Morrison v. Bailey , 5 Ohio St. 13 ( 1855 )

Bartley, J.

This suit was brought against Bailey, as drawer, and Burgess, as indorser, of a paper, of which the following is a copy:

$300. Cleveland, O., June 30th, 1853.

Wicks, Otis & Brownell: Pay to L. P. Burgess, on the 13th day of July, ’53, or order, three hundred dollars.

R. B. BAILEY.

Indorsed by L. P. Burgess.

The paper was presented to Wicks, Otis & Brownell, for payment, on the 16th day of July, 1853; payment refused, and notice of nonpayment given on that day.

It is claimed, on the part of the defense, that presentment was not made, and notice given, in due time. And the question for determination is, whether this instrument, upon which suit is brought, is, or is not, entitled to- days of grace; and this depends upon the question, whether the instrument is a check eo nomine, or a bill of exchange, subject to the rules and usages governing ordinary bills of exchange.

The distinction between a bill of exchange and a check, although much confused, in some respects, by the apparently inconsistent language of some of the adjudicated cases, as well as of some of the elementary writers bearing upon it, is founded in the difference in the nature of these two classes of commercial paper. Checks, being drafts or orders for immediate payment of money, have come into such common use as to supersede, in frequent payments of considerable amounts, not only gold and silver coin, but even bank notes. And with their general use, certain usages have grown up peculiar to that class of instruments, and which have become engrafted on the commercial law of the country. A check is subject to many of the rules which regulate the rights and liabilities of parties to hills of exchange, and so nearly resembles the latter class of instruments, that some authors have defined a check to be, in substance and in legal effect, an inland bill of exchange, payable on demand. But, as Judge Story well said, in the matter of Brown, 2 Story’s Rep. 502, although a check “ nearly resembles a bill of exchange, yet nullum simile est idem.” By statute, in Ohio, all bills made negotiable are entitled to three days grace in the time of payment. (Revised Stat. 576.) But days of grace, in the time of payment, would be inconsistent with the nature and purpose of a check, which requires no acceptance, and is always payable immediately on presentment.

These two classes of commercial paper, although in many respects similar, are to be distinguished in the following particulars, to wit:

1st. A cheek is drawn upon an existing fund, and is an absolute transfer or appropriation, to the holder, of so much money in the hands of the drawee; whereas a bill of exchange is not always, or necessarily, drawn upon actual funds in the hands of the drawee, but very frequently drawn in anticipation of funds, or upon a previously arranged credit.

2d. The drawer of a check is always the principal; whereas the drawer of a bill frequently stands in the position of a mere surety.

3d. As between the holder of a check and an indorser, demand of payment within due time is essential to the liability of the latter. Where the parties reside in the same place, the holder should present the check on the day it is received, or within business hours of the following day; and when payable at a different place from that in which it is negotiated, the check should be forwarded by mail on the same, or the next succeeding day, for presentment. Rut days of grace being allowed to bills of exchange, the time for demanding payment of a bill is different.

4th. As between the holder and drawer, however, mere delay in presenting a check in due time for payment, would not discharge the latter, unless he had been injured thereby, and then only to the extent of his loss; but a different rule, in this respect, prevails in case of a bill of exchange.

5th. A check requires no acceptance, and, when presented, the presentment is for payment.

6th. It is not protestable, or in other words, protest is not requisite to hold either the drawer or an indorser.

Prom these distinguishing characteristics, arising out of the nature of these two classes of instruments, it follows, that a check is always payable on presentation and demand; and that, if a draft for money be in the usual form of a check, except that it is payable on a specified day in future, it is a bill of exchange, and entitled to days of grace. This is the result of the doctrine of the most recent and well considered authorities having a bearing upon this subject. Bowen et al. v. Newell et al., 4 Selden Rep. 190 ; Brown v. Lusk, 4 Yerger’s Rep. 240 ; Daniels v. Kyle et al., 1 Kelley’s (Ga.) Rep. 304; Woodruff v. Merchants’ Bank, 25 Wend. 673; 6 Hill 174; Chitty on Bills 512 and 515 ; Ryles on Bills 71; Story on Prom. Notes, secs. 489, 490 and 491; 3 Kent’s Com. 104.

It is also settled, in Woodruff v. Merchants’ Bank, and Bowen v. Newell, above referred to, that any supposed usage of banks in any particular place to regard drafts upon them, payable at a day certain after date, as checks, and not entitled to days of grace, is inadmissible to control the rules of the law in relation to such paper.

Motion for new trial overruled and judgment for the plaintiffs.