First Nat. Bank of Elwood v. Universal C. I. T. Credit Corp.

• Decision Date: 16 November 1960
• Docket Number: No. 2,No. 19215,19215,2
• Citation: 132 Ind.App. 353,170 N.E.2d 238
• Parties: FIRST NATIONAL BANK OF ELWOOD, Appellant, v. UNIVERSAL C. I. T. CREDIT CORPORATION, Appellee
• Court: Indiana Appellate Court

Page 238

170 N.E.2d 238

132 Ind.App. 353

FIRST NATIONAL BANK OF ELWOOD, Appellant, v. UNIVERSAL C. I. T. CREDIT CORPORATION, Appellee.

No. 19215.

Appellate Court of Indiana, Division No. 2.

Nov. 16, 1960.

Rehearing Denied Dec. 19, 1960.

Hugh E. Reynolds, Hugh E. Reynolds, Jr., Indianapolis, Robert L. Austin, Anderson, for appellant, Locke, Reynolds, Boyd & Weisell, Indianapolis, of counsel.

Leo M. Gardner, Jerry P. Belknap, Eugene C. Miller, Jr., Indianapolis, for appellee, Barnes, Hickam, Pantzer & Boyd, Indianapolis, of counsel.

KELLEY, Judge.

Appellee was the payee named in two checks given it by an automobile dealer. Said checks were drawn on appellant bank. On February 5, 1954, appellee endorsed each of said checks 'for deposit only' and deposited them in its depository, Merchants National Bank, Muncie, Indiana. The latter named bank forwarded said checks by mail to The Indiana National Bank, of Indianapolis, Indiana, and the latter received the same February 6, 1954.

On the same day, February 6, 1954, said Indiana National Bank forwarded said checks to appellant by mail, together with other items in a cash letter requesting credit in full for the amount of the cash letter and advising that on Tuesday, February 9, 1954, appellant's account with said Indiana National Bank would be charged in the amount of said cash letter, less adjustments, and returned items reported by appellant on that date.

On Monday, February 8, 1954, appellant received the cash letter and said here involved checks by mail and on the same day, February 8, 1954 or the next day, February 9, 1954 credited the said Indiana National Bank with the amount of the said cash letter, including said here involved checks, less a small item of no pertinency in this case. This small non-pertinent item was latter returned and will not be further noticed. By letter deposited in the United States mail at Elwood, Indiana, 'on or before' February 9, 1954, appellant advised the said Indiana National Bank that it (the appellant) accepted a charge to its account with the said Indiana National Bank of the amount of said cash letter, which included both of said here involved checks.

At the time appellant received said cash letter, including said here involved checks, from said Indiana National Bank, said automobile dealer had insufficient funds on deposit with appellant to pay said checks. Said dealer then told the President of appellant bank that he was getting a loan of sufficient amount to pay said checks. However, said dealer did not deposit in appellant bank sufficient funds to meet and pay said checks. Thereupon, on February 13, 1954 the president of appellant bank returned said checks by mail to said Indiana National Bank, together with a notice that it (appellant) had charged said checks against the account of said Indiana National Bank because of insufficient funds of the drawer, said automobile dealer.

Said checks and notice were received by said Indiana National Bank on February 15, 1954. Orally, the said Indiana National Bank advised appellee's depository, Merchants National Bank of Muncie, of the return of said checks to it by appellant and, on said February 15, 1954, said Indiana National Bank 'mailed' said checks to said Merchants National Bank, of Muncie, together with written advice that the appellant bank was being credited and the said Merchants National Bank was being charged with said checks.

Upon receipt of such advice, said Merchants National Bank, of Muncie, orally advised appellee of the return of said checks and thereafter the account of appellee in said bank was charged with the amount of said returned checks, which said checks were then returned to appellee and were held by it, unpaid, until the trial of the present action.

On the theory that appellant was indebted to appellee by reason of the former's payment of said checks on presentment 'by advice of credit', without timely revocation thereof, appellee instituted this action by complaint in three paragraphs. The first paragraph counted upon one of the aforesaid checks in the face amount of $1,653.04 and the second paragraph upon one of said checks in the face amount of $1,316.22. The third paragraph of complaint was predicated upon the theory that the president of appellant bank promised to pay appellee the aggregate sum of both of said checks. No further notice need be taken of said third paragraph of complaint since a finding for appellant thereon was made by the court. Appellant answered said several paragraphs of complaint under the rules and the cause was submitted to the court for trial without a jury. The court found for appellee on the first and second paragraphs of its complaint and entered judgment for appellee in the total amount of said two checks, namely, $2,969.26.

Appellant supplies us with three main grounds of asserted reversible error. It says, in effect, that said checks were not finally charged by it to the account of the maker, as provided for in § 7 of the Bank Collection Code, which is now § 18-2507 of Burns' 1950 Replacement, and, hence, said checks were not paid as claimed by appellee; that the acceptance by said Indiana National Bank of the return of said checks and the consequent revocation of the prior credit therefor constituted an agreement by appellee, through its collecting agent, the said Indiana National Bank, that appellant was not required to return said checks during the business day following the receipt thereof by appellant, as provided for in § 1 of the 1949 Deferred Posting Act, being now § 18-2518 of Burns' 1950 Replacement; and that the trial court erred in sustaining appellee's objection to the introduction by it into evidence of paragraphs 4a, 4b, 4c and 9 through 15 of a stipulation of facts by the parties. The latter evidence was rejected by the court on the ground that it was irrelevant and whether it was so or not depends upon the interpretation and construction placed upon the two aforementioned sections of the statutes.

Said § 7 of the Bank Collection Code, enacted in 1929, being § 18-2507, Burns' 1950 Replacement, reads as follows:

'Where the item is received by mail by a solvent drawee or payor bank, it shall be deemed paid when the amount is finally charged to the account of the maker or drawer.'

The last mentioned section is claimed by appellant to be controlling of the instant question; and that, therefore, since appellee failed to show that said checks had been charged by appellant to the account of the maker, the decision of the trial court is contrary to law.

Appellee relies upon said § 1 of the Deferred Posting Act being § 1, Ch. 74, Acts 1949, Burns' 1950 Replacement, § 18-2518, et seq., the title and said § 1 of which reads

as follows:

'An Act relating to the collection, payment and dishonor of demand items by banks and the revocation of credit for, and payment of, such items, and declaring an emergency.

'Section 1. That in any case in which a bank receives, other than for immediate payment over the counter, a demand item payable by, at or through such bank and gives credit therefor before midnight of the day of receipt, the bank may have until midnight of its next business day after receipt within which to dishonor or refuse payment of such item. Any credit so given, together with all related entires on the books of the receiving bank, may be revoked by returning the item, or if the item is held for protest or at the time is lost or is not in the possession of the bank, by giving written notice of dishonor, nonpayment, or revocation; provided that such item or notice is dispatched in the mails or by other expeditious means not later than midnight of the bank's next business day after the item was received. For the purpose of determining when notice of dishonor must be given or protest made under the law relative to negotiable instruments, an item duly presented, credit for which is revoked as authorized by this Act, shall be deemed dishonored on the day the item or notice is dispatched. A bank, revoking credit pursuant to the authority of this Act, is entitled to refund of, or credit for, the amount of the item.'

In particular, appellant says that (1) said § 1 of the Uniform Deferred Posting Act was not designed to 'mark' the point at which a check received by mail was 'paid' but extended recognition to a custom (we find no evidence of such asserted custom) of many years among banks to post checks to the maker's account on the day following their receipt, thereby avoiding the common law requirement in many states that such checks had to be returned immediately or consequent liability could attach; (2) that any attempt to apply both said § 1 of the Deferred Posting Act and said § 7 of the Bank Collection Code to determine the 'time' of payment creates an inconsistency between them which can be resolved only by considering (a) that § 1 of the Deferred Posting Act impliedly amended said § 7 of the Bank Collection Code; or (b) that said § 1 of the Deferred Posting Act impliedly repealed said § 7 of the Bank Collection Code; or (c) that said Section 7 of the Bank Collection Code determines the 'time' of payment of a check received by mail and said § 1 of the Deferred Posting Act only determines the 'period' within which a drawee bank may return a check received by mail for payment without fear of liability and the collecting bank may accept the returned check without fear of liability for negligent delay; and (3) that § 7 of the Bank Collection Code deals specifically with the matter of payment of such checks and, therefore, takes precedence over the Deferred Posting Act which is general in its terms.

Appellant further states, with regard to the aforesaid phase (a) and (b) of its point (2), that in Indiana there can be no implied 'amendment' of a statute, and that there can be an implied 'repeal' of a statute only when there exists such repugnancy and inconsistency between the repealing act...