demand instruments. The rule itself in its application to demand notes is an anomaly, and that it should not be extended to cases which do not fall precisely within it has been stated in other jurisdictions. Downes v. Phoenix Bank, 6 Hill; N.Y. 297; Brummagim v. Tallant, 29 Cal. 503, 89 Am. Dec. 61. In this jurisdiction the supreme court fell into the error of deeming the demand promissory note rule applicable to demand certificates of deposit. This happened in Mereness v. First National Bank, 112 Iowa 11, 83 N.W. 711, 51 L.R.A. 410, 84 Am. St. Rep. 318. But in Elliott v. Capital City State Bank, 128 Iowa 275, 103 N.W. 777, 1 L.R.A., N.S., 1130, 111 Am. St. Rep. 198, the error was corrected and the Mereness case was expressly overruled because the court had come to a realization that there are distinctions between the obligation upon a demand note and the obligation upon a certificate of deposit, though both are demand negotiable instruments. The distinctions between the obligations of drawers of drafts and makers of promissory notes are no less fundamental. This court's position with respect to whether there is an analogy between promissory notes and other demand instruments, as stated in the Elliott case, being sound, should be determinative in this case. Unable to agree that the supplemental opinion discloses a logical or sound basis for the majority's decision in this case, with respect to the draft, I can not but dissent therefrom, and so do.

HAMILTON, C.J., and SAGER and OLIVER, JJ., join in this dissent.