Anderson v. Gill
| Decision Date | 19 June 1894 |
| Citation | 29 A. 527,79 Md. 312 |
| Parties | ANDERSON v. GILL. |
| Court | Maryland Court of Appeals |
Appeal from court of common pleas.
Action by N. Rufus Gill, executor of Mary A. Dodge, against William H. Anderson. From a judgment for plaintiff, defendant appeals. Reversed.
Argued before ROBINSON, C.J., and BRYAN, BRISCOE, ROBERTS, and McSHERRY, JJ.
E. C Eichelberger, for appellant.
N Rufus Gill and Wm. S. Bryan, Jr., for appellee.
On the 13th of January, 1892, Anderson, the appellant, drew his check in favor of Mary A. Dodge on J. J. Nicholson & Sons bankers in the city of Baltimore, for $693.03, and delivered it to the payee the same day. She forthwith deposited it to her credit in her account with the Old Town Bank, of the same city, duly indorsed for collection. On the following day, the 14th, the Old Town Bank sent the check by its runner to the banking house of Nicholson & Sons, where it was presented for payment shortly before 11 o'clock a. m., during the usual hours of business. Anderson had to his credit on deposit with Nicholson & Sons at that time $5,000, available for the payment of the check. Instead of getting cash for the check, the runner accepted in lieu thereof a check drawn by Nicholson & Sons on the Western National Bank for the precise amount of Anderson's check, and delivered up the latter to Nicholson & Sons. The banking house of Nicholson & Sons was situated about three blocks distant from the Western National Bank, and it would not have required more than from 5 to 10 minutes for the runner to have walked from the one to the other. But in place of doing this, and presenting Nicholson & Sons' check to the Western National Bank, and getting it cashed or certified, he took it to the Old Town Bank, where it remained in the possession of the latter until after Nicholson & Sons failed and closed their doors, at 1:30 p. m. the same day. By this failure, Anderson lost the $5,000 on deposit to his credit with them. Up to that hour the Western National Bank had ample funds belonging to Nicholson & Sons with which to cash the check given to the Old Town Bank. Shortly before 3 o'clock, and after the failure of Nicholson & Sons, the Old Town Bank sent the check it had received from Nicholson & Sons in lieu of Anderson's check to the Western National Bank, and presented it for payment, but it was dishonored; whereupon the runner went with it to the banking house of Nicholson & Sons, to surrender it, and to demand a return of Anderson's check, but he was unable to gain admittance. About 5 p. m. of the same day, the cashier of the Old Town Bank was allowed to enter, and, at his instance, a notary took a copy of Anderson's check, and protested the check, of which notice was mailed the same evening to Anderson, and received by him the next day. Subsequently, the Old Town Bank replevied the check from the trustees of Nicholson & Sons, and still has it, that case not having been disposed of yet. After the Anderson check had been presented to Nicholson & Sons, on the morning of January 14th, and after the runner of the Old Town Bank had surrendered it, and accepted in lieu of it the check on the Western National Bank, two other checks were given by Nicholson & Sons upon the Western National Bank,--one for $1,900, to the runner of the Merchants' National Bank, and one for $1,800, to the runner of the National Bank of Baltimore,--and each of these was presented to the Western National Bank before 1:30 p. m. of the same day, and paid or certified by it. With this state of facts existing, the executor of Mary A. Dodge sued Anderson to recover the $692.03 due by him to her when the check was given, on January 13, 1892; and the inquiry presented by the record is whether, under the circumstances, Anderson is still liable for that debt. It was held by the court below that he was, and from the judgment against him he has appealed.
As between the parties to a check, the drawer remains liable upon it to the holder until the bar of the statute of limitations supervenes and releases him, if availed of, unless the omission or neglect of the holder to present it within a reasonable time after its receipt has resulted in injury or loss to the drawer. A failure of the bank which is the drawee of the check, and which held on deposit a fund to meet it, by which failure that fund is lost, presents the usual, if not the only, case in which delay of the holder in making presentment or giving notice of dishonor devolves loss upon him. Daniel, Neg. Inst. § 1590. Speaking generally, what is a reasonable time depends on the facts of each particular case; but it is thoroughly settled that the reasonable time allowed the holder for presenting a check when he receives it in the same place where the bank on which it is drawn is located is till the close of banking hours on the next secular day; and if, in the meantime, the bank fails, the loss will fall on the drawer. Id. 1591; Byles, Bills, side page 14; Moule v. Brown, 4 Bing. N. C. 266; Boddington v. Schlencker, 4 Barn. & Adol. 752. Every drawer of a check assumes the risk of the drawee's solvency during that period of time. It is consequently obvious that Anderson would have continued liable had the check been presented on the 14th, during business hours, though after the failure of Nicholson & Sons. But it was presented to the drawees before the failure, and would have been paid when presented had the cash been then demanded; or, had the check on the Western National Bank been presented for payment or certification at any time that day before Nicholson & Sons actually suspended and closed their doors, the money would have been obtained. While, therefore, it is apparent that the mere passivity of the holder--her mere failure to present the check on the 14th prior to the suspension of the drawees--would not of itself have discharged the drawer, yet another element has entered into the case, and, the holder having chosen to present the check before there was any obligation on her part to do so, and having furthermore chosen, through her agent, to surrender it, and to accept the drawee's check instead of money, what, then, became the degree of diligence which she owed to Anderson in order to still hold him liable? This is the crucial question in the case.
Now, a check on a bank or banker is payable in money, and in nothing else. Morse, Banks (2d Ed.) p. 268. The drawer, having funds to his credit with the drawee, has a right to assume that the payee will, upon presentation. exact in payment precisely what the check was given for, and that he will not accept, in lieu thereof, something for which it had not been drawn. It is certainly not within his contemplation that the payee should upon presentation, instead of requiring the cash to be paid, accept at the drawer's risk a check of the drawee upon some other bank or banker. The holder had a right to make immediate demand for payment upon receipt of Anderson's check, though she was not bound to do so. When her agent, the Old Town Bank, the collecting bank being the agent of the holder (Dodge v. Trust Co., 93 U.S. 379), did make demand, it was only authorized to receive money (Ward v. Smith, 7 Wall. 451); and the acceptance by the collecting agent of anything else rendered it as liable to the holder as though it had collected the cash. Bank v. Ashworth (Pa. Sup.) 16 A. 596. The acceptance of Nicholson & Sons' check on the Western National Bank was either payment of Anderson's check, or it was not. If it was, as it would be according to the Massachusetts doctrine (The Kimball, 3 Wall. 37), then his liability was extinguished. If it was not a payment, then the holder's collecting agent is responsible to her for having given up the check without payment; and, if injury resulted to Anderson by reason of that agent's failure to use due diligence in converting Nicholson & Son's check into money, then, also, is Anderson discharged, because the agent's failure to use due diligence is the failure of that agent's principal. But, while a check drawn bona fide on a banker having funds of the drawer is prima facie payment if accepted as cash (Woodville v. Reed, 26 Md. 190), still, in the absence of an express agreement, the acceptance of a check of either the debtor or a third party is, in fact, merely conditional payment; that is, satisfaction of the debt if and when paid (Haines v. Pearce, 41 Md. 221). But the acceptance of such check implies an undertaking of due diligence in presenting it for payment, and, if the party from whom it is received sustains loss by want of such diligence, it will be held to operate as actual payment. Kilpatrick v. Association, 119 Pa. St. 30, 12 A. 754; Freeholders of Middlesex v. Martin, 20 N. J. Eq. 39. What, then, is the degree of diligence required under such conditions?
The rule fixing the close of business hours of the next secular day as a reasonable time within which a check may be presented, so as to hold the drawer when drawn on a bank in the same place where it is delivered, has relation only to the contract and liability of the parties to the instrument and does not apply to a check given by the drawee to the payee, or to the agent of the payee, of the original check, upon its surrender. There is no un bending or inflexible rule governing this latter condition of facts, and, in the nature of things, there could not well be. What would be due diligence under one condition of facts might be negligence under different circumstances; and all that can be definitely laid down is that each case must in this particular be decided upon its own peculiar facts, though in no instance can the liability of the drawer be extended beyond the period which would ordinarily limit it. The holder of a substituted check taken upon...
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