C. N. Ray Corporation v. Williams ( 1931 )

On August 14, 1928, the United Fuel Supply Company gave to defendant, city treasurer of Detroit, its check drawn on the People's Wayne County Bank for $3,688.29 in payment of city taxes assessed to and on property owned by the plaintiff. The defendant indorsed the check and deposited it in the above-named bank, in which he kept an account as city treasurer, and on the same day issued and sent to the plaintiff his official receipt therefor. The check was charged to the account of the fuel and supply company, and credited to defendant's account. The fuel and supply company had a balance in its checking account in the bank at the close of business on that day of more than $100,000. The bank, however, at that time held obligations of the company, secured by collateral but not then due, of more than $1,000,000. On August 15th the bank officials had a conference with the secretary-treasurer of the company, at which these officials insisted on its furnishing additional collateral to its loans. An employee of the bank, testifying from its records, stated that on August 15th it applied the entire sum to the credit of the fuel and supply company on its indebtedness to the bank not then due and closed its account. On August 17th, when three of the company's obligations became due, a bill of complaint was filed, under which a receiver of the company was appointed, and it is still in process of liquidation. On that day (August 17th), the bank returned the check for $3,688.29 to the defendant, and on August 20th he sent to the bank his check for the amount.

The bill of complaint herein was filed to enjoin the defendant from advertising and selling the property assessed for the payment of this tax. Plaintiff had decree, from which defendant has appealed.

The only dispute in the facts is as to the date on which the bank returned the check to the defendant. An employee of the bank who had no personal knowledge of the matter testified that the books of the bank showed that "it was charged on August 15, 1928." The cheek was produced by the defendant's attorney. Quoting from the record:

"The indorsements on the return slip attached to the check are as follows

" '8-532-8/14 Pd. Bank Aug. 20-28. Deposited Aug. 14th. Ret. by bank Aug. 17th.' "

Neither the defendant nor any of his employees appeared as witnesses. The trial court found:

"On the 17th day of August, 1928, a receiver was appointed for the said United Fuel Supply Company by the circuit court for the county of Wayne. Subsequently and on or about the 17th day of August, 1928, the bank returned this check to the defendant, who on August 20th paid to the bank the amount of the check and took it up."

When this check was deposited to the credit of the defendant and charged to that of the fuel and supply company, the money represented by it was, in legal effect, paid to him by the fuel company. The burden of showing that he was thereafter justified in repaying it to the bank was upon him.

While the statute (1 Comp. Laws 1929, § 339) provides that a check tendered for the payment of a tax shall not operate as such unless "it shall be paid on presentation," this check was paid when it was deposited by the treasurer and credited to his account and charged to the account of the fuel and supply company, there being then in this account a sum sufficient for the payment thereof. No claim is or could be made that the check was fraudulently issued, or that any mistake was made by an employee of the bank in the debiting or crediting of it.

The injustice of reinstating the tax after it had been paid is disclosed by the record. The property was owned by the plaintiff, and under lease to the fuel and supply company, with obligation on its part to pay the taxes thereon. But at the time of the payment an arrangement was made requiring it to pay a portion of the tax, which was fixed by the parties at $2,843.14. The plaintiff gave its check upon the same bank for this amount to the fuel and supply company, and that company deposited it in the bank on the same day (August 14th) that it gave its check to the defendant for the payment of the tax, and it was charged to plaintiff's account and credited to that of the fuel and supply company. The effect of defendant's action is to require the plaintiff to pay this amount a second time.

The decree is affirmed, with costs to plaintiff.

BUTZEL, C.J., and WIEST, CLARK, McDONALD, NORTH, and FEAD, JJ., concurred with SHARPE, J.