Foster v. Bank

• Decision Date: 18 August 1933
• Docket Number: No. 22627.,22627.
• Citation: 47 Ga.App. 447,170 S.E. 408
• Parties: FOSTER. v. PEOPLE'S BANK.
• Court: Georgia Court of Appeals

47 Ga.App. 447

170 S.E. 408

FOSTER.

v.PEOPLE'S BANK.

No. 22627.

Court of Appeals of Georgia,

Division No. 2.

Aug 18, 1933.

Rehearing Denied Sept. 2, 1933.

Syllabus by Editorial Staff.

JENKINS, P. J., dissenting.

Error from Superior Court, Carroll County; L. B. Wyatt, Judge.

Suit by the People's Bank against J. T. Foster. Judgment for plaintiff, defendant's mo tion for a new trial was overruled, and defendant brings error.

Reversed.

Statement by SUTTON, Judge:

The People's Bank brought suit in November, 1926, against J. T. Foster for $2,000, plus interest, alleging that Foster was due it that sum. The trial resulted in a directed verdict for the bank. The defendant brought the case to this court and obtained a reversal of that direction. Foster v. People's Bank, 42 Ga. App. 102, 155 S. E. 62. On the second trial the following facts appeared: On December 29, 1925, after 10 o'clock a. m., the defendant deposited with the plaintiff bank a cashier's check for $2,000, drawn on the Citizens' Bank in the same city, indorsing the check in blank, and receiving in return a passbook showing a deposit of $1,000 and a time certificate, bearing 5 per cent. interest, due in six months, for the other $1,000. The passbook contained in the front thereof this stipulation: "Items are credited or cashed subject to final payment in cash. This bank acts only as depositor's agent and will not be liable in case of failure or negligence of collecting agents, or for loss in mail. Right is reserved to send items direct to institutions where payable, and to accept their exchange drafts in lieu of money." There was no evidence that the defendant knew of this stipulation, that his attention was called thereto, or that he assented thereto in any manner. As was customary between these banks, on the next day the plaintiff bank took this check, together with other items on the Citizens' Bank, to the Citizens' Bank, had credited against them certain items on the plaintiff bank which the Citizens' Bank held, and received from that bank its exchange check drawn on a bank in Baltimore for the amount due the plaintiff on such items, which was more than the amount of the cashier's check. No reason appears from the evidence why the plaintiff could not procure the cash called for by the cashier's check from the drawee, the evidence being that no effort was made to procure the cash. The plaintiff bank immediately sent this check to its correspondent bank in New York, to be presented to the Baltimore bank. In the meanwhile the drawee bank failed, and as it owed the Baltimore bank, that bank did not honor this check and refused payment thereof. The cashier of the plaintiff testified that it was the custom of banks to accept, in lieu of cash, checks of drawee banks in payment of chocks drawn on them. In January, 1926, the plaintiff bank allowed the defendant to draw out his deposit of $1,000; and in July, 1926, it paid to him the time certificate, with interest. The defendant was not notified of the failure of the plaintiff to collect cash on the cashier's check so deposited with it, andno effort was then made to collect the amount out of the defendant, but on the contrary the plaintiff tried to collect the exchange check given it by the drawee bank from the Baltimore bank.

The present action is to recover the $2,000 so paid to the defendant by the plaintiff, being the $1,000 deposit and the $1,000 time certificate, which the plaintiff contends the defendant is not entitled to.

In his answer the defendant set up that he deposited the cashier's cheek with the plaintiff bank, and $1,000 was loaned to it on time certificate, and he was allowed to draw against the other $1,000, and that when the plaintiff bank accepted from the drawee bank the exchange check on the bank in Baltimore it did so at its own risk. The jury returned a verdict for the plaintiff for the full amount, plus interest. The defendant's motion for new trial was overruled, and he excepted.

It is not necessary that the other special grounds be set out here, except that shown by paragraph 6 of the syllabus.

Willis Smith and Smith & Millican, all of Carrollton, for plaintiff in error.

Boykin & Boykin, of Carrollton, for defendant in error.

Syllabus Opinion by the Court.

SUTTON, Judge.

1. As "a general rule, when a bank receives a check from a depositor for collection, it must either return him the cheek or the money. So, also, if the collecting bank surrenders the check to the bank on which it is drawn and accepts a cashier's check or other obligation in lieu thereof, its liability to its depositor is fixed, as if it had received the cash. It has no right, unless specially authorized to do so, to accept anything in lieu of money." Empire Cotton Oil Co. v. Sellars, 18 Ga. App. 377, 379, 89 S. E. 454, 455. While it has been held that custom or usage may justify a collecting bank in receiving as payment the check or draft of the debtor drawn on another bank, the more general and better view is that if a check drawn on another bank, or any kind of paper payable outside of the collecting bank, is accepted, this is only conditional payment and the collecting bank is responsible until the money is collected thereon. 7 C. J. p. 014, §§ 270, 277.

2. The fact that the passbook given to the depositor contained a printed stipulation that the plaintiff bank reserved the right "to send items direct to institutions where payable and to accept their exchange drafts in lieu of money" does not show that the bank had special authority from the depositor to receive anything from the drawee bank except cash in payment of the check, where the attention of such depositor is not particu-

larly called thereto or he does not assent thereto expressly or impliedly. It is not sufficient that such stipulation appears in the front of the passbook. The case is not one in which the party must know that he is accepting a contract, as where he is accepting an insurance policy, but is more analogous to the case of special conditions and limitations printed on the back of a railroad ticket. Highfield v. First National Bank, 45 Ga. App. 431 (6), 437, 165 S. E. 135.

3. A usage or custom among banks, in collecting a check or draft for a depositor, to surrender it to the drawee and receive in lieu of the cash a check or draft drawn by the drawee on a bank in a distant city, has no application as between the depositor and the collecting bank, and such a custom or usage cannot be invoked by the collecting bank as a justification for receiving the check or draft of the drawee in lieu of cash, at least in the absence of knowledge on the part of the depositor of such custom or usage at the time he turns the check over to the collecting bank. National Bank of Commerce v. American Exchange Bank, 151 Mo. 320, 331, 332, 52 S. W. 265, 74 Am. St. Rep. 527, 534; Hall v. Storrs, 7 Wis. 253; Whitney v. Esson, 99 Mass. 308, 96 Am. Dec. 762; First National Bank of Chicago v. Citizens' Savings Bank, 123 Mich. 336, 82 N. W. 66, 48 L. R. A. 583: Wagner v. Crook, 167 Pa. 259, 31 A. 576, 46 Am. St. Rep. 672.

4. Where a cashier's check of a bank in a certain city was deposited with another bank in that city after 10 o'clock a. m., and where the custom of such banks was to present checks so deposited the next day for payment, and the bank receiving such cashier's check for deposit presented it to the drawee bank for payment and accepted in lieu of cash an exchange check drawn in its favor by the drawee bank on a bank in a distant city, instead of the cash called for by such cashier's check, no reason appearing why it was unable to obtain the cash from the drawee bank, and the drawee bank failed and the check on the distant bank is protested for nonpayment, this constituted payment of the cashier's check by the drawee bank as between such collecting bank and the depositor, even though it was customary for the banks to transact business in this manner. Comer v. Dufour, 95 Ga. 376, 379, 22 S. E. 543, 30 L. R. A. 300, 51 Am. St. Rep. 89; Empire Cotton Oil Co. v. Sellars, supra; Pollak Bros. v. Niall-Herin Co., 137 Ga. 23, 72 S. E. 415, 35 L. R. A. (N. S.) 13; Farley National Bank v. Pollock & Bernheimer, 145 Ala. 321, 39 So. 612, 2 L. R. A. (N. S.) 194, 117 Am. St. Rep. 44, 8 Ann. Cas. 370 and note; National Bank of Commerce v. American Exchange Bank, supra; 1 Morse on Banks (3 Ed.) § 252; Bank of Antigo v. Union Trust Co., 149 111. 343, 36 N. E. 1029, 23 L. R. A. 611; Midland National Bank v. Brightwell, 148 Mo. 358, 49 S. W. 994, 71 Am. St. Rep. 608.

5. The depositor, who indorsed the cashier's check in blank when he deposited it, is not liable to the collecting bank as an indorser; the cashier's check having been paid as between the depositor and the collecting bank when the latter accepted the exchange check of the drawee bank in lieu of the cash called for by the cashier's check.

6. Accordingly, under the pleadings and evidence in this case, the court should have given in charge to the jury the instruction requested by the defendant that "if the plaintiff carried the cashier's check issued to J. T. Foster by the Citizens' Bank to the Citizens' Bank and accepted exchange on some other bank in lieu of the cashier's check, without the knowledge and consent of J. T. Foster, the plaintiff did so at its own risk, and if the plaintiff sustained a loss thereby, they cannot hold J. T. Foster liable for the same."

It follows that the court erred in overruling the motion for new trial.

The other special grounds of that motion do not show error.

Judgment reversed.

STEPHENS, J., concurs.

JENKINS, Presiding Judge (dissenting).

The facts of the instant case are in most respects similar to those set forth in the decision on a former trial (Foster v. People's Bank, 42 Ga. App. 102, 155 S. E. 62), from which it will appear that the defendant sought to show as one of his two defenses that the plaintiff bank accepted the deposit of the cashier's check in controversy as cash and...