Ditch v. W. Nat. Bank of Baltimore

• Decision Date: 17 March 1894
• Citation: 29 A. 72,79 Md. 192
• Parties: DITCH et al. v. WESTERN NAT. BANK OF BALTIMORE.
• Court: Maryland Court of Appeals

29 A. 72

79 Md. 192

DITCH et al.

v. WESTERN NAT. BANK OF BALTIMORE.

Court of Appeals of Maryland.

March 17, 1894.

Appeal from circuit court of Baltimore city.

J. D. Ditch & Bros, against the Western National Bank of Baltimore. From a judgment for defendant, plaintiffs appeal. Affirmed.

Argued before ROBINSON, C. J., and BRYAN, BRISCOE, McSHERRY, FOWLER, ROBERTS, and BOYD, JJ.

Rich. Bernard & Son, for appellants. S. D. Schmucker, and Geo. Whitelock, for appellee.

BRYAN, J. This case involves a question of considerable importance. Thomas J. Shyrock & Co. drew their check for $187.55 on the Third National Bank of Baltimore, payable to the order of John E. Reese. Reese indorsed it in these words: "Pay to the order of J. S. Ditch & Brother." The next indorsement was in these words: "For deposit to the credit of J. S. Ditch & Brother," signed "Per T. F. Cassidy." It was admitted that Cassidy had due authority from Ditch & Bros, to make and sign this indorsement. Luther Ditch, a member of the firm of Ditch & Bros., in person deposited this check, together with others, in the bank of J. J. Nicholson & Sons, and they at the same time entered a credit of cash to the amount of all of these checks in the deposit book of Ditch & Bros, and also in their own books. Ditch's testimony on this point is as follows: "That he handed his deposit to John R. Nicholson in person. That his firm kept another pass book with Nicholson & Sons, in which accounts were left for collection, on which promissory notes only were entered. That when these promissory notes were paid credit was entered on the regular deposit book. All checks, whether out of town or city checks, were entered on the regular deposit book as cash. On a few occasions, checks dated ahead were entered as cash. If necessary, or if they were short of funds, they checked immediately after the deposit was made. They made no special arrangement about checking on deposit. * * * That the paper left for collection, consisting of promissory notes, was not carried to the deposit books until the collection had been made, but all checks were entered in the deposit book, when deposited as cash, as if they were so much currency; and they were at liberty to check against such deposits as soon as made, if they desired." Mathew Aiken, general bookkeeper of Nicholson & Sons, testified: "That he knew J. S. Ditch & Bros. That they had two accounts with his bank, and a separate pass book for each account,—one a deposit account, and the other an account for collection. The collections went to their credit when collected, and were then marked off their collection book, and credited on the deposit book. The deposits made by Ditch & Bros, went to their credit on the books of Nicholson & Sons on the same day the deposit was made, and they were credited on the deposit book of Ditch & Bros, at the time the deposit was made." And also: "That the check in question forms a part of a credit of cash, $929.75, to Ditch & Bros, in their deposit book with Nicholson & Sons, on January 14, 1892; and that the amount of the credit was so entered on the deposit book at the time the deposit was made, and was carried to their credit on the books of Nicholson & Sons." And also: "That all checks deposited by Ditch & Bros, were entered on their deposit book as cash, and subject to immediate withdrawal in currency or anything else." When Ditch deposited this check, it is evident that he did not wish to have the money for it paid into his hand, because, if he had wished the money, it would have been as easy to obtain it from the Third National Bank as to deposit the check; and, secondly, because, according to his own testimony and Aiken's, he could have drawn the money immediately, if he had choseu to do so. Instead of the money, he preferred a credit with Nicholson & Sons, subject to his check. This was, in all respects, more convenient to him than the possession in hand of currency or coin. And this is what the indorsement plainly meant, —the check was to be deposited, and the amount of it was to be placed to the credit of Ditch & Bros. The indorsement was in blank, so far as the name of the indorsee is concerned; but when Ditch handed the check to Nicholson & Sons, with the book in which his deposits were entered as cash, he evidently intended that the deposit should be entered in that book, and that he should receive credit for the amount of the check as cash, and that Nicholson & Sons should be holders of the check as indorsees in blank. No form of words could have made his meaning plainer, and this meaning is in exact accordance with the indorsement. The indorsement showed that it was to be deposited in a banking house, and that Ditch & Bros, were to receive credit for it. But the name of the banking house was not mentioned; it was left blank. By delivery, Ditch designated the bankers with whom it was to be deposited, and who were to give the credit. If Nicholson & Sons had paid to Ditch & Bros, the full amount of the check in coin or currency when it was delivered to them, it is supposed that there would have been no question about the nature and effect of the transaction. But they gave Ditch & Bros, what was preferred to the coin or currency,—they gave them the unconditional right to get the coin or currency at any time they might see fit to call for it, thus relieving them from the trouble and risk attending the care and custody of it. Now, it is extremely difficult to see on what principle or by what process Ditch & Bros, could retain any interest in this check after they had delivered it to a blank indorsee, and had received full and valuable consideration for it. It will not be alleged by any one that the banker did not give a consideration, valuable in the eye of the law, and sufficient to maintain the transfer of the check, when he made an absolute and unconditional contract with the depositor to pay his checks to the amount of the deposit. This point was decided in Tyson v. Bank (at January term, 1893) 26 Atl. 520. It has been asked, what would be the condition of the bank in case this check should be dishonored when presented for payment? The answer is not difficult. In Tyson v. Bank, the court thought that the bank would have against the depositor the ordinary remedies which belong to the indorsee of dishonored instruments of this character. It could certainly recover from him the amount of the check. And here we may notice a portion of the testimony which has been made the subject of a good deal of comment Aiken testified as follows: "It was not the custom of Nicholson & Sons to charge back to the depositors the checks which had been deposited with them and were dishonored. The custom was to have returned the checks to the party, and to get the money refunded." John Ditch testified: "Should any check be returned, they [Ditch & Bros.] had always to make them good. That the Nicholsons never bothered themselves about the unpaid checks." This testimony merely shows that the bank was aware of its legal rights, and that depositors paid voluntarily what they could have been compelled to pay by suit at law. Persons engaged in mercantile pursuits would lose all commercial credit and standing if they did not promptly perform their plain and well-understood obligations....