Hamlin v. Simpson

• Decision Date: 08 April 1898
• Parties: N. HAMLIN, Appellant, v. B. F. SIMPSON
• Court: Iowa Supreme Court

74 N.W. 906

105 Iowa 125

N. HAMLIN, Appellant, v. B. F. SIMPSON

Supreme Court of Iowa, Des Moines

April 8, 1898

Appeal from Audubon District Court.--HON. N.W. MACY, Judge.

PLAINTIFF seeks to recover the sum of nine hundred and twenty-nine dollars and forty-six cents for hogs and cattle sold the defendant. The answer admits the purchase of said live stock at the price named, but avers that the price was settled for at the time by bank checks, which plaintiff held an unreasonable time before presenting for payment, and that the bank upon which they were drawn became insolvent. By way of reply, plaintiff says that, at the time defendant drew said checks and delivered them to plaintiff, he (defendant) had no funds with which to meet them in the bank upon which they were drawn; that at said time said bank was hopelessly insolvent, and that this fact was well known to defendant and unknown to plaintiff; and that a presentment of said checks would have been useless. The case was tried to the court without a jury. There was a judgment dismissing plaintiff's petition, and in favor of defendant for costs. Plaintiff appeals.

Affirmed.

Willard & Willard for appellant.

Theo. F. Myers and F. E. Brainard for appellee.

OPINION

WATERMAN, J.

The facts, as stipulated or established, are that on December 13 1893, the defendant gave his two checks on the Cass County Bank of Atlantic to plaintiff in settlement for live stock purchased. One of the checks was for four hundred and forty-one dollars and eighty cents; the other, for four hundred and eight-seven dollars and sixty-six cents. The checks were given by defendant, at plaintiff's home in Audubon county, sixteen and three-fourths miles from Atlantic, and five and one-half miles from Brayton, a station on a railroad leading to Atlantic, upon which two trains a day, except Sunday, ran to the lastnamed town. There was a bank in Exira, a town seven miles from plaintiff's home. Plaintiff never presented the checks for payment, and on December 27, 1893, the Cass County Bank, being insolvent, was placed in the hands of a receiver.

II. As an excuse for not presenting the checks for payment, and to show that defendant suffered no injury by the failure so to do, the plaintiff alleges that defendant at the time he gave the checks had no funds in said bank against which to draw. In the ordinary course of business, the checks should have been presented for payment, at the latest, during business hours of the second day after their receipt, which would have been the fifteenth. Tiedeman, Commercial Paper, section 443. At that time, and for some days before, defendant's general account with the bank was overdrawn. On December 16th he deposited one thousand, one hundred and fifty dollars and seven cents. During all this time defendant had on special deposit in this bank the sum of two thousand dollars, represented by two certificates of deposit for one thousand dollars each. As a general rule, it may be said that a check drawn on a bank in which the drawer has not sufficient funds to meet it need not be presented at all, in order to hold the drawer. This rule, however, has some qualifications. The reasons for it seem to be that it is deemed a fraud for one to give a check which he has no ground to believe will be paid, and that he does not need notice of the fact that the check is not paid, when he must have known that payment would be refused. But if he has reason to think his check will be honored, though he may have no credit balance on the books of the bank, his act in drawing it will not be a fraud; and he will be in a position to insist on prompt presentment, demand and notice. In Beauregard v. Knowlton, 156 Mass. 395 (31 N.E. 389), the rule is said to be that the drawing of a check on a bank wherein the drawer has no funds, and with no ground for a reasonable expectation that the check will be paid, is a fraud, and will excuse the failure to present for payment. See, also, Savings Co. v. Weakley, 103 Ala. 458 (15 So. 854); Case v. Morris, 31 Pa. 100; True v. Thomas, 16 Me. 36; Stanton v. Blossom, 14 Mass. 116; French v. Bank, 8 U.S. 141, 4 Cranch 141, 2 L.Ed. 576; Robinson v. Ames, 20 Johns. 146; Bank v. Easley, 44 Mo. 286; Hill v. Norris, 2 Stew. & P. 114. In speaking of the rule that excuses demand and notice when the drawer has no funds in the hands of the drawee, it is said in Case v. Morris, supra: "It introduced an exception to a plain and intelligible rule of commercial law, which many eminent and experienced judges have since regretted. It is adhered to on the principle of stare decisis , but it is not to be extended a single step."

III. Under the rule stated, we have this situation: There being no funds to the credit of defendant's general account in the Cass County Bank, plaintiff was presumptively under no obligation to make demand for the money; but this presumption is rebuttable, and defendant seeks to overcome it by this showing: During all this time he held certificates of deposit, issued by the bank, for the sum of two thousand dollars, and he claims to have had an...