Hanna v. Mccrory (bank of Commerce of San Marcial

• Decision Date: 18 June 1914
• Docket Number: No. 1601.,1601.
• Citation: 19 N.M. 183,141 P. 996
• Parties: HANNAv.MCCRORY (BANK OF COMMERCE OF SAN MARCIAL, GARNISHEE).
• Court: New Mexico Supreme Court

19 N.M. 183

141 P. 996

HANNA

v.MCCRORY (BANK OF COMMERCE OF SAN MARCIAL, GARNISHEE).

No. 1601.

Supreme Court of New Mexico.

June 18, 1914.Rehearing Denied July 21, 1914.

Syllabus by the Court.

It is an elementary and well-settled rule of the law merchant that an order for the payment of money out of a particular fund is not a negotiable instrument. It is likewise equally well settled that the inclusion in a check, order, or of bill of exchange of a direction to charge the amount of the check, order, or bill of exchange to a particular account does not make it payable conditionally, or out of a particular fund, and therefore it is payable absolutely, and is negotiable, and does not constitute an assignment of a particular fund. And independent of judicial construction, this rule is established in New Mexico by section 3, c. 83, Sess. Laws 1907.

The mere act of stamping a bill of exchange “paid” by the payee in and of itself does not constitute payment. Payment could only be made by delivery of the actual cash, or an adjustment of accounts, by agreement of the parties, so that the payee would be obligated to the holder of the bill.

Where a statute requires the acceptance of a bill of exchange to be in writing and signed by the drawee, an oral acceptance is not binding upon the drawee.

Appeal from District Court, Socorro County; before Justice Lieb.

Action by Samuel G. Hanna against M. R. McCrory, defendant, and the Bank of Commerce of San Marcial, as garnishee. From judgment for plaintiff, the garnishee appeals. Affirmed.

Parker, J., dissenting.

The mere stamping of a bill of exchange “paid” by the payee does not constitute payment.

Alexander R. Macdonell, of Socorro, for appellant.

J. G. Fitch, of Socorro, for appellee.

ROBERTS, C. J.

On or shortly before October 15, 1912, the Bank of San Marcial collected a life insurance policy for the defendant McCrory in the sum of $2,000. From the amount so collected, it made certain deductions and payments on the order of McCrory, and on the morning of the 16th of October thereafter there remained in the possession of the bank, to the credit of McCrory, the sum of $1,412.58. Shortly after the opening of the bank on the morning of October 16th, about 9:05 or 9:10 o'clock, Frank Johnson, Seymour Worrell, and Thomas Marron each presented orders on said bank, or the cashier thereof, signed by said McCrory, for the following amounts:

To the order of Frank Johnson $ 31 33 To the order of Seymour Worrell 500 00 To the order of Thomas Marron 160 00

--said orders totaling $691.33.

The order given to Thomas Marron was as follows, to wit:

“San Marcial, N. M., Oct. 15, 1912.

Mr. J. W. Joyce, Cashier of the Bank of San Marcial: Pay to the order of Tom Marron the sum of ($160.00) one hundred and sixty dollars, and charge the same against the ($2,000.00) two thousand insurance draft issued by Dora Alexander of the Woodman Circle in my favor; the same being the balance of my account with him.

Respectfully M. R. McCrory.”

The other two orders referred to were in the same language, except as to names and amounts.

The cashier of said bank took said orders, marked on each of them, “Presented October 16, 1912, 9:05,” and stamped said orders on the face thereof with the bank stamp, which read as follows: “Paid October 16, 1912, Bank of San Marcial, San Marcial, New Mexico.” And thereupon said cashier made his check to each of the said parties for the amount, respectively, of the check or order so presented by them. Such checks, however, were not delivered to said parties; the bank retaining possession thereof, for the alleged purpose of protecting itself against garnishment proceedings which had been theretofore instituted by Armstrong Bros., and then pending. Between 1 and 2 o'clock in the afternoon of the 16th day of October the bank was served with process in the garnishment proceedings instituted by the appellee herein. On the 21st day of October thereafter the Armstrong Bros.' garnishment was amicably adjusted, and the bank paid them, on McCrory's order, per said adjustment, the sum of $892.55, and then had remaining in its possession the sum of $920.03 belonging to McCrory, or the holders of said orders. Some time thereafter it delivered the cashier's checks to the three parties named, and later paid in cash the amounts called for by said checks to the several parties. The trial court, after hearing the evidence, found the facts substantially as above stated, and concluded as a matter of law, that the garnishee was liable to the appellee for the full amount of the judgment theretofore rendered against the principal defendant, McCrory. Judgment was entered thereon, from which the garnishee defendant appeals.

Appellant first complains that the judgment is excessive, because it had heretofore paid into the hands of the clerk of the court, when it filed its answer, the sum of $228.70, which was the amount it admitted owing McCrory, and that the court failed to take into account the payment so made when it entered the judgment. There is no merit in this contention, however, as appellee can protect itself by paying to the clerk, in satisfaction of the judgment, the difference between the amount theretofore paid the clerk and the amount of the judgment.

Appellant's principal contention is that the orders operated as assignments of the funds in the hands of the bank to the holders of such checks or orders; consequently at the time it was served with process it had in its hands only the sum of $228.70 of the money of the defendant McCrory. The solution of this question depends upon whether such orders are negotiable instruments, for if they are they did not operate as assignments of any part of the funds to the credit of McCrory with the bank. Sections 127 and 189, c. 83, S. L. 1907.

The bank contends they were not negotiable, because they were payable out of a particular fund, by reason of the direction, “and charge the same against the ($2,000.00) two thousand dollar insurance draft issued by Dora Alexander of the Woodmen Circle in my favor, the same being the balance of my account with him,” contained in each of said orders.

[1] It is an elementary and well-settled rule of the law merchant that an order for payment out of a particular fund is not a negotiable instrument. It is likewise equally well settled that the inclusion in a check, order, or bill of exchange of a direction to charge the amount of the check, order, or bill of exchange to a particular account does not make it payable conditionally, or out of a particular fund; and therefore it is payable absolutely, and is negotiable, and does not constitute an assignment of a particular fund, or of a part of a particular fund. First National Bank v. Lightner, 74 Kan. 736, 88 Pac. 59, 8 L. R. A. (N. S.) 231, 118 Am. St. Rep. 353, 11 Ann. Cas. 596. And, see, also, note to Hays v. Lapeyre, 35 L. R. A. 647. Independent of judicial construction, this rule is established by section 3, c. 83, S. L. 1907, which reads as follows:

“An unqualified order or promise to pay is unconditional within the meaning of this act, though coupled with:

1. An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount; or

2. A statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a particular fund is not unconditional.”

While the foregoing section of the act is but a restatement of the rule theretofore adhered to by the majority of the courts of the country, it had not always been uniformly followed, as the case notes above referred to will show. It was to remove all doubt arising from the conflict of authority, and to establish a rule that the section was incorporated into the Negotiable Instruments Act. Under the section above quoted the orders in question were unconditional, negotiable, and did not constitute an assignment of a particular fund, or a part of a particular fund. By the orders, the cashier of the appellant bank was directed to pay the amounts therein named, and to debit the amount of the payment against the named account; hence there is no room for judicial construction, as the effect of the direction is controlled by the statute.

[2] Appellant contends, however, that the acts of its cashier in stamping said orders “paid,” and making out the cashier's checks, constituted, either (1) a payment of the orders, or (2) an...