International Trust Co. v. City of Rexburg

• Decision Date: 18 October 1929
• Docket Number: 5170
• Citation: International Trust Co. v. City of Rexburg, 48 Idaho 279, 281 P. 472 (Idaho 1929)
• Parties: INTERNATIONAL TRUST COMPANY, a Corporation, Respondent, v. CITY OF REXBURG, a Municipal Corporation, Appellant
• Court: Idaho Supreme Court

281 P. 472

48 Idaho 279

INTERNATIONAL TRUST COMPANY, a Corporation, Respondent, v. CITY OF REXBURG, a Municipal Corporation, Appellant

No. 5170

Supreme Court of Idaho

October 18, 1929

BANKS AND BANKING-DRAFTS-DELAY IN PRESENTMENT FOR PAYMENT-EFFECT-PAYMENT-BY BILL OF EXCHANGE.

1.Trust company's showing as to custom requiring it to have either security or safekeeping receipt in its files held insufficient, as valid excuse for nonpresentment of draft for collection for fourteen days, especially in absence of showing that custom was known to sender of draft.

2.Delay for fourteen days before sending draft for collection held unreasonable delay in presenting it, as result of which loss due to failure of bank falls on payee.

3.Where bill of exchange is given in payment of obligation payment is considered conditional, in absence of express understanding or action of parties, showing that bill is received as absolute payment.

4.Where drawer delays an unreasonable length of time in presenting draft for payment, it will be presumed he has elected to accept draft as absolute payment, rather than as conditional payment of obligation.

APPEAL from the District Court of the Ninth Judicial District, for Madison County.Hon. Ralph W. Adair, Judge.

Action on depository bond.Judgment for plaintiff.Reversed and remanded.

Reversed and remanded, with instructions.Costs to appellant.

F. L Soule, for Appellant.

A check must be presented within reasonable time of its issue.(C S., secs. 6053, 6060.)

This court has very recently held that failure to present a check for payment within five days is unreasonable and discharges the drawer.(Campbell v. Shark,46 Idaho 278, 267 P. 458.)

Where illness is asserted as an excuse for failure or delay in presenting or forwarding a check for payment, the illness must be shown to be so sudden and severe as to prevent him not only from making the presentment personally but also from employing another to do it.(8 C. J., p. 691, sec. 969.)

W. A. Ricks, for Respondent.

The courts have not fixed on any particular time as a reasonable time within which to present paper payable on demand or at sight, but what is a reasonable time depends on all the circumstances of each particular case.(Sims v. Hunter,44 Idaho 505, 258 P. 550;Campbell v. Shark,46 Idaho 278, 267 P. 458;8 C. J. 537, secs. 751, 738.)

A delay of three months in presenting a draft for payment is, as a matter of law, not unreasonable.(8 C. J. 537.)

A bank draft, such as we have here, as distinguished from a check or ordinary bill of exchange, is intended and expected to be put in circulation for a limited period, so that immediate presentment is not required.(8 C. J. 544, sec. 756, note 63.)

The Negotiable Instrument Act makes a distinction between a banker's draft and an ordinary check.It says that in determining what is a reasonable or an unreasonable time for presentment, regard must be had to the nature of the instrument, usage of trade or business, and the facts of the particular case.(C. S., sec. 6060;8 C. J. 538, 544, sec. 756, note 63.)

GIVENS, J. Budge, C. J., T. Bailey Lee, Wm.E. Lee and Varian, JJ., concur.

OPINION

GIVENS, J.

Respondent in Denver, as the collecting agent for Mrs. Reynolds of the same place, on December 27, 1924, forwarded to appellant for payment a bond theretofore issued by appellant, the bond having been called.Appellant purchased from the Farmers' and Merchants' Bank of Rexburg a draft drawn on the Columbia Trust Company of Salt Lake City and sent it to respondent who received it on January 2, 1925, and immediately notified Mrs. Reynolds who did not come to the respondent bank until January 16th.Respondent did not send the draft for collection immediately because it claimed that under its rules and the rules of the bank examiners it had to have either the security or the safekeeping receipt in its files.The draft was not presented for payment until January 19th and was not paid because the Rexburg Bank had failed and closed its doors on January 12th.Hence this suit.

Appellant's defense was payment and that there had been negligent delay in presenting the draft for payment.

It took only three days after the draft was sent for collection to have it presented.Fourteen days passed before it was sent.The time lost was not in transit as considered in 8 C. J. 545, note 63, but in being held by respondent.The facts are undisputed and present only a question of law.

The only showing of custom offered as an excuse for the delay is contained in a letter written by respondent to its attorney, the material part of which is as follows:

"On January 2nd we notified Mrs. Mary Reynolds that we had received a draft for the bond and requested her to bring in the safe keeping receipt and receive the funds.It is a rule of this bank and a ruling of the bank examiners that we must have either the security or the safe keeping receipt in our files, in case a safe keeping receipt has ever been issued for some security."

With this as a basis the court made finding No. 7 as follows:

"That it is a usage, custom and rule of the state banking department of the state of Colorado that the plaintiff must have either the security or the safe keeping receipt in its files before it could close the transaction."

The court concluded that respondent had presented the draft for payment within a reasonable time.

Conceding that the letter showed a custom or rule that...