Walker v. Sellers

"A cashier's check, being merely a bill of exchange drawn by a bank on itself, and accepted in advance by the act of its issuance, is not subject to countermand by the payee after indorsement, as is an ordinary check by the drawer, and the relations of the parties to such an instrument are analogous to those of the parties to a negotiable note payable on demand." 2 Michie on Banks and Banking, § 139 (2); 5 R. C. L. 528, 529. But "when such a check is given to a depositor to cover the amount of a withdrawal, it is merely an acknowledgment of an indebtedness on the part of the bank to the payee of the order. The change thereby made is not in the nature of the debt, but in the evidence of it." 5 R. C. L. 483, 484; Clark v. Chicago, etc., Co., 186 Ill. 440, 57 N.E. 1061, 53 L.R.A. 232, 78 Am. St. Rep. 294.

As between the bank and the payee a cashier's check is, in legal effect, the same as a certificate of deposit or a certified check. Clark v. Chicago, etc., Co., supra; Lummus Cotton Gin Co. v. Walker, 195 Ala. 552, 70 So. 754.

Certainly the purpose in each case is the same, that is, to enable the holder to use the check as money; and when a check is certified it ceases to possess the character, or to perform the functions, of a check, but represents so much money on deposit, payable to the holder on demand. National Com. Bank v. Miller, 77 Ala. 168, 175, 54 Am. Rep. 50. "Such a deposit stands upon exactly the same ground as any other." Id.

Manifestly in the present case the cashier's check to petitioner did not, so long as it remained in his hands as owner, dissolve his relation with the bank as depositor, though the fund which it represented was withdrawn from its former subjection to his order other than through the medium of the cashier's check itself, just as would have been the case if he had procured a certified cheek instead. But when petitioner indorsed the check to Waggoner, he of course, transferred the fund to him, and Waggoner, as his transferee, acquired the status and enjoyed the rights of a depositor until he presented the check to and received payment from the drawer bank.

Obviously, then, petitioner has no interest in the fund represented by the cashier's check so long as that check is held by an indorsee; and there is no allegation in the petition showing that it is not still held and owned by the indorsee, Waggoner. On the face of the petition, Waggoner is entitled to claim the distribution due to depositors of the Clanton Bank, and not petitioner.

We do not overlook the allegation that the collecting bank returned the check to the depositee bank, and that "the said sum has been charged back to petitioner." When a deposited check on another bank is credited to the depositor's account, and is afterwards dishonored, the bank may, of course, charge the amount back to the depositor's account, and this action restores the check to the ownership of the depositor.

It does not appear who charged this check back to petitioner, but it could only have been done by Waggoner, of course. However, as between an indorser and indorsee in the course of business, even where the indorsement represents a payment on account, the mere act of charging back to the indorser's account the sum previously credited does not of itself restore the indorsed instrument to the indorser. Although the credit conditionally entered is suspended, yet the instrument still belongs to the indorsee, and he may still pursue his rights thereunder against the indorser and all prior parties. The dishonored instrument is restored to the legal ownership of the indorser only by its retransfer to him by the indorsee, or, in equity, by the indorser's payment to the indorsee of the original consideration for which it was given.

The respondent, as administrator of the insolvent bank, is entitled to protection against the apparent claim of Waggoner, as indorsee; and petitioner is entitled to the relief prayed only when he shows that he is the owner of the deposit represented and evidenced by the cashier's check.

In this aspect the demurrer should have been sustained, and the decree of the circuit court will be reversed, and one here rendered accordingly. Petitioner will be allowed 30 days in which to amend the petition.

Reversed, rendered, and remanded.

ANDERSON, C. J., and MAYFIELD and THOMAS, JJ., concur.