Loland v. Nelson

I cannot concur in the conclusion of the majority that the Jenning's check was not presented to the Bank of Kenton upon which it was drawn within a reasonable time. Section 57-1003, Oregon Code 1930, provides:

"A check must be presented for payment within a reasonable time after its issue, or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay."

Section 57-1101 provides:

"In determining what is a `reasonable time' or an `unreasonable time' regard is to be had to the nature of the instrument, the usage of trade or business, if any, with respect to such instruments and the facts of the particular case."

I believe that we are justified in taking notice of the fact that the Bank of Kenton was located just inside of the boundaries of the city of Portland, whereas the Northwestern National Bank was located in the business center of the city, distant from the Bank of Kenton several miles. In fact, the testimony itself quite clearly establishes those facts. The Jennings check was delivered to Joseph, Haney Littlefield Monday, November 29. Upon the same day that firm of attorneys deposited it in the Northwestern National Bank to their credit. The latter bank upon the same day mailed the check to the Portland branch of the Federal Reserve Bank for the purpose of collection. Since the Northwestern bank was a member of the Federal Reserve System, and since the Kenton bank was neither a member of that System nor of the Portland Clearing House, the Federal Reserve Bank performed the services of a clearing house in this instance, as in all other like situations. The Jennings check reached the Federal Reserve Bank Tuesday, November 30, and upon the same day was deposited in the mails, addressed to the Kenton bank, where it was received Wednesday, December 1.

It will be observed from the foregoing that the check handed to the payee on Monday was presented to the drawee on Wednesday, and that in the meantime it was in transit. It will also be observed that the check was handled in the way that anyone would expect such an item would be handled; that is, the party to whom it was given promptly deposited it in his own bank which, in turn, sent it to the clearing house for collection. Our statutes, as will be observed from the foregoing, modify the requirement that a check must be presented for payment within a reasonable time by specifying that a reasonable time includes the time consumed by the usage of the trade or business in which the check performs its service. Our statutes also recognize as a disputable presumption (§ 9-807, Oregon Code 1930) "that the ordinary course of business has been followed" and "that things have happened according to the ordinary course of nature and the ordinary habits of life." Since the testimony, without any contradiction whatever, shows that this transaction was in all ways regular, in harmony with the established practice, and that in Portland the mail is used for the purpose of forwarding checks in lieu of bank messengers, the above presumptions seem applicable. In other words, these presumptions, in view of the evidence, warrant the belief that ordinarily a check drawn upon the Bank of Kenton, or any other bank in the outlying sections of Portland, is sent to the clearing house or the Federal Reserve Bank by mail, is then forwarded by mail to the drawee bank, and that it does not reach the latter until the third day.

The arbitrary rule recognized in Matlock v. Scheuerman,51 Or. 49 (93 P. 823, 17 L.R.A. (N.S.) 747), that a check must be presented to the drawee the day following its receipt if the payee lives in the same place where the bank upon which it is drawn is located, or the drawer will be discharged, was greatly modified by the rule of reason applied inJoppa v. Clark Com. Co., 132 Or. 21 (281 P. 834), which yielded effect to the provisions of the statute defining a reasonable time above quoted. I believe that the check was presented to the Bank of Kenton within a reasonable time.

The next difficulty which it is said prevents the maintenance of this suit is the fact that when the Bank of Kenton sent to the Federal Reserve Bank a draft drawn upon the Portland branch of the Bank of California, in order to discharge payment of the Jennings check the Reserve bank did not at once reject the draft and demand payment in cash, but presented the draft to the California bank. It is said that this act of the Federal bank constituted an acceptance of the draft as payment, thereby discharging the drawer of the check. In Federal Reserve Bank ofRichmond v. Malloy, 264 U.S. 160 (68 L. Ed. 617, 44 S. Ct. 296, 31 A.L.R. 1261), which, together with Cleve v. Craven ChemicalCo., 18 F.2d 711 (52 A.L.R. 980), are the authorities upon which the Jennings principally rely, the decision recognized the right of the collection bank to accept a draft in order to facilitate payment where a custom justified such action. I believe that the evidence warrants a conclusion that it was the custom in Portland for the collection bank to receive a draft upon a downtown bank when it had mailed to the outlying bank a check for payment. One witness whose qualifications were not contested gave the following uncontradicted testimony:

"Q. I want to ask you whether it was the Bank of Kenton's custom to pay these checks in that manner?

"A. That was the custom; yes, sir.

"Q. Could you state whether or not that is the general custom in Portland between different banks?

"A. My experience in the banking business is that is the method of remitting for items sent through the mail."

Such a custom would seem to be supported by reason. It would save the outlying bank from the hazard of constantly transferring substantial sums of money from its place of business to the downtown bank, and, in the present instance, would enable the latter promptly to effect collection from the reserve of funds carried by the Bank of Kenton in the Portland branch of the Bank of California. However, it is contended that the evidence of this custom is not verified by the testimony of two witnesses, as required by section 9-902, Oregon Code 1930, which provides that usage must be proved by the testimony of at least two witnesses. The quoted excerpt from the testimony of the above witness is uncontradicted and constitutes the testimony of one witness. The uncontradicted testimony of the several other witnesses who testified that this transaction was handled in harmony with the ordinary practice, together with the aforementioned presumptions which justify the inference that the usual course of business was pursued, supply the balance of the needed testimony, in my belief.

Having arrived at the above conclusions, I decline to concur in the decision of the majority.