Stevenson v. Earling

Mr. Justice Barnes

delivered the opinion of the court.

The question is whether under the foregoing facts and circumstances the checks constituted payment of the indebtedness so incurred.

It is appellees’ and was the trial court’s theory, that under the foregoing circumstances there was a constructive delivery of the checks to plaintiff when they were received at his office, and that he was chargeable with the duty of presenting them for payment with reasonable diligence after such delivery, and, therefore, with any loss consequent upon the neglect so to present them. Citing the Negotiable Instruments Act governing checks, appellees argue that the certification of the checks operated under sections 186 and 188 (J. & A. ¶¶7826, 7828), as a pro tanto assignment of their deposit in said bank, that the transfer of their possession of the checks by mailing them to plaintiff’s office constituted delivery of them within the meaning of section 190 (J. & A. ¶ 7830), and that by sections 181 and 185 (J. & A. ¶¶ 7821, 7825), they were discharged to the extent of any loss on the checks by plaintiff’s delay to present them and give notice of dishonor.

Whatever application these provisions of the statute might have, had the checks been sent to pay a previously recognized indebtedness, we need not inquire. The important fact is that the indebtedness was created without plaintiff’s knowledge, expectation or consent. It is clear that the damages ensuing from the abrogation of the contract being unliquidated, they could not be adjusted and determined by the ex parte action of defendants. Plaintiff had the right to determine whether he would accept the amount of the checks as the measure of his damages or elect to stand upon his contract, and not until he received notice of the conditions out of which the right arose could there be occasion for its exercise. He received neither actual nor constructive notice until July 2nd. Not before then did he owe defendants any duty with respect to his contract or the checks. "While he then manifested an election to receive the cheeks as the measure of his damages, he did not agree to accept them as payment, and no authorities need be cited in support of the familiar common-law rule, applicable in this State, that a check ordinarily does not constitute payment of an indebtedness unless it is accepted as such by the creditor. (30 Cyc. 1181, 1194.)

In its final analysis appellees’ argument seems to be that plaintiff was estopped by reason of some form of negligence from denying the claim of payment,—negligence either in making no provision for prompt attention to his mail, or in not presenting the checks and giving notice of dishonor after they actually came into his hands.

Unless he owed them some special duty to have his mail looked after in his absence, there was no negligence for his inattention thereto. As above shown, his contractual relations with defendants raised no such duty before he received actual notice of the abrogation of the contract, and we fail to see in the circumstances anything upon which such a duty can be predicated. If not, then the checks cannot be deemed to have been delivered to him, until he actually received them.

And we fail to see any ground for imputing negligence after the checks were so delivered and received. The bank then being insolvent and in the course of liquidation, no default, misconduct or negligence could be imputed to him for not going through the useless form of presenting them and giving notice of dishonor. Defendants lost no right from a failure so to do. Nor was the insolvent bank’s liability thereon changed. The fact that the certification of the cheeks operated as a pro tanto assignment of defendants’ account did hot prevent plaintiff from refusing to accept the assignment in his favor and the restoring of defendants’ right to a claim against the insolvent bank.

The circumstances of the case are unusual, if not novel, but so different from those of cases cited by appellees that we need not refer to such cases merely to point out distinguishing features. Somewhat similar, however, is the case of Union Biscuit Co. v. Springfield Grocer Co., cited by appellants and reported in 143 Mo. App. 300, 126 S. W. 996. That was a suit on an open account. The defendant pleaded payment and offered in proof thereof a bank draft indorsed to the plaintiff and mailed to its office, where the letter containing it was wrongfully opened and the draft abstracted by one of plaintiff’s employees who had access to its mail and substituted his name for plaintiff’s on the draft and cashed it as and for his own. The court held not only that there could be no payment under the common-law rule by the taking of the check or draft without an express agreement to take it as payment, but that plaintiff was not estopped by the facts to deny a receipt of the draft.

So in the case at bar, we think the defense of payment was not sustained, and that plaintiff was not es-topped from denying receipt of the checks until they actually came into his hands, assuming that the record is such that the doctrine of estoppel may be invoked. The judgment, therefore, must be reversed and one entered here for $1,750 with interest at 5 per cent from April 17, 1914, the date plaintiff paid his instalment under the contract, making the sum of $2,185.

Reversed with judgment here and finding of fact.

Finding of fact. We find that the checks dated June 1, 1914, sent by appellees Sherburne M. Earling and Harold S. Cook to appellant Thomas H. Stevenson were not accepted by him as payment of the indebtedness sued on and did not constitute payment thereof in whole or in part, and that there is now due from appellees to appellant the sum of $2,185.