McFadden v. Follrath
| Decision Date | 03 March 1911 |
| Docket Number | 16,959 - (250) |
| Citation | 130 N.W. 542,114 Minn. 85 |
| Parties | M. J. McFADDEN v. FRANK FOLLRATH |
| Court | Minnesota Supreme Court |
Action in the district court for Sibley county to recover $77.03 for goods sold and delivered. The answer admitted the sale and delivery of the goods and their value as alleged in the complaint, and alleged that on February 8, 1909, the claim was satisfied by payment in full. The case was tried before Morrison, J., who made findings of fact and ordered judgment in favor of defendant. From an order denying plaintiff's motion for a new trial, he appealed. Affirmed.
Agent's authority to make indorsement.
Authority of an agent to collect bills and receipt therefor carries no implication of authority to indorse negotiable paper.
Payment by check.
When a debtor has given his check for the amount of his indebtedness, in the absence of a contrary agreement, such check is given and received as a conditional, not an absolute, payment of the debt.
Liability of bank paying check upon unauthorized indorsement.
A bank paying a check upon the unauthorized indorsement of the payee and charging the amount thereof to the drawer's account becomes liable to the payee for the amount of such check, unless the conduct of the payee excuses such payment, or prevents him from asserting such liability.
Payment by such check.
Under such circumstances, a check given by the debtor to pay an account, and wrongfully indorsed by the agent authorized to receive it, discharges the liability on the original account.
Defense of payment.
To pay an existing indebtedness the defendant gave his check, payable to plaintiff's order, to an agent of plaintiff authorized to receive the same. The agent, having no authority so to do, indorsed the plaintiff's name by himself as agent, and cashed the check at the bank on which it was drawn. The bank charged the defendant's account with the amount of the check, and returned the check to defendant, stamped "Paid." Held, such facts are a defense to an action by the plaintiff against the defendant on the account to pay which the check was given.
Joseph T. Avery, for appellant.
W. F. Odell, for respondent.
The plaintiff is engaged in a wholesale business, and the defendant is a retail merchant at Arlington. The defendant had bought goods from the plaintiff, and paid therefor, for several years. These payments had been made from time to time to traveling salesmen of plaintiff, who presented statements of account to defendant. Payment was usually made by checks payable to plaintiff's order, and delivered to such agents. These checks were, by the agents, sent in to plaintiff, by plaintiff indorsed, and through the usual channels were paid and returned to defendant. On the eighth of February defendant was indebted to plaintiff for goods sold in the sum of $77.03. Plaintiff then had in his employ as a traveling salesman one Henry J. Good. Good was instructed to call on the defendant and collect this bill. He was authorized to receive payment in cash or by check. Upon presentation of the account, defendant made and delivered to Good his check, drawn on the First State Bank of Arlington, dated February 15, payable to plaintiff's order, for the amount of the bill, and received from Good a receipt acknowledging payment. Good indorsed the check, "McFadden Candy Company, by Henry J. Good, Agent," presented it to the First State Bank of Arlington, and received from the bank, in money, the amount of the check. The bank charged defendant's account with the amount, and returned the check to defendant in the regular course of business, stamped, "Paid Feb. 8." Good did not account to plaintiff for the proceeds of the check. He was not authorized to indorse for plaintiff and receive money on checks payable to plaintiff.
Plaintiff brings this action against the defendant for goods sold, and seeks to recover the same balance for which the check was given by defendant to plaintiff's agent. The defendant pleads payment, and relies on the facts above stated to establish his defense. The trial court determined the issue in favor of the defendant, and plaintiff appeals from an order denying a new trial.
When a debtor has given his check for the amount of his indebtedness, in the absence of a contrary agreement, such check is given and received as a conditional, not an absolute, payment of the debt. In case the check is not honored upon presentation, the original indebtedness for which it was given is not discharged, and the creditor may recover on such indebtedness, and need not rely on the liability on the check. 22 Am. & Eng. Enc. (2d Ed.) 569; Good v. Singleton, 39 Minn. 340, 40 N.W. 359; First Nat. Bank v. McConnell, 103 Minn. 340, 114 N.W. 1129, 14 L.R.A. (N.S.) 616, 123 Am. St. 336. Giving a receipt acknowledging payment of the debt at the time the check is delivered does not evidence an agreement to accept the check as absolute payment. Weddigen v. Boston, 100 Mass. 422; Bradford v. Fox, 38 N.Y. 289. Payment by check becomes absolute payment of the debt when the check is paid upon presentation. Upon such payment of the check, the debt is deemed to have been discharged from the time the check was given. Downey v. Hicks, 14 How. 240, 14 L.Ed. 404; Strong v. Ten Cent T.B. & S. Assn., 189 Pa. St. 406, 42 A. 46.
While payment by check usually becomes absolute payment of the debt through payment of the check, it may become so by the certification of the check by the bank for the payee, or through the laches of the payee in not presenting the check to the bank. 30 Cyc. 1209; Brown v. Schintz, 202 Ill. 509, 67 N.E. 172; Taylor v. Wilson, 11 Metc. (Mass.) 44, 45 Am. Dec. 180. In Taylor v. Wilson, supra, it is stated: In case a check given to pay a debt is lost, and has not been presented for payment to the bank on which it is drawn, an action may be maintained by the payee against the drawer on the check. Section 4717, R.L. 1905; First Nat. Bank v. McConnell, supra.
Authority given an agent to collect accounts does not, by implication, give such agent authority to indorse and present for payment checks received by him payable to his principal's order. In this case, Good had no authority, express or implied, to indorse plaintiff's name and cash the check he received from the defendant. The bank on which the check was drawn was bound to pay it to the payee therein named or his order. When the check was presented, therefore, indorsed "by Henry J. Good, Agent," the bank was bound to determine, at its peril, that he had authority, as agent, to make such indorsement and receive payment on the check. Ermentrout v. Girard F. & M. Ins. Co., 63 Minn. 305, 65 N.W. 635, 30 L.R.A. 346, 56 Am. St. 481.
Under the facts appearing in this case, the bank, without authority, accepted and paid to Good the check given by defendant. When it so paid such check, and charged the sum so paid to the account of the defendant, such charge being acquiesced in by the defendant, a right of action against the bank accrued in favor of the plaintiff, in the absence of any act or omission on his part which would excuse such payment by the bank, or deprive him of such right of action. William Deering & Co. v. Kelso, 74 Minn. 41, 76 N.W 792, 73 Am. St. 324; Dispatch Printing Co. v. National Bank of Commerce, 109 Minn. 440, ...
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