General Finance Corp. of Fla. v. CENTRAL B. & T. CO.

• Decision Date: 14 April 1959
• Docket Number: No. 17370.,17370.
• Citation: 264 F.2d 869
• Parties: GENERAL FINANCE CORPORATION OF FLORIDA, Appellant, v. CENTRAL BANK AND TRUST COMPANY et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

264 F.2d 869 (1959)

GENERAL FINANCE CORPORATION OF FLORIDA, Appellant, v. CENTRAL BANK AND TRUST COMPANY et al., Appellees.

No. 17370.

United States Court of Appeals Fifth Circuit.

March 10, 1959.

Rehearing Denied April 14, 1959.

Edward McCarthy, Anderson M. Foote, Jr., Elliott Adams, Jacksonville, Fla., McCarthy, Lane & Adams, Jacksonville, Fla., for appellant.

Jerry B. Crockett, Scott McCarthy, Preston, Steel & Gilleland, Miami, Fla., for The First Nat. Bank of Miami, appellee.

Richard J. Horwich, Pallot, Cassel & Marks, Miami, Fla., for Central Bank & Trust Co., appellee.

Before RIVES, TUTTLE and CAMERON, Circuit Judges.

TUTTLE, Circuit Judge.

This appeal from a judgment in favor of two defendant banks presents for construction several sections of the Florida Banking Laws. More precisely we are to decide whether Section 676.55, F.S.A., which has no counterpart in the Uniform Negotiable Instruments Law, and Sections 676.07, 676.08 and 676.48, F.S.A.,¹ place upon a drawee or payor bank the duty to return a check drawn on it not later than the day following its receipt to prevent its being held to have accepted or finally paid the item.

The trial court entered summary judgments for the defendants on the basis of an amended complaint and affidavits filed by the defendants in support of their motions for summary judgment. From the allegations of the complaint, either admitted or not controverted by the defendants, and for the purpose of reviewing the action of the trial court in the present state of the pleadings, the following facts may be taken as true:

The appellant, on July 17, 1957 (Wednesday), deposited and received credit in its account in the First National Bank of Miami for a check of one Clausi in the amount of $28,300. The check was drawn on Clausi's account in the Central Bank & Trust Company. On July 18th (Thursday) First delivered the check to Central for collection and the latter paid the item conditionally by entering a bank credit in favor of First. On July 22nd (Monday) Central returned the items to First over the objection of appellant. At no time between July 18 and July 22, 1957, "was the account at Central Bank & Trust Company of Anthony Clausi * * * sufficient in collected funds to cover the payment of check 10170 drawn on that account to G.F.C. (General Finance Corporation) on July 15, 1957 in the amount of $28,300." Upon the return of this item the First National Bank charged the sum of $28,300 against the account of appellant. There was in force at the time of the making of this deposit by appellant a deposit contract between it and First providing in essence that all deposits were made for collection only and all credits were subject to "final payment in cash or solvent credits."

Appellant objected to the charging of this item to its account, asserting that under the Florida statutes the holding of the check by the payor bank beyond the day after it was received by it, constituted final payment by Central Bank under the Florida statute Section 676.55 F.S.A.² Appellant also contended that by virtue of the provisions of Section 185³ of the Uniform Negotiable Instruments Law, enacted as Section 676.48 of the Florida Statutes, F.S.A., a check is treated for the purposes of the N.I.L. as a bill of exchange, and that by virtue of Sections 136 and 137 of the N.I.L. (676.07 and 676.08, F.S.A.)⁴ a bill of exchange retained by the drawee longer than 24 hours without returning it to its correspondent is deemed to have been accepted by the drawee.

At the time of the adoption of Section 676.55 by the Florida legislature in 1945 the Florida courts had not construed the relevant sections of the N.I.L. in connection with the liability of a drawee bank as to either checks or bills of exchange which were neither charged to the drawer's account, formally accepted nor returned within 24 hours. The state of the law in other jurisdictions which had adopted these same sections of the N.I.L. was not uniform. In commenting on the appellant's appraisal of the state of the law generally as favoring its contention, the appellee, Central, in its brief, makes this partial concession:

"Taking uniformity first, the most that might be said is that a slight majority of jurisdictions guided only by court decision hold that mere retention of an instrument presented for payment results in liability under § 137 of the N.I.L."

Commenting on the state of the jurisprudence generally, appellant quotes from Beutel's Brannan's Negotiable Instruments Law, 7th Edition, where on page 1249 it is stated:

"These cases holding the drawee bank liable represent the overwhelming weight of authority under the Act, and in the interest of uniformity they should be followed."

We have carefully read all the cases cited by the parties in their briefs and some additional decisions touching on the question here involved. These cases present several different issues that remained in an uncertain state, so far as the Florida law was concerned, prior to the adoption of the amendment in 1945.

In Wisner v. First National Bank of Gallitzin, 220 Pa. 21, 68 A. 955, 957, 17 L.R.A.,N.S., 1266, the court had before it for construction Sections 136, 137 and 185, N.I.L., supra, footnotes 3 and 4. The court held against the drawee bank on two critical points: it held that a check was comprehended by Sections 136 and 137, and that mere retention of the check beyond the 24 hours limit amounted to a "refusal to return" the item under Section 137. The opinion has also been construed generally as holding that it is immaterial whether the check is presented to the drawee bank for acceptance (the words of the statute) or for payment,⁵ (the usual situation with respect to checks.)

This case, decided in 1908 has become the leading case in the field, and by 1945 the majority of the courts which had the same issues to decide had accepted it as the proper construction to be placed on these sections of the Negotiable Instruments Law. It was both criticized and praised by the text writers. See Paton's Digest of Legal Opinions 12, §§ 7-2, 14-12, Michie, Banks and Banking, Vol. 5A, 520-521, and Zollman, Banks and Banking, Vol. 6, pp. 173-175, for criticisms. The Fourth Edition of Brannan's Negotiable Instruments Law seems to have criticized it, but the Seventh Edition, edited by Beutel, at page 1249, says:

"As pointed out in the fourth edition of this book at p. 983 ff, the act, in sections 136 and 137, covers only presentment for acceptance, and presentment for payment is not mentioned. But it does not necessarily follow that because the act is silent as to presentment for payment that sic the result should be different from the case of presentment for payment. The considerations involved in both cases are the same, the act in other sections has provided that upon presentment immediate action must be taken, the drawee has 24 hours in which to accept, secs. 136, 137 * * *. Although the act seems silent on the point of how long the drawee may take, the rule of the Wisner case fills this gap by requiring promptness on the part of the drawee, thus he must return the instrument or be liable for its face value as acceptor."

Cases cited by Beutel's Brannan as following the principles laid down in the Wisner case include American Nat. Bank of Ardmore v. National Bank of Claremore, 119 Okl. 149, 249 P. 424; Blackwelder v. Fergus Motor Co., 80 Mont. 374, 260 Pa. 734, 740; Clark v. Northern Pac. R. Co., 55 N.D. 454, 214 N.W. 33; Clarke v. National Bank of Montana, 78 Mont. 48, 252 P. 373; First National Bank v. Citizens Bank of Campti, 163 La. 919, 113 So. 147; First State Bank of Talihina v. Black Bros. Co., 187 Okl. 124, 101 P.2d 802; McLaughlin's Store v. Copeman, 50 Idaho 214, 294 P. 523; Miller v. Farmers State Bank of Arco, 165 Minn. 359, 206 N.W. 930; Mount Vernon Nat. Bank v. Canby State Bank, 129 Or. 36, 276 P. 262, 63 A.L.R. 1133.

A reading of these cases discloses that while they all express reliance on the Wisner decision, some deal with somewhat different facts. Although in some there was a lapse of greater time, in some the instruments were drafts rather than checks; and in some the presentment was for acceptance rather than payment, these different facts seem not to have been thought by the several courts to be a significant factor in arriving at their decisions.

Some jurisdictions, as has been indicated, have arrived at the opposite conclusion; some because the check presented for payment is not, within the terms of the statute, a bill presented for acceptance. See First National Bank of Goree v. Talley, 115 Tex. 591, 285 S.W. 612,⁶ and Urwiller v. Platte Valley State Bank, 164 Neb. 630, 83 N.W.2d 88, and some because they consider a "failure" to return is not the same as a "refusal," which is the word used in Section 137. See Mitchell Livestock Auction Co., Inc. v. Bryant State Bank, 65 S.D. 488, 275 N.W. 262.

Both Central Bank and appellant say that the Florida decision most relevant to the issue at bar is Bank of Blountstown v. Cross, 132 Fla. 392, 181 So. 390, 394. However, this case, as recognized by both parties, is significant only because of the statements of general principles which it contains, since the facts are not similar. Appellant relies on a quotation by the Florida court from a California case, Ocean Park Bank v. Rogers, 6 Cal.App. 678, 92 P. 879, in which this language appears:

"If, however, at the close of the banking hours on the day when the check is presented the account of the drawee is insufficient to pay it, the bank must then elect to either pay the check itself, charging the amount thereof to the account of the drawer as an overdraft, or return the check to the party presenting it as unpaid for want of funds."

In support of its contention that the payment by crediting First National's account was only conditional and subject to "final payment," Central's brief quotes:

"It is not contended that plaintiff in the court

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