Lewis, Hubbard & Co. v. Montgomery Supply Co.

• Decision Date: 20 February 1906
• Citation: Lewis, Hubbard & Co. v. Montgomery Supply Co., 59 W.Va. 75, 52 S.E. 1017 (W. Va. 1906)
• Parties: LEWIS, HUBBARD & CO. v. MONTGOMERY SUPPLY CO.
• Court: West Virginia Supreme Court

52 S.E. 1017

59 W.Va. 75

LEWIS, HUBBARD & CO. v. MONTGOMERY SUPPLY CO.

Supreme Court of Appeals of West Virginia.

February 20, 1906

Syllabus by the Court.

A person receiving a check, on a fund in the hands of a bank for the amount of a demand against the drawer thereof, is bound to exercise reasonable diligence in making presentment thereof for payment, if he wishes to avoid risk of loss by insolvency of the drawee.

If the payee of the check and the drawee reside, or have their places of business, in the same city or town, presentment must be made before the expiration of business hours of the day next after the day of the receipt thereof.

If the person receiving a check and the bank on which it is drawn are in different places, it must be forwarded, for presentment, by mail or other usual mode of transmission, on the next day after the receipt thereof at the place in which the payee resides or does business, if reasonably and conveniently practicable; and, if it is not so practicable then by the next mail, or other similar means of conveyance leaving after said date.

Neither payee nor his agent is required to transmit such check by the only, or last, mail of the day next after its receipt, if such mail closes or departs at an hour so early as to render it inconvenient for the holder to avail himself of it.

What is an unreasonably early hour in such case depends upon all the circumstances of the transaction and situation of the parties, and, the facts being free from controversy and doubt, is a question of law for the court.

In the absence of any agreement to the contrary, and of any circumstance, known to the payee, making imprudent to do so he may indorse and deliver the check to a bank for collection; but this does not extend the time within which it must be forwarded for presentment. The bank, however, in such case, is not required to forward it on the next day after its receipt by the payee, if there be no reasonably convenient means of doing so, within the banking hours of that day.

Though the courts of this state cannot have judicial knowledge of the existence of any particular bank, or of any mode of business peculiar to a given bank, they will take judicial notice that, in all cities and towns of large population and extensive business, within their jurisdiction, banks exist, and of the facts that their operations are governed by reasonable rules and regulations, to which parties dealing with them, or in commercial paper, are deemed to have subjected themselves.

Courts cannot take judicial notice of the business hours of any particular bank, but the courts of this state judicially know that ordinarily banks in the cities and larger towns of the state do not open their doors for business at an hour earlier than 9 o'clock a. m.

The parties to a check drawn on a bank and sent to a distant place to be forwarded for presentation are deemed in law to have acted with knowledge of the usual diligent method of making such presentment through a bank at the place to which it is sent, and to have agreed to suffer any reasonable delay incident to such mode of presentment.

In such case, the drawer, by allowing his funds to remain in the drawee bank, and the payee, by accepting the check, evince belief in the solvency of the bank, and the former voluntarily takes the risk of its solvency during the reasonable period necessary for presentment of the check in the usual manner.

The drawer, in delivering a check to an agent of the payee, having no authority to indorse it, at the place of business of the drawer, impliedly agrees to allow such additional time for presentment as may be necessary for the transmission of the check to the principal of the agent.

Failure to present a check does not bar recovery from the drawer, if the time intervening between delivery thereof and the failure of the bank is not sufficient for presentment by the exercise of such diligence as the law requires.

It is reversible error to give an instruction presenting an hypothesis which has no foundation in the evidence adduced, unless the court can clearly see that it did not prejudice the exceptor.

An offer of evidence, not appearing in any way to be relevant and material, is properly rejected.

Error from Circuit Court, Fayette County.

Action by Lewis, Hubbard & Co. against the Montgomery Supply Company. Judgment for defendant, and plaintiffs bring error. Reversed.

Berkeley Minor, Jr., and Payne & Hamilton, for plaintiffs in error.

Dillon & Nuckolls, for defendant in error.

POFFENBARGER J.

A question of commercial law arises on this record. Lewis, Hubbard & Co., of the city of Charleston, doing a wholesale business in groceries, had, prior to the 24th day of September, 1900, sold goods to the Montgomery Supply Company, doing a retail grocery business in the town of Montgomery, and on that day there was due from said last-mentioned concern the sum of $183.69. On that day W. G. Hubbard, a traveling salesman for Lewis, Hubbard & Co., was at Montgomery, called upon the Montgomery Supply Company, received from it, not earlier than 4 o'clock p. m. of that day, a check for the amount of the bill, payable to Lewis, Hubbard & Co., drawn on the Montgomery Banking & Trust Company, a bank in Montgomery, neglected or failed to forward the same to his principal, and went on from Montgomery to call upon other customers of his house, taking the check with him. He received the check on Monday, the 24th day of September, and on Friday, September 28th, the Montgomery Banking & Trust Company failed to opens its doors for business, went into the hands of a receiver, and finally paid a small percentage to its depositors. The drawer of the check had ample funds in the bank to pay it, and it presumably would have been paid, had it been presented for payment at any time during banking hours on Thursday the 27th. It was afterwards sent to the bank through proper channels and protested.

This action was brought by Lewis, Hubbard & Co. against the drawer of the check, in a justice's court, and went from that court to the circuit court of Fayette county, where judgment was rendered in favor of the plaintiff for the sum of $26.60, the amount received by the defendant as a dividend on its deposits from the assets of the defunct bank. This judgment being substantially one for the defendant, the plaintiff has brought the case to this court on a writ of error.

From the testimony in the case, it appears that Hubbard had authority to collect and to give receipts for his collections, but did not have authority to indorse checks in the name of his principal and receive money thereon. It further appears that, had he promptly mailed the check to his principal, it would have been received by it the following day, and, if discounted at Charleston on the same day and promptly forwarded back to Montgomery within business hours of that day, it would have reached the latter place not earlier than Wednesday morning. The mails left Montgomery for Charleston three times a day, namely, about noon, between 3 o'clock and 5 o'clock p. m., and between 7 o'clock and 8 o'clock p. m. The first two reached Charleston in about one hour's time. By the last one delivery was made in Charleston the next day. The eastbound train took western mail at Montgomery, carried it east, and delivered it to a west-bound train which passed Charleston at about 3 a. m. the next morning. The mails from Charleston reached Montgomery twice a day, one at about 6 a. m. and the other between 10 and 11 a. m. It was by the latter one that mail could be posted at Charleston and be received at Montgomery on the same day. If, therefore, the plaintiff was bound by law to exercise the utmost diligence possible under the circumstances to obtain the money on the check, and is precluded from recovery by its failure to exercise such diligence, its case would clearly fail; for it could have had the check presented for payment at Montgomery on Thursday. But, if the law does not demand of the holder of a check the utmost diligence and haste in procuring payment of a check by the drawee, the question depends upon the degree of diligence that is required. If such diligence did not require the discounting or depositing of the check at Charleston on the day of its reception at that place by the plaintiff, and it was allowable to deposit at a Charleston bank on the next day, namely, Wednesday, it could not have reached Montgomery until Thursday, unless deposited and forwarded early in the morning, for the last mail from Charleston to Montgomery on that day left not later than 10 o'clock a. m., for it arrived at Montgomery between 10 and 11 o'clock a. m. The mail for that train would probably close by 9:30 o'clock a. m. If the plaintiff was bound to put the check in the hands of the bank in time for that mail on Wednesday, it was necessary, therefore, to do so on Tuesday or at an early hour on Wednesday. If the plaintiff was bound to deposit it on the same day of its reception, and the Charleston bank was not required to forward it until the next day, it would not have reached Montgomery until Thursday, unless mailed at an early hour on Wednesday. If so, and the Charleston bank had the whole of the business day in which to mail it, it would not have reached Montgomery until Thursday. If it had been received at Montgomery by the agent or correspondent of the Charleston bank on Thursday, then the question arises whether the agent or correspondent was bound to present it on the day of its reception, or was entitled to hold it until the next day, Friday. Upon the answers to these questions, to be found in the principles declared by the courts, the correctness of some of the positions taken by the attorneys in the case depends...