Mars, Inc. v. Chubrilo

• Decision Date: 06 November 1934
• Parties: MARS, INC., v. CHUBRILO.
• Court: Wisconsin Supreme Court

216 Wis. 313

257 N.W. 157

MARS, INC.,

v.CHUBRILO.

Supreme Court of Wisconsin.

Nov. 6, 1934.

Appeal from a judgment of the Circuit Court for Kenosha County; E. B. Belden, Circuit Judge. Reversed.

Action on contract by Mars, Incorporated, against M. I. Chubrilo to recover on an account for merchandise. Defendant answered, and, in connection with other defenses, pleaded payment by a check, which, because plaintiff negligently failed to present it for payment within a reasonable time, was not presented until after the bank on which it was drawn was closed by order of the Comptroller of Currency. Upon a trial, the court found that the check was cleared within a reasonable time, and judgment was entered for plaintiff. Defendant appealed.Val. W. Dittmann, of Kenosha, for appellant.

Kadwit & Lepp, of Kenosha, for respondent.

FRITZ, Justice.

The defendant contends that the court erred in finding that a check issued by defendant to plaintiff in payment of indebtedness to plaintiff was presented for payment within a reasonable time after its issuance, in compliance with section 118.62, Stats., which provides: “A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay.”

The evidence established the following facts: On November 7, 1932, defendant sent his check for $319.87, drawn on the United States National Bank & Trust Company at Kenosha, Wis., to plaintiff's office in Chicago, Illinois, where it was received by plaintiff on November 8, 1932. That day was a national holiday, and all the banks were closed. On November 9, 1932, plaintiff, instead of depositing the check at Chicago, to have it forwarded directly to Kenosha for presentation, sent it by airmail to its depository bank in Minneapolis, Minn. That bank received the check on November 10, 1932, and forwarded it on that day to the Federal Reserve Bank at Chicago. As November 11, 1932, was also a legal holiday, and the banks were closed, the check was not forwarded from Chicago to Kenosha until November 12, 1932, and it was not presented to the drawee at Kenosha until the next business day after Saturday, November 12, 1932. As the defendant had sufficient funds on deposit, and the drawee honored all checks presented on November 12, 1932, it would have been paid if presented on that day. But, as it was not presented and as the bank was closed on November 13, 1932, by an order of the Federal Comptroller of Currency, the check was not paid.

It is obvious that presentment to the drawee was delayed by plaintiff to the extent of at least one business day beyond the time reasonably required if the check had been deposited, in the first instance, at a bank in Chicago, and forwarded from there directly to Kenosha instead of being first sent by plaintiff to Minneapolis for deposit there, and then being returned to Chicago to be again forwarded from there through the Federal Reserve Bank to its correspondent at Kenosha for presentation to the drawee. However, plaintiff contends that, notwithstanding that delay, there was no failure to make presentment within a reasonable time because of proof to the effect that since December, 1930, plaintiff, to facilitate the cashing of checks, as it thought best, cleared all checks which it received in Chicago and which were drawn on banks in Wisconsin, Northern Illinois, and Minnesota, through its depository bank at Minneapolis; that it was the practice of most concerns in Chicago having a great volume to clear checks all over the United States in different depository banks, because the clearing house at Chicago makes quite a charge on checks deposited there; and that up to November 7, 1930, twenty checks, which had been sent to plaintiff by defendant and which were drawn on the bank at Kenosha, had, as appeared from indorsements thereon, been forwarded by plaintiff to its depository at Minneapolis and had been sent through the Minneapolis clearing house to the Federal Reserve Bank at Chicago for presentation to the drawee bank at Kenosha, where they were paid and returned to the defendant as honored. In the latter connection it appeared, however, that the defendant had never been informed that his checks were accepted by plaintiff only to be cleared through the Minneapolis bank. It was, apparently, upon that evidence that the court found that, “taking into consideration the nature of the instrument and the usage of the trade and business in which the plaintiff was engaged and the custom of the trade and business houses in the City of Chicago, Illinois, in clearing checks,” it was within the contemplation of the parties to the transaction that the check in question would be cleared through the bank at Minneapolis; that it was presented for payment, with reasonable diligence and promptitude, within a reasonable time after its issuance; and that plaintiff was not negligent in handling that check.

[1][2] It is of controlling significance that it appears as to all checks in evidence, which were honored by the drawee at Kenosha, that the presentment and collection thereof were made ultimately through the bank at Chicago forwarding them directly to Kenosha for those purposes. Consequently, by first depositing the check in suit at Minneapolis, instead of at Chicago, because of which it could not be sent, in the first instance, directly from Chicago to Kenosha, the plaintiff adopted a needlessly circuitous route, which resulted in the delay that ultimately preventedthe payment of the check. Although plaintiff and other concerns at Chicago may, as a matter of economy, have indulged in the practice of clearing checks through depository banks located elsewhere than in Chicago, in so far as that practice resulted inevitably in a failure to comply with the statutory requirement that “a check must be presented for payment within a reasonable time after its issue,” in order to avoid the discharge of the drawer from liability, it affords no protection to the plaintiff in its disregard of the rights of the defendant, whom it had not informed of that practice and who had not consented thereto. As far as he was concerned, compliance with the provision in section 118.62, Stats., as to presentation within a reasonable time, required the check, under the circumstances of this case, to be forwarded on the next business day after the first business day on which it came into plaintiff's possession, directly from Chicago to Kenosha for presentation to the drawee, at the latest, before the close of business upon the day following its receipt at Kenosha. Aebi v. Bank of Evansville, 124 Wis. 73, 77, 102 N. W. 329, 68 L. R. A. 964, 109 Am. St. Rep. 925;Gifford v. Hardell, 88 Wis. 538, 541, 60 N. W. 1064, 43 Am. St. Rep. 925;Lloyd v. Osborne, 92 Wis. 93, 65 N. W. 859. As is said in Brady on Bank Checks, § 89, p. 140: “It is improper to send a check over a circuitous route and the forwarding a check in such manner will have the effect of discharging the drawer where the check is not paid upon presentment, if it appears that the check would have been paid if forwarded in a more direct manner.” See, also, a note in 91 A. L. R. 1204;Northern Lumber Co. v. Clausen, 201 Iowa, 701, 208 N. W. 72;Plover Savings Bank v. Moodie, 135 Iowa, 685, 110 N. W. 29, 113 N. W. 476;Seager v. Dauphinee (Mass.) 187 N. E. 94;Woods Bros. Corp. v. Francke, 122 Neb. 672, 241 N. W. 88;First Nat. Bank of Chadwick v. Mackey, 157 Ill. App. 408;Republic Metalware Co. v. Smith, 218 Ill. App. 130.

[3][4] Although, ordinarily, “what constitutes a reasonable time for presentation is a question of fact” (Coolidge v. Rueth, 209 Wis. 458, 245 N. W. 186, 189, 85 A. L. R....