Graham v. National Bank

Harrington, J.,

charging the jury:

The plaintiff contends:

1st. That the Jones check for $700.00 was collected by the defendant bank;

2d. That even if the defendant bank did not collect said check it was estopped to deny that it had collected it.

The defendant denies that it collected said check or that the law of estoppel applies.

It is admitted by the plaintiff that the check was deposited in the defendant bank for collection. Where money is deposited in a bank the relation of debtor and creditor arises, and the bank, like any other debtor, owes the depositor the amount of its deposit. National Dredging Co. v. Farmers’ Bank, 6 Penn. 580, 589, 69 Atl. 607, 16 L. R. A. (N.S .) 593, 130 Am. St. Rep. 158; People’s National Bank, etc., v. Rhoades, 5 Boyce 65, 90 Atl. 409.

Where, however, a check is deposited for collection, the bank merely becomes the agent of the depositor, and the relation of debtor and creditor does not arise until the check so deposited shall have been collected by the bank.

It is admitted by the plaintiff that if a check, deposited for collection, is not collected, that a bank may, as a general rule, reverse or cancel a credit given on such check, whether such credit be given because of an error, or provisionally.

Michie on Banks and Banking, at page 1374, Section 156(1), in discussing this subject, says:

“It is a well established rule that where negotiable paper is deposited with a bank for the purpose of collection, the relation of principal and agent is thereby-created between the depositor and the bank, and not the relation of creditor and debtor. The bank becomes the agent of the holder or payee, not of the drawer or maker. A bank, having received paper for collection, does not owe the amount thereof to the sender until collected, and though it may enter a credit in its books therefor, such a credit may be treated as provisional if the paper is afterwards dishonored, and it may cancel the credit.”

The same proposition is well stated in Jefferson County Savings Bank v. Hendrix, 147 Ala. 670, 39 South. 295, 1 L. R. A. (N. S.) 246:

“A bank, which receives a check for collection, and enters the face value of it as a deposit credit to its owner, becomes the agent of the owner to collect it. If the collection is made the relation of depositor and banker is consummated. If the collection is not made, the bank’s right to charge off the deposit arises.”

See, also, to the same effect, Security Savings & Trust Co. v. King, 69 Or. 228, 138 Pac. 465; Bank v. Brightwell, 148 Mo. 358, 49 S. W. 994, 71 Am. St. Rep. 608; and Morse on Banks and Banking, §§ 214 and 237.

That money paid a depositor under the mistaken belief that a check deposited for collection has been paid, may be recovered by the bank under ordinary circumstances, is also clear. Michie on Banks and Banking, vol. 2, p. 1453; Morse on Banks and Banking, § 249; Security Savings & Trust Co. v. King, 69 Or. 228, 138 Pac. 465.

The ordinary duty of a bank, receiving paper for collection, extends no further than to make a proper demand for payment; sometimes, in cases of non-payment, to take such further action by protest and notice as may be necessary to preserve the liabilities of all parties to such paper, and also, in cases of nonpayment ultimately to return the paper to the depositor, or to account to him for the amount of it. 7 C. J., 605, 609; Harris v. National Reserved Bank (Sup.), 132 N. Y. Supp. 794; National Reserved Bank v. National Bank of Repub., 172 N. Y. 102, 64 N. E. 799; McClure, etc., v. Osborne, 86 Ill. App. 465.

It is not denied by the plaintiff that the check in question was returned to him, nor is it contended that he was prejudiced by the delay in returning it, or that the defendant in any other respect failed to perform its duties toward him.

The question for you to determine, therefore, is whether the plaintiff collected and received the money on the Jones check.

Even if you believe that the general balance between the defendant and the Farmers’ Bank was in favor of the defendant bank in July, 1920, and that the defendant for a time, and without the consent of the Farmer’s Bank charged in its accounts the $700.00 item against that bank in its periodic settlements with it, that alone would not constitute a collection of said item from the Farmer’s Bank or a payment by that bank to the defendant; especially, if you further believe that said charge against the Farmers’ Bank was subsequently reversed because that bank had not collected said Jones check, and, therefore, because of the charge being an error. It is true that under the law of estoppel cases may arise where money has not actually been collected when the bank, with which the check has been deposited for that purpose, may not be permitted to deny its assertion that it has made such collection.

Equitable estoppel, or estoppel in pais, is based on the ground of promoting equity and justice in the individual case by preventing the assertion of rights under general technical rules of law when it would be contrary to equity and good conscience to prove the truth. 21 C. J. 1116; Lewis v. Coxe, 5 Harr. 401.

It is administered only in favor of the one who, without negligence on his part, has been actually misled through the act, admission, or representation of another; that is in favor of one who has been induced to alter his line of conduct with respect to the subject matter in controversy so as to have foregone some right or some remedy which he otherwise would have taken.

The Court are of the opinion that the law of estoppel is not applicable to this case because it is essential that one party should have relied upon the conduct or representation of the other and should have been induced by such conduct or representation to put himself in such a position that he would be injured if the other should be allowed to repudiate his action. Jones v. Savin, 6 Boyce 68, 96 Atl. 756; Id., 6 Boyce 180, 79 Atl. 591; Marvel v. Ortlip, 3 Del. Ch. 9, 42. It is not claimed that these elements are shown by the testimony.

In support of his contention that the law of estoppel is applicable to this case, the plaintiff relies on Harley v. Eleventh Ward Bank, 7 Daly (N. Y.) 476, where the plaintiff recovered on an account stated. An examination of that case shows that it differs very materially in its facts from this case. It, therefore, does not support the plaintiff’s contention that the law of estoppel applies here.

As in all civil cases, the plaintiff must prove his case by the weight or preponderance of the evidence. By this, however, we do not mean by the mere number ‘of witnesses, but by the weight of the evidence under all of the facts and circumstances proved.

As we have already stated, the question for you to determine is whether the defendant collected and received the money on the Jones check.

If, after fully considering the evidence, you believe that the defendant bank did collect and receive the money on such check for $700.00, your verdict should be for the plaintiff for the amount collected, with interest. If, however, you believe that such money was not collected by the defendant, and that any statements that may have been made by it that it did collect it, if any were made, were erroneous, your verdict should be for the defendant.