Hadley v. Farmers Nat. Bank of Okla. City

• Decision Date: 28 June 1927
• Docket Number: Case Number: 15853
• Citation: 257 P. 1101,125 Okla. 250,1927 OK 183
• Parties: HADLEY v. FARMERS NAT. BANK OF OKLAHOMA CITY.
• Court: Oklahoma Supreme Court

1927 OK 183

257 P. 1101

125 Okla. 250

HADLEY v. FARMERS NAT. BANK OF OKLAHOMA CITY.

Case Number: 15853

Supreme Court of Oklahoma

Decided: June 28, 1927

Syllabus

¶0 1. Payment--Voluntary Payment by Customer to Collecting Bank of Protested Cashier's Check.

Where a customer of a bank presents a check to his bank for collection, said check being drawn on an out of town bank by a third party, and the collecting bank mails the check direct to the bank on which it is drawn, receives a cashier's check in return, credits the customer's account with the amount of the cashier's check, transmits the cashier's check through regular channels for collection, and the cashier's check is returned protested, and the bank asked his customer whether the protested cashier's check should be charged to his account or whether the customer will pay it, and the customer, with full knowledge of all the facts, does pay the amount of the cashier's check without protest or objection, such payment constitutes a voluntary payment and not a payment under compulsion or coercion.

2. Same--No Right to Recover Voluntary Payment Made with Knowledge of Facts.

Money voluntarily paid, with full knowledge of all the facts under which it was demanded, cannot be recovered back upon the ground that payment was made under a misapprehension of the legal rights and obligations of the party paying.

Commissioner's Opinion, Division No. 2.

Error from District Court, Oklahoma County; T. G. Chambers, Judge.

Action by Roscoe E. Hadley against the Farmers National Bank of Oklahoma City, Okla. Judgment for defendant, and plaintiff appeals. Affirmed.

Edward Hirsh and Leon S. Hirsh, for plaintiff in error.

Keaton, Wells & Johnston, for defendant in error.

JEFFREY, C.

¶1 Plaintiff in error, Roscoe E. Hadley, who was plaintiff below, being indebted to one J. R. Cottingham and being the holder and owner of a bank check drawn by C. G. Watts in favor of Hadley on the First State Bank of Wagoner, Okla., for the sum of $ 855, indorsed in blank and delivered the check to his creditor, Cottingham. Cottingham gave Hadley credit for the amount of the check, and being a customer of the defendant in error, the Farmers National Bank of Oklahoma City, through his agent, McCracken, deposited the check with said bank for collection. The Farmers National Bank sent the check by mail direct to the First State Bank of Wagoner, and received in return a cashier's check for the amount, gave Cottingham's account credit for the amount, and transmitted the cashier's check through the Federal Reserve Bank of Oklahoma City in due course for collection. While the cashier's check was being cleared by the Federal Reserve Bank, the First State Bank of Wagoner was declared insolvent and closed by the Bank Commissioner. The cashier's check was later protested and returned to the Farmers National Bank unpaid, which bank notified Cottingham of the return of the check and asked Cottingham whether the check should be charged to his account or whether Cottingham would give his check to cover the amount. Cottingham was notified of the return of the cashier's check only a few days before the 1st of January, 1923. A few days later, at the request of Cottingham, Hadley gave his personal check on another Oklahoma City bank payable to the Farmers National Bank for $ 857, delivered the same to Cottingham, which was in turn delivered to the Farmers National Bank by Cottingham, advising that the check was given to take up the protested cashier's check. The bank accepted the check and delivered the cashier's check to Cottingham, who delivered it to Hadley. And on October 8, 1923, after the commencement of this suit, Cottingham executed and delivered to Hadley a written assignment of such claims and demands as Cottingham had, or might have, against said bank by reason of said transaction. Hadley commenced this action for money had and received on July 28, 1923, to recover from the Farmers National Bank the amount of the original check and protest fees. Upon the issues joined a jury was waived and the cause was tried to the court, who rendered judgment therein that plaintiff recover nothing and defendant recover its costs, from which judgment plaintiff prosecutes this appeal.

¶2 In support of his petition in error for a reversal of the judgment of the lower court, plaintiff in error urges four propositions, to wit:

"1. When a bank receives a check for collection it must return the check or the money; and if the collecting bank surrenders the check for anything but legal tender, it is liable to the depositor for the amount of the check.

"2. In the absence of agreement to the contrary a bank to which paper is intrusted for collection becomes the owner of the proceeds of the paper; and when proper credit is given to the depositor, the relation of debtor and creditor is created between the parties.

"3. When a bank credits the proceeds of a collection item to its depositor, wipes out the relation of principal and agent, and establishes a relation of debtor and creditor, all prior liabilities of the bank, growing out of the collection transaction, become merged into the debtor and creditor relation and the suit against the bank for the amount of the collection item is properly had under the common counts for money had and received rather than for negligence in performing the duties of collecting agent.

"4. Where, under a contract of collection between depositor and banker, into which enters an established custom, a relationship of principal and agent becomes one of creditor and debtor, rights accruing under the latter may not legally be abrogated by a reversion to the former at the whim of the banker."

¶3 Each of these propositions, we think, embodies a sound principle of law and is reasonably well supported by the authorities. If the transaction between the parties had closed with the crediting of the cashier's check to the account of Cottingham, that is to say, if Hadley had not given his check to the bank in payment of the protested item, and if Cottingham had not delivered the check and received the cashier's check in the manner in which it was done, the above principles of law would be especially applicable and perhaps control a determination of the issues.

¶4 In view of all the facts, the only questions for a correct determination of the issues by this court are: Did Hadley and Cottingham voluntarily pay the bank the amount of the protested cashier's check and protest fees? And if so, is Hadley entitled to recover back this amount?

¶5 Did Cottingham act voluntarily in taking up the cashier's check? On this question counsel for both parties have cited numerous cases in their original and supplemental briefs in support of their respective contentions. It is apparent from an examination of these authorities that every case depends to a considerable extent upon its own circumstances. It was held in Union Central Life Insurance Co. v. Erwin, 44 Okla. 768, 145 P. 1125, that where a mortgagee is threatening to foreclose its mortgage, and the mortgagor arranged to secure a new loan on the property mortgaged, had no other means of paying the mortgage except to secure a new loan, made arrangements for a new loan, offered the mortgagee all that could have been collected under foreclosure proceedings, and the mortgagee refused to execute a release of his mortgage in order that the new loan could be secured unless the mortgagor should pay a bonus for such release, and the mortgagor did pay said bonus under protest, such payment was made under compulsion and could be recovered back. To the same effect is the holding in the case of Kilpatrick v. Germania Life Insurance Co., 183 N.Y. 163, 75 N.E. 1124, 2 L.R.A. (N.S.) 574, and a number of other cases cited. On the other hand, in the case of Detroit Edison Co. v. Wyatt Coal Co, 293 F. 489, the facts were that plaintiff company contracted with defendant for a large quantity of coal at $ 2.50 per ton; that defendant shipped a large portion of the coal contracted, and charged $ 2.85 per ton, and that plaintiff was a public service corporation, supplying heat, electric lights and power in the city of Detroit, and because at the time it was engaged in furnishing its service to manufactories engaged in war work for the government, and it being imperative that the plaintiff should receive the coal, and for this reason paid the increased price. The court there held that plaintiff was not entitled to recover back the amount paid in excess of the contract price for the reason that the payment was not made under compulsion and duress.

¶6 In Chesebrough v. U. S., 192 U.S. 253, 48 L. Ed. 432, 24 S. Ct. 262, plaintiff entered into an agreement with a third party to convey certain real estate and to deliver his deed therefor. Because of an act of Congress which purported to require the payment of a stamp tax on such instruments, the purchaser of the real estate refused to pay for same unless the taxes were paid on the deed. For this reason plaintiff paid the collector of internal revenue $ 600 for the revenue stamps, and brought this action to recover it back. It was held that though the revenue stamps were not required to be affixed to the deed, plaintiff was not entitled to recover the amount paid for the reason that he had not paid under compulsion, but voluntarily.

¶7 The rule as applied to the payment of money involuntarily or under duress, so as to entitle the party paying to recover it back, has been announced in numerous cases and with very little variance. It was said in Adams v. Schiffer, 11 Colo. 15, 17 P. 21, that transactions had under stress of pecuniary need do not amount to compulsion. Compulsion or coercion must furnish the motive for the payment sought to be recovered before one can maintain an action to recover money paid with a knowledge of all the facts under which it was demanded. In order to recover back on the ground of involuntary payment or duress, compliance with the...