Federal Land Bank of New Orleans v. Collins

• Citation: 156 Miss. 893,127 So. 570
• Decision Date: 07 April 1930
• Docket Number: 28572
• Court: United States State Supreme Court of Mississippi
• Parties: FEDERAL LAND BANK OF NEW ORLEANS, LA., v. COLLINS et al

127 So. 570

156 Miss. 893

FEDERAL LAND BANK OF NEW ORLEANS, LA., v. COLLINS et al

No. 28572

Supreme Court of Mississippi

April 7, 1930

Division A

1. BANKS AND BANKING. Checks. Acceptance. Paying check. Bank's payment of check on unauthorized indorsement and charging it to drawer does not constitute "acceptance" (Negotiable Instruments Act, sections 132, 185, 189).

Negotiable Instruments Act, section 189 (Hemingway's Code 1927 section 2943), provides that check of itself does not operate as assignment, and bank is not liable to holder until it accepts or certifies check; Negotiable Instruments Act section 185 (Hemingway's Code 1927, section 2939) provides that provisions of act applicable to bill of exchange apply to check; and Negotiable Instruments Act, section 132 (Hemingway's Code 1927, section 2886), provides that acceptance must be in writing and signed by drawee.

2. BANKS AND BANKING. Check. Acceptance. Payment on unauthorized indorsement.

Payee could not sue drawee paying check on unauthorized indorsement without notice of defect (Negotiable Instruments Act, sections 132, 185, 189).

3. ASSIGNMENTS. Check. Assignment of funds.

There is no assignment pro tanto, where check is not drawn on particular fund or does not show on face it is assignment of particular fund (Negotiable Instruments Act, section 189).

4. LIMITATION OF ACTIONS. Cause of action. Concealment. Cause of action of mortgagee against parties cashing check for award in condemnation proceeding was not concealed, and therefore extended, where mortgagee was served in proceeding but did not appear (Heming way's Code 1927, section 2647).

Code 1906, section 3109 (Hemingway's Code 1927, section 2647). provides that if person liable to personal action shall fraudulently conceal cause of action from knowledge of person entitled thereto, cause of action shall be deemed to have first accrued at time fraud shall be or with reasonable diligence might have been first discovered. In this case the mortgagee had been summoned to court and knew or was presumed to know that result of the eminent domain proceedings would be judgment for payment of money, and was charged with notice that judgment in its favor had been rendered.

5. LIMITATION OF ACTIONS. Applicable statute. Suit on canceled check. Mortgagee's action against parties cashing check on unauthorized indorsement for award in condemnation proceeding was barred by three-year statute (Hemingway's Code 1927, section 2637).

All that was presented in case was canceled check with indorsements of defendants on back thereof, and there was no implied promise to pay deducible from such instrument so as to take case out of statute referred to.

6. LIMITATION OF ACTIONS. Three-year statute. Writing. Canceled check.

To take case out of three-year statute, there must be writing evidencing acknowledgment of indebtedness or promise to pay in terms rendering supplementary evidence unnecessary (Hemingway's Code 1927, section 2637).

HON. G. C. TANN, Chancellor.

APPEAL from chancery court of Jones county, Second district HON. G. C. TANN, Chancellor.

Suit by the Federal Land Bank of New Orleans, La., against Jeff Collins and others. The demurrers of defendants to complainant's bill were sustained, and complainant appeals. Affirmed and remanded.

Affirmed and remanded.

Wells, Jones, Wells & Lipscomb, of Jackson, for appellant.

A cause of action evidenced by a check, a written instrument, is not barred by the three-year statute of limitation.

Cock, Adm'r v. Abernathy, 77 Miss. 872, 28 So. 18; Masonic Benefit Association v. First State Bank, 99 Miss. 610, 55 So. 408.

The statute of limitations does not begin to run until appellant discovered, or with the use of reasonable diligence could have discovered that its name had been endorsed on the check without its authority and no part of the money paid over to it.

Hudson v. Kimbrough, 74 Miss. 341, 20 So. 885; Orr Shoe Co. v. Edwards, 111 Miss. 542, 71 So. 816.

Receipt of a check by a bank stamping its name thereon and charging same to the account of the drawer, constitutes an acceptance by the bank.

Section 2943 of Hemingway's Code of 1927; Pickle v. People's National Bank, 88 Tenn. 380, 7 L.R.A. 93, 17 Am. St. Rep. 900, 12 S.W. 918; McFadden v. Follrath, 114 Minn. 85, 37 L.R.A. (N.S.) 201, 130 N.W. 542; 15 L.R.A. (N.S.), p. 519; Mechanic's Bank v. Yeager, 62 Miss. 529; Vanbibber v. Bank of Louisiana, 14 La. Ann. 481, 74 Am. Dec. 442.

Deavours & Hilbun, of Laurel, for appellee, Commercial Bank & Trust Co.

The stamping of its name on back of check by a bank other than the one on which such check was drawn, does not constitute an acceptance of such check.

Section 2886 of Hemingway's Code; Elyria Savings & Banking Co. v. Walker Bin Co., 92 Ohio State 406; L.R.A. 1916D, 433, 111 N.E. 147.

A check does not of itself operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies the check.

Sec. 2943 of Hemingway's Code of 1927; Baltimore & O. R. Co. v. First Nat. Bank, 102 Va. 753, 47 S.E. 837.

Shannon & Schauber, of Laurel, for appellee, First National Bank.

Even though the name of the First National Bank of Laurel is stamped on either the front or back of the check and even if this check was ever charged to the account of the drawer, these facts do not amount to an acceptance or certification of the check by the bank.

Ballard v. Home National Bank of Arkansas, L.R.A. 1916C, p. 164; Elyria Savings & Banking Co. v. Walker Bin Company, L.R.A. 1916D, p. 433; State Bank of Chicago v. Mid-City Trust & Savings Bank, 12 A.L.R., p. 989.

Collins & Collins, of Laurel, for appellee.

The three-year statute of limitations bars this action because there was no concealment by defendant, and appellant was a party to the eminent domain proceedings and the whole matter was of record.

Flemming v. Grafton, 54 Miss. 79.

Argued orally by Calvin Wells, for appellant.

OPINION

McGowen, J.

The Federal Land Bank filed its bill in the chancery court of Jones county against D. R. and M. J. Sanders, Jeff Collins, A. S. Jackson, the Commercial National Bank & Trust Company, and the First National Bank of Laurel, Mississippi, to which bill all of the appellees, defendants in the court below, filed demurrers, except A. S. Jackson, who filed a cross-bill against his codefendants. The codefendants appeared, answered this cross-bill, and interposed a demurrer. The demurrers of the appellees to the original bill of the Federal Land Bank were sustained, and the appellant was granted an appeal to this court to settle the principles of the cause. The demurrer to the cross-bill of Jackson was continued by the court until a determination of this appeal was had by this court.

The Federal Land Bank charged in its bill that it loaned Sanders and his wife five thousand dollars evidenced by note which was secured by a deed of trust dated September 1, 1923, on certain lands owned by the Sanders. The loan was a long-term loan with payments to be made three hundred twenty-five dollars annually, and on January 1, 1929, there remained due on said loan four thousand six hundred seventy-six dollars and ninety-four cents.

It was further alleged that proper proceedings were had in the proper court on the application of the Mississippi Power Company to condemn a right of way across the lands belonging to Sanders and his wife for its public corporation purposes, and process was issued and served on Sanders and wife, the Federal Land Bank, and the trustee named in the deed of trust. Neither the trustee nor the Federal Land Bank entered appearance, but the Sanders entered their appearance, and the proceeding resulted in a judgment assessing damages for the land taken, which was a one-hundred foot right of way, for the sum of one thousand three hundred dollars. The judgment recited that this was for damages awarded Sanders and wife and the Federal Land Bank, which had an interest in the lands condemned by virtue of its deed of trust. Thereupon the Mississippi Power Company paid the award to A. S. Jackson, the circuit clerk of that county, by check drawn by A. S. Jackson, circuit clerk, on the First National Bank of Laurel, Mississippi, payable to D. R. Sanders, Mrs. M. J. Sanders, the Federal Land Bank of New Orleans, and Jeff Collins. Judgment was rendered October 8, 1925. The check was dated October 23, 1925. On the back of the check appeared the following indorsements: "D. R. Sanders. Mrs. M. J. Sanders. The Federal Land Bank of New Orleans, by Jeff Collins, Attorney for Defendants for D. R. Sanders; W. M. Carter Lumber Company, by Keeton." Also on the back of the check was stamped: "Commercial National Bank & Trust Company of Laurel, Laurel, Mississippi, Paid October 27, 1925, per Teller." The check was perforated with the following words and figures: "Paid 10--27--25."

The bill further alleged that said check was presented for payment to the Commercial Bank & Trust Company and was paid by said bank on October 27th with the indorsements, as set forth above, thereon at the time; that Sanders and his wife indorsed the check personally, and that the indorsement, "The Federal Land Bank of New Orleans by Jeff Collins, Attorney for Defendants, for D. R. Sanders," was written on the back of the said check by the defendant Jeff Collins, and that the said defendant, Collins, was without any authority whatsoever to indorse for the Federal Land Bank, and that he was in no way authorized to accept payment of said sum of money for said complainants, nor were any of the parties whose names were indorsed thereon authorized to collect the check for the said Federal Land Bank;...