DocketNumber: [No. 39, January Term, 1932.]
Citation Numbers: 159 A. 777, 162 Md. 355
Judges: SLOAN, J., delivered the opinion of the Court.
Filed Date: 4/13/1932
Status: Precedential
Modified Date: 1/12/2023
This case comes here on an appeal from an order denying a preference to the holder of a certified check drawn by a depositor of the Chesapeake Bank of Baltimore, payment of which was refused by the receiver of the bank.
The appellant contends that the transaction comes within the provisions of section 95 of article 11 of the Code (Supp. 1929), being the Bank Collection Code as enacted by the Acts of 1929, ch. 454; while the appellee contends that the transaction did no more than create the relation of debtor and creditor between the bank and the holder, who is also the payee of the check.
On December 9th, 1930, Hyman Paul Rome, attorney, of Baltimore, represented the Star Realty Company in the purchase of some property from the Suburban Construction Company, appellant. At the conclusion of the transaction on the day named, Mr. Rome's client owed the appellant $6,750.29, for which he gave his two checks to the order of the appellant for $2,650.29 and $4,100, respectively, drawn on the Chesapeake Bank, and, at the request of the appellant, had them certified. As soon as they were certified they were taken to the Old Town branch of the Maryland Trust Company for *Page 357 deposit, and before 2 o'clock of the same day the cashier of the Old Town bank advised the appellant of the Chesapeake Bank failure. George W. Page, bank commissioner of Maryland, was appointed receiver, and, demand having been made on him for payment of the certified checks, which was refused, the appellant filed its petition praying an order directing the receiver to pay the checks held by the appellant as a preferred claim. The appellee, receiver as aforesaid, filed a combined answer and demurrer, and, after testimony was heard, the petition was dismissed, and this appeal taken.
It is undisputed that all the money represented by the checks, $6,750.29, except $146.25, was money of the Star Realty Company left with Mr. Rome by it to be applied to the purchase of property conveyed by the appellant, and deposited on December 9th, before the checks were certified. Three days before a deposit of $282 was made from the same source, so that he appears to have put up $146.25 himself. According to the record, $6,604.04 of the Star Realty Company's money, and $146.25 of Mr. Rome's, is traceable into these checks. When the checks were certified by the teller of the Chesapeake Bank, charge slips were made out by him against the account of Mr. Rome, and then and thereupon his deposit, to the extent of the checks to the appellant, passed out of his control and into the control of the appellant, and whatever relations there were with regard to the paper was between the appellant and the bank, but just what that relationship may be is what makes this a case.
As the appellant admits, "A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies the check" (Code, art. 13, sec. 208, Uniform Negotiable Instruments Law), but it contends that the money so deposited by Mr. Rome was impressed with a trust in favor of the appellant, and that, in spite of the fact that the certified checks were not presented for payment before the receivership, they still are to be preferred, and cites 7 C.J. 751 as authority for its contention. It is there said: "Where a deposit is made *Page 358
under such circumstances as to constitute a trust fund in the hands of the bank, such deposit is entitled to be repaid in preference to general creditors, where it can be identified (Italian Fruit Importing Co. v. Penniman,
The appellant also urges the application of section 95 of article 11 of the Code (Supp. 1929 — Bank Collection Code), as enacted by the Acts of 1929, ch. 454, to the facts of this case. By the second paragraph of that section it is provided that: "Except in cases where an item or items is treated as dishonored by non-payment as provided in section 11 (93), when a drawee or payor bank has presented to it for payment *Page 359
an item or items drawn upon or payable by or at such bank, and at the time has on deposit to the credit of the maker or drawer an amount equal to such item or items, and such drawee or payor shall fail or close for business * * * after having charged such item or items to the account of the maker or drawer thereof or otherwise discharged his liability thereon but without such item or items having been paid or settled for by the drawee or payor either in money or by an unconditional credit given on its books or on the books of any other bank, which has been requested or accepted so as to constitute such drawee or payor or other bank debtor therefor, the assets of such drawee or payor shall be impressed with a trust in favor of the owner or owners of such item or items for the amount thereof," or for the balance of items exchanged, "and such owner or owners shall be entitled to a preferred claim," no matter whether such items can be traced and identified, or have "been intermingled with or converted into other assets of such failed bank." Just what is necessary to protect a maker or drawer under the circumstances provided for in the act quoted is aptly illustrated and applied in the case ofFederal Reserve Bank v. Peters,
In this case it is undisputed that the certified checks so held by the appellant never were presented to the Chesapeake Bank for payment. The procedure necessary to avail the appellant of the provisions of the act had been started by the deposit of the checks in the Old Town Bank on the day they were certified, but before the close of business on the same day the Chesapeake Bank was closed. It cannot be said that any one, unless it was the appellant, was negligent or at fault, as the Old Town Bank had until the next day to present the checks for payment. Andersonv. Gill,
If the appellant, therefore, has any rights now, it is as the *Page 360 holder and payee of two certified checks which represent the purchase money of property, the cash payment for which was converted by Mr. Rome, the purchaser's attorney, into checks which were certified, and that at the request of the appellant. The money was deposited and the checks procured by a boy sent to the bank from Mr. Rome's office, whose return was awaited by Mr. Rome and the secretary-treasurer of the appellant. There is nowhere in the record any evidence that the bank was advised of the nature of the business being done, or that the funds so deposited were to be set apart or used in such a way as to make the bank the agent of either party, and thus make it the trustee rather than the depository of the purchase money. Note 31A.L.R. 472. The transaction, therefore, must speak for itself in terms of the statutes of this state, and the adjudicated cases.
By section 206, article 13 of the Code (Negotiable Instruments Law), it is provided that "where a check is certified by the bank on which it is drawn, the certification is equivalent to an acceptance." The effect of certification, as stated by Judge McSherry in Anderson v. Gill,
In Scheffenacker v. Hoopes,
There is no charge in the appellant's petition that, at the time the deposit was made and the checks certified, the Chesapeake Bank was insolvent, and that therefore a fraud was perpetrated on the depositor or holder of his certified check (Pott v. Schmucker,
In the absence of any other evidence than that the appellant was the holder in due course of a certified check of a depositor in a failed bank, which had not been presented for payment and charged in accordance with the provisions of section 95, article 11 of the Code, Supp. 1929, and with no facts from which an inference of agency of the bank for the holder can be drawn, the order of the chancellor dismissing the appellant's petition should stand.
Order affirmed, with costs.
Schumacher v. Harriett , 52 F.2d 817 ( 1931 )
Scheffenacker v. Hoopes , 113 Md. 111 ( 1910 )
Bk. of Balto. v. Drovers', Etc., Bk. , 143 Md. 168 ( 1923 )
First Nat. Bank of Jersey City v. . Leach , 52 N.Y. 350 ( 1873 )
G.N. Bank v. . Bingham , 118 N.Y. 349 ( 1890 )
Lynch v. . First Nat. Bk. of Jersey City , 107 N.Y. 179 ( 1887 )