Commercial Investment Trust v. Lundgren-Wittensten Company
| Decision Date | 02 December 1927 |
| Docket Number | 26,276 |
| Citation | 216 N.W. 531,173 Minn. 83 |
| Parties | COMMERCIAL INVESTMENT TRUST v. LUNDGREN-WITTENSTEN COMPANY |
| Court | Minnesota Supreme Court |
Plaintiff appealed from an order of the district court for Marshall county, Grindeland, J. denying its motion for a new trial. Affirmed.
When holder of draft must suffer by insolvency of the drawer.
1. Where the holder of a draft, payable on demand, negligently fails to present the same for payment within a reasonable time, there being funds for its payment, and thereafter the drawer fails, the holder must suffer the loss.
When creditor's negligence in holding draft operates as payment.
2. When such draft has been sent by a debtor to his creditor on account, such negligence on the part of the creditor makes the draft his own and operates as a payment.
Bills and Notes, 8 C.J. p. 545 n. 65; p. 546 n. 66; p. 547 n. 77.
Payments 30 Cyc. p. 1207 n. 96; p. 1208 n. 99; p. 1209 n. 4.
See note in 23 A.L.R. 1206; 5 R.C.L. 509; 1 R.C.L. Supp. 1418; 4 R.C.L. Supp. 330.
M. A. Jordan and Thomas Kneeland, for appellant.
Julius J. Olson and Rasmus Hage, for respondent.
Plaintiff appealed from an order denying its motion for a new trial. The action is in replevin, but the controversy relates to whether a draft was received and retained by plaintiff under such circumstances as to constitute payment.
Defendant owed plaintiff the sum of $1,044.25, secured by certain Star motor vehicles, and an item of $25 termed "attorney's fees." On October 20, 1925, at the instance of defendant, the Warren National Bank of Warren, Minnesota, issued its draft on the First National Bank of Minneapolis for $576.85 to Olson & Hage, who indorsed it in blank (their connection with the transaction being an unimportant incident), and defendant on October 28, 1925, transmitted the draft in a letter, stating it was the proceeds from the sale of one of the cars, to the Mercantile Acceptance Company, plaintiff's agent at Minneapolis. In response thereto, the agent wrote defendant:
Plaintiff did not present the draft for payment but held the same awaiting a reply to its letter. On November 23, 1925, the drawer suspended payment. It had, at the time of the date of the draft and at all times thereafter up to November 17, 1925, funds with the drawee in excess of the amount of the draft.
Plaintiff asks us to construe the letter as meaning that the draft was not accepted and would not be unless "by return mail" it received the balance; and it claims that defendant's failure to answer was the occasion for the delay in presenting the draft for payment. However, it seems to us more reasonable to say that the letter acknowledged the receipt of the draft, and that plaintiff's agent then offered a compromise on the claim for attorney's fees if it could get the balance by return mail. There is nothing in the letter indicating any thought of refusing the draft. Creditors seldom do that. The remittance was unconditional. The evidence shows that this remittance was to meet a specific item of the indebtedness, but that is not of controlling importance.
Defendant was not under any legal duty to answer the letter, nor was there anything in the letter to indicate to defendant that plaintiff was waiting for a reply. It did not ask for one. It held the draft for a period of 12 days, during which it could have had the money by presenting the draft. This was without legal excuse. Its duty was to return the draft or present it for payment. It did neither. Whether a holder retains a check or bill for an unreasonable time is usually a question of fact. The circumstances and facts in this case support the court's conclusion that plaintiff was guilty of negligence and that such negligence was the cause of the loss occasioned by the closing of the bank.
This draft was an inland bill of exchange. G.S. 1923, §§ 7169, 7172. Presentment for payment must be made within a reasonable time after the last negotiation thereof. G.S. 1923, § 7114. Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence. G.S. 1923, § 7124.
When the holder fails to present a check within a reasonable time after its issue, the drawer is discharged from liability thereon to the extent of the loss caused by the...
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