Mitchell Livestock Auction Co. v. Bryant State Bank
| Decision Date | 05 October 1937 |
| Docket Number | No. 8056.,8056. |
| Citation | 65 S.D. 488,275 N.W. 262 |
| Parties | MITCHELL LIVESTOCK AUCTION CO., Inc., v. BRYANT STATE BANK et al. |
| Court | South Dakota Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Circuit Court, Hamlin County; W. W. Knight, Judge.
Action by the Mitchell Livestock Auction Company, Inc., against the Bryant State Bank, Bryant, S. D., and another. From an order sustaining the demurrer of the named defendant, to the plaintiff's complaint, the plaintiff appeals.
Affirmed.
Morgan & Whiting and Donald O. Nicolls, all of Mitchell, for appellants.
Benthin & Arneson, of Hayti, for respondents.
The complaint alleges that plaintiff on July 14, 1936, indorsed and deposited with the Mitchell National Bank a check for $1,512.38 and received credit upon the books of the bank for that amount; that this check was executed and delivered by defendant Claude Sondergaard on the defendant bank; that the check was duly indorsed by the Mitchell National Bank and forwarded to the First National Bank & Trust Company of Minneapolis, which in turn indorsed and forwarded the check for payment to the defendant bank; that the check was received by the defendant bank on July 16, 1936, and not until July 23, 1936, did the defendant bank give plaintiff or its agents any notice of dishonor of the check; and that on that day the defendant bank notified the First National Bank & Trust Company of Minneapolis by telegram that it did not honor the check for the reason that the drawer did not have on deposit sufficient funds with which to pay the check.
It is further alleged that plaintiff executed and delivered checks to defendant Sondergaard during the interval; that, if plaintiff had been notified within a reasonable time of the refusal of the defendant bank to honor the check in question, the plaintiff would have had an opportunity to stop payment upon the checks issued to Sondergaard and also to retake by judicial process livestock sold and delivered to Sondergaard; and that the check in question was not paid notwithstanding defendant bank during the period of retention received from Sondergaard funds for deposit greatly in excess of the amount of the check and that the defendant bank paid other checks issued by defendant Sondergaard which were delivered to the defendant bank for payment after receipt of the check presented by the plaintiff for acceptance and payment.
For a second cause of action it is alleged that on July 20, 1936, while the defendant bank was still retaining the check involved in the first cause of action and before the defendant bank had notified the forwarding bank of its refusal to pay such check, the defendant Sondergaard purchased other livestock from the plaintiff, and that in payment thereof the purchaser executed and delivered two checks on the defendant bank in the sum of $324.97; that these checks were not paid; that, if plaintiff had been advised of defendant's refusal to pay the check described in the first cause of action, the plaintiff would not have accepted these two checks. Plaintiff appeals from the order sustaining the demurrer of the defendant bank to the complaint.
It is the contention of counsel for the plaintiff that the retention of the check for $1,512.38 involved in the first cause of action by the defendant bank under the circumstances described by the complaint amounted to an acceptance. Defendant bank claims that the check in question was never accepted or certified by it; that the mere retention of the check did not render the drawee bank liable as an acceptor of the instrument. Section 1887, Rev.Code 1919, provides that the provisions of the negotiable instruments act applicable to bills of exchange shall apply to checks. Section 1835, Rev.Code 1919, provides that the acceptance of a bill is the signification by the drawee of his assent to the order of the drawer and that an acceptance must be in writing and signed by the drawee. Plaintiff contends that this is not the sole and exclusive method of proving an acceptance; that a drawee bank will be deemed to have accepted a check if it refuses within twenty-four hours after delivery or within such other period as the holder may allow to return the check to the holder. In this the plaintiff relies on the following provisions of section 1839, Rev. Code 1919: “The drawee is allowed twenty-four hours after presentment in which to decide whether or not he will accept the bill; but the acceptance, if given, dates as of the day of presentation.”
This section is identical with the provisions of section 136 of the Uniform Negotiable Instruments Act. Section 137 of that act, which section has been omitted from the provisions of the Negotiable Instruments Act of this state, reads as follows: “Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within twenty-four hours after such delivery, or within such other period as the holder may allow, to return the bill accepted or nonaccepted to the holder, he will be deemed to have accepted the same.”
[1] It is the holding in some jurisdictions that these sections are not applicable where checks are delivered for collection or payment,...
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