Mt. Vernon Nat. Bank v. Canby State Bank

• Decision Date: 02 April 1929
• Citation: 129 Or. 36,276 P. 262
• Parties: MT. VERNON NAT. BANK v. CANBY STATE BANK ET AL.
• Court: Oregon Supreme Court

276 P. 262

129 Or. 36

MT. VERNON NAT. BANK v. CANBY STATE BANK ET AL.

Supreme Court of Oregon

April 2, 1929

Appeal from Circuit Court, Multnomah County; Walter H. Evans, Judge.

Action by the Mt. Vernon National Bank against the Canby State Bank and another. Judgment for plaintiff, and defendant named appeals. Affirmed.

Philip Hammond, of Oregon City, for appellant.

John J Beckman, of Portland (Frank A. McMenamin, of Portland, on the brief), for respondent.

BELT J.

This is an action in assumpsit to recover the amount due on a draft. It arose as follows: A. P. Nelson sold and delivered a carload of potatoes to W. S. Hurst & Co., a corporation engaged in a wholesale produce business in Portland, Or. In payment therefor, the following draft was executed:

"W. S. Hurst & Co., Wholesale Produce.

"No. 141.

"Portland, Oregon, Apr. 28, 1926.

"At sight pay to the order of E. P. Nelson $1,300.00, thirteen hundred and no/100 dollars, to apply on car Burbank potatoes. Car No. FSE 40678. Value received and charge the same to account of

"W. S. Hurst & Co.,

"By W. S. Hurst.

"To W. S. Hurst & Co., 507 Panama Bldg., Portland, Oregon.

"Payable Canby State Bank, Canby, Oregon."

After plaintiff became owner and holder of the above draft by indorsement, it was sent as a cash item to the Seattle National Bank, and by it forwarded as such to the United States National Bank of Portland, Or. The Portland bank elected not to treat the draft as a cash item, and this resulted in a reconcilement of account between it and the Seattle National Bank.

The United States National Bank received this instrument on May 3, 1926, and, on that date, through messenger, made a "courtesy" presentation for payment to W. S. Hurst & Co. at its place of business in Portland. The money was not obtained on the draft, and Mr. Hurst, president of the company, instructed the bank to forward the bill to the defendant bank at Canby, Or., about 25 miles distant. The United States National Bank thereupon immediately forwarded the draft through the mail to the Canby State Bank. Accompanying this bill was a "collection letter," wherein the Canby State Bank was designated as payer, and among other things, was instructed, "Do not hold for convenience of payer." The instrument was referred to as a check by the transmitting bank. No protest was requested. Upon this form letter we also note the words "We inclose for collection and return when paid." The Canby Bank received the draft on May 4, 1926, and on May 29, 1926, returned it to the United States National Bank unpaid. In the meantime the Portland bank had sent four "tracers" making inquiry as to the status of this transaction, but received no response from the defendant. The draft was returned to the plaintiff, and on June 4, 1926, was again presented through the same channel of banks to the defendant bank for payment, with directions noted on the bill to "protest if not paid." The Canby Bank failed to have the draft protested, and on June 8, 1926, again returned it to the United States National Bank unpaid.

It is the theory of plaintiff that the retention of this draft by the defendant bank, under the circumstances as disclosed in the record, amounted to an acceptance. The defendant denies acceptance, and alleges affirmatively that the draft was sent to it for collection, with directions that it be presented to W. S. Hurst & Co. for payment. The Canby Bank further avers that it endeavored to collect the draft in accordance with such directions, but was unable to do so, and thereupon returned it to the United States National Bank as requested. The cause was submitted to the court without a jury, and from the judgment entered in favor of plaintiff the defendant appeals.

The motion for nonsuit presents the question: Is there any evidence tending to show an acceptance of this draft by the Canby State Bank? The instrument in question purports to be a draft drawn by W. S. Hurst & Co. upon itself, payable at Canby State Bank. Although in form a draft, it has all the essential elements of a check. Section 7977, Or. L., thus defines a check: "A check is a bill of exchange drawn on a bank payable on demand." When the drawer made this check payable at the Canby State Bank, it was equivalent to an order on that bank to pay the same and charge to its account. Section 7879, Or. L.; Maddock v. McDonald, 111 Or. 448, 227 P. 463. It is idle for the defendant bank to contend that it retained this draft, in order to present it to W. S. Hurst & Co. for acceptance. The drawer had already given an order on the defendant to pay this bill at sight or on demand.

We are assuming that the words, "Payable Canby State Bank" were on the draft when originally presented, although this is disputed by Mr. Graham, cashier of the defendant bank. He says: "If it had been there, I am sure we would have given the matter more attention." The witness is unquestionably mistaken in his contention that these words were not on the draft. W. S. Hurst, president of W. S. Hurst & Co., admits that these words are in his handwriting. E. P. Nelson testified that they were on the draft when it was delivered to him. The cashier of the Mt. Vernon National Bank also says the same was true when the draft was acquired by indorsement by that bank. The words "Payable Canby State Bank" must have been on the draft when it reached the United States National Bank. Otherwise, it would not have known where to send it. At any rate, this is a question of fact which, for the purpose of determining the error assigned, must be resolved in favor of the plaintiff.

What is an acceptance? The statute answers: It is the signification of the drawee of his assent to the order of the drawer. Section 7924, Or. L. Justice Harris in Hunt v. Security State Bank, 91 Or. 362, 179 P. 248, says: " 'Acceptance' of a bill of exchange is the act by which the drawee manifests his consent to comply with the request contained in the bill of exchange directed to him; and it contemplates an engagement or promise to pay." Citing in support thereof many authorities.

The next logical inquiry is: How may an acceptance be established? Section 7924 of the Code provides that "The acceptance must be in writing and signed by the drawee." This, however, is not the sole and exclusive method of proving an acceptance. The above section must be considered in connection with the following provision of the Negotiable Instruments...