Bank of Springfield v. First Nat. Bank of Springfield

• Decision Date: 10 April 1888
• Parties: THE BANK OF SPRINGFIELD, Respondent, v. THE FIRST NATIONAL BANK OF SPRINGFIELD, Appellant.
• Court: Missouri Court of Appeals

30 Mo.App. 271

THE BANK OF SPRINGFIELD, Respondent, v. THE FIRST NATIONAL BANK OF SPRINGFIELD, Appellant.

Court of Appeals of Missouri, St. Louis.

April 10, 1888

APPEAL from the Greene Circuit Court, HON. W. D. HUBBARD, Judge.

Affirmed.

JAMES R. VAUGHAN, for the appellant: The certificate of a bank that a check is good is equivalent to acceptance. Morse on Banking [2 Ed.] 308-13-14; Bigelow on Estoppel [2 Ed.] 412-16. No particular form of certification is necessary. The mere verbal statement of the bank officer that the check is good will constitute a certification. Daniel on Neg. Inst., sec 1606, p. 527; Morse on Banking [2 Ed.] 316; Bigelow on Estoppel, 412-17; Pope v. Bank, 59 Barb. 226; Espy v. Bank, 18 Wall. 604. The appellant, after it had been informed by the plaintiff' sofficials that the check was all right, in good faith took the same from Maggio in payment of the draft on him, and remitted the money to Reeme & Company, and the Bank of Springfield was thereby estopped and forbidden by law to deny the want of funds or their liability to pay the check. Bigelow on Estoppel [2 Ed.] 412 et seq.; Meads v. Bank, 26 N.Y. 143. The petition avers a contract, contains an averment that defendant wrongfully and unlawfully failed to pay a balance to plaintiff, and nowhere avers any conversion of plaintiff's checks, while the evidence, if it shows anything, shows a conversion. For the above reasons, there is a failure of proof or fatal variance in plaintiff's case between the allegations of the petition and the proofs. Watson v. Stever, 25 Mich. 386; Carson v Cummings, 69 Mo. 325; Sandeen v. Railroad, 79 Mo. 278; Moses v. Arnold, 43 Iowa 187. A mistake as to the condition of Maggio's account, or failure to charge Maggio & Company, could not affect appellant's rights. Espy v. Bank, 18 Wall 621; Bank v Bank, 16 N.Y. 126; Bank v. Leach, 52 N.Y. 350; Cook v. Bank, 52 N.Y. 96. The court erred in admitting Bentley's testimony giving his conclusions and opinions as to the meaning of the telephonic communication between banks of Springfield like that on the twentieth of July. A custom must be proven by facts and actual occurrences and not by opinions. A positive rule of law or a legal liability cannot be changed by proof of a custom. A custom cannot be proven by one witness, even where he is uncontradicted. Clark's Brown on Customs [1 Am. Ed.] 146-52; Kleekamp v. Meyer, 5 Mo.App. 444; Cook v. Bank, 52 N.Y. 96.

MASSEY & MCAFEE, for the respondent.

OPINION

THOMPSON J.

The plaintiff is a bank doing business at North Springfield in this state, and the defendant is a national bank doing business at Springfield, about a mile and a half distant from the plaintiff bank. The substance of the petition is, that the plaintiff and the defendant made an exchange of checks between each other, and that in the exchange the defendant became indebted to the plaintiff for the balance of $187.50, which the defendant refused to pay. The answer, after a general denial, sets up a state of facts which was supported by uncontradicted evidence, and which was as follows:

The defendant received from a correspondent in Kansas City for collection a draft for $187.50 drawn upon B. Maggio by the name under which he did business, which was B. Maggio & Company. Maggio tendered to the defendant in payment of the draft, the check of B. Maggio & Company drawn upon the plaintiff bank for the amount of the draft. Maggio's financial standing was not good, and he was distrusted by the officers of the defendant, who, therefore, judged it prudent before receiving the check to inquire of the plaintiff bank over the telephone whether it was good. They accordingly called up the plaintiff over the telephone, and received in reply to their inquiry the statement that the bookkeeper of the plaintiff was sick, but that the plaintiff would shortly inform them whether the check was good. About ten minutes later the plaintiff called up the defendant, and stated that the check was " all right." The defendant thereupon received the check in payment of the draft, delivered the draft to Maggio, and at once remitted the amount of it, less charges, to their correspondent at Kansas City. This was on the twentieth of July, 1885. The uncontradicted evidence is, that the account of B. Maggio & Company in the plaintiff bank was good for the check on that day and on the following day, and that if the check had been presented on either of those days it would have been paid. But it was not presented until the twenty-second, on which day it seems that Maggio suspended payment. When it was presented in the usual course of the business of exchanging checks which took place between the two banks, the messenger of the plaintiff bank, under instructions which he had received from his superiors, informed the messenger of the defendant bank that the check would not be paid. The agent of the defendant protested that the defendant had received the check on the faith of the plaintiff's assurance, delivered over the telephone, that it was good, and insisted on its payment. Thereupon the messenger of plaintiff took the check for the purpose of consulting his superiors about it. When informed of what he had done they returned the check to the defendant bank refusing to receive it, and the defendant in its turn refused to receive it back. In the exchanges of the day the defendant had become indebted to the plaintiff in a sum equal or greater than the amount of this check, and the defendant thereupon refused to make good to the plaintiff its balance equal to the amount of this check, and the plaintiff prosecutes this suit for the same.

Down to this point in the testimony there was no conflict upon any matter of substance. The only substantial conflict in the testimony related to the evidence of a custom among the bankers of Springfield and North Springfield, touching representations made over the telephone that checks were good. Against the objection of the defendant, the plaintiff's cashier was permitted to testify in substance that such a representation over the telephone, made by one bank to another, in response to its inquiry, was understood to mean that the check was good at that time; that such replies were not certifications of checks, but were only regarded as information to guide the discretion of the inquiring bank as to whether it would receive the check. An officer of the defendant, on the other hand, testified that there was no such custom. As the testimony of disinterested bankers was not given upon this question, if it were material, we should feel inclined to hold that such a custom had not been established. But we regard it as immaterial, because the statement made by the plaintiff's cashier as to the customary understanding of the bankers at those places is substantially a statement of what we understand to be the law independently of any custom.

The certification of a check by the bank upon which it is drawn is analogous to the acceptance of a bill of exchange. The check itself is, when presented to the banker and accepted by him, an appropriation of so much of the funds of the drawer in favor of the holder. It produces a complete novation in respect of the amount named in it; the holder is substituted in the place of the drawer as the creditor of the bank; the bank charges the amount of the check against the drawer on his account, and becomes primarily liable to the holder, and remains so liable until discharged by payment, release, or the statute of limitations. Meads v. Merchants' Bank, 25 N.Y. 143. A bank, by certifying a check to be " " good" , creates a simple and unconditional obligation on its part to pay the same to the holder on demand, and demand may be made by him at any time which may suit his convenience, and no laches are imputable to him by reason of delay. Willets v. Bank, 2 Duer (N. Y.) 121.

Such being the effect of the certification of a check, the next inquiry is, whether these important consequences can be held to flow from a mere representation over the telephone in response to an inquiry, to the effect that a check of a customer for a certain amount is good. After a diligent search we have found no decision which so holds. It may be conceded that a bill of exchange may be accepted by parol where there is no statute requiring it to be accepted in writing. 2 Rand. Com. Paper, sec. 606. It may be conceded also that a bank check possesses several of the incidents of an inland bill of exchange. Cruger...