Commerce Union Bank v. Horton

• Decision Date: 17 January 1972
• Citation: 3 Pack 679,225 Tenn. 679,69 A.L.R.3d 1305,475 S.W.2d 660
• Parties: , 225 Tenn. 679, 69 A.L.R.3d 1305 COMMERCE UNION BANK, Petitioner, v. John H. HORTON, Administrator, Respondent.
• Court: Tennessee Supreme Court

Page 660

475 S.W.2d 660

3 Pack 679, 225 Tenn. 679, 69 A.L.R.3d 1305

COMMERCE UNION BANK, Petitioner, v. John H. HORTON, Administrator, Respondent.

Supreme Court of Tennessee.

Jan. 17, 1972.

Alfred E. Abbey, Russell H. Hippe, Jr., Trabue, Minick, Sturdivant & Harbison, Nashville, for petitioner.

Andrew D. Tanner, Nashville, for respondent.

OPINION

HUMPHREYS, Justice.

This case is before the Court by certiorari to the Court of Appeals. The administrator sued the bank to recover on a bank deposit. The bank pleaded the presumption of payment arising after the lapse of sixteen years. The trial judge recognized and applied the presumption. The Court of Appeals reversed the trial judge and awarded judgment. This Court granted certiorari, after full consideration, because it is of opinion the presumption of payment after the lapse of sixteen years applies to a deposit in a bank of this character: a deposit in a checking account.

The facts are that in 1950 the administrator's intestate deposited $1,251.38 in a checking account in the bank. She was issued a bank book which still contains a single entry in the amount of this deposit. This bank book is to be distinguished from a savings account passbook, as to which, possibly different rules apply. ¹

The depositor died in 1968, and plaintiff was appointed her administrator in April 1969. Thereafter, he presented the bank book to the bank and made formal demand for payment. This demand, after thorough search and after no record could be found concerning this account except the original signature card of the depositor, which was found in a closed-out file, was rejected. The proof was that under the bank's usual procedure the signature card would be placed in the closed-out file when the account was paid out. The officers of the bank further testified that its records were routinely purged and records more than ten years old destroyed. They also testified that the bank no longer had microfilm records pertaining to the years 1950 to 1955. They also testified that they had not examined all of the microfilm records made of all checks passing through the bank each day because this would be practically impossible, as the microfilm records of checks were not matched to any particular account.

The administrator introduced five witnesses who testified that decedent had discussed her bank account with him prior to her death. This testimony was rejected on objection by the bank that it was hearsay, but was admitted to make a record. It was not considered by the trial judge. And not coming within any exception to the hearsay evidence rule, is inadmissible.

This recitation discloses that the bank, after pleading payment, relied on the presumption of payment after the lapse of sixteen years, and, in addition to this defense, sought to show by an examination of its records that as a matter of fact, there was no such account as that sued on then in the bank. Against this, the administrator sought by the introduction of hearsay evidence to prove there was such an account, and on the general equity of the case, involving as it does a single deposit in an amount which it would not hurt the bank to pay, have this case treated as an exception to the presumption of payment rule. All of this calls into consideration the validity of the presumption of payment from a lapse of time.

The best discussion of this rule that we have found is under the title 'Payment' in 21 R.C.L., § 144 et seq. as follows:

'In General.--In all civilized countries where the law is administered as a science, having reference to the peace, quiet, and progress of society, as well as to the protection of individual rights, it has been thought wise that there should be some limit to litigation, some boundary beyond which contests or matters open to contest should be regarded as settled. Early in the judicial history of England the presumption of payment was raised after a great lapse of time between the creation of an obligation and an attempt to enforce it in the courts. This presumption became a part of the law of the United States and is applied in all jurisdictions. It originated in equity in the application of the maxim vigilantibus non dormientibus jura subveniunt, but was soon engrafted in the common law, and has since been steadily applied. It is not to be confused with the equitable doctrine of laches, since laches is generally regarded as being not delay alone, but rather delay working a disadvantage to another. Lapse of time may also set up to show that no claim ever existed as well as to raise a presumption of payment.' 21 R.C.L. § 144, p. 128.

Since the Court of Appeals seemed to equate the presumption of payment to the statute of limitations, and seemed to decide the case on statute of limitations cases, we quote with approval the following from the same authority:

'Statute of Limitations Distinguished.--The presumption of payment from the lapse of time differs essentially from a statute of limitations which presupposes an established substantive right, but forbids its enforcement by the customary remedies. The presumption of payment may be rebutted by sufficient evidence, no matter how long the time may be; but a statute of limitations cuts off the right of action, although it may be admitted that no payment has ever been made. A statute of limitations must ordinarily be pleaded and relied on by the defendant, while the presumption of payment arising from the lapse of...