Pease v. Landauer

• Decision Date: 31 March 1885
• Citation: 63 Wis. 20,22 N.W. 847
• Parties: PEASE v. LANDAUER, RECEIVER, ETC.
• Court: Wisconsin Supreme Court

63 Wis. 20

22 N.W. 847

PEASE

v.LANDAUER, RECEIVER, ETC.

Supreme Court of Wisconsin.

Filed March 31, 1885.

Appeal from county court, Milwaukee county.

Jenkins, Winkler & Smith, for respondents.

Shepard & Shepard, for appellant.

TAYLOR, J.

The facts out of which the contention between the parties to this appeal arises, are briefly as follows: On and before July 30, 1884, E. D. Davis and Ezra Michelbacker were partners doing business in the city of Milwaukee, state of Wisconsin, under the firm name of E. D. Davis & Co. On that day the said firm was indebted to the appellant, Joseph M. Pease, in the sum of $574.23, and that upon the adjustment and settlement of such debt the said firm gave to the said Pease their check upon the Merchants' Exchange Bank at Milwaukee for that sum. The following is a copy of such check:

+-----------------------------------+
                ¦“$574.23.¦MILWAUKEE, July 30, 1884.¦
                +-----------------------------------+
                

Merchants' Exchange Bank: Pay to the order of Jos. M. Pease five hundred and seventy-four and 23-100 dollars, with exchange.

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                ¦(No. 369.)¦E. D. DAVIS & Co.” ¦
                +------------------------------+
                

Mr. Pease was a resident of the city of New York, and the business was transacted by mail. On the day the check was drawn it was forwarded by E. D. Davis & Co., by mail, to Mr. Pease, in New York, and was received by him before the fourth of August, and by him immediately forwarded to Milwaukee and presented for payment at the bank on the seventh of August, and payment was refused. On the fourth day of August, E. D. Davis & Co. entered on their books of account the transaction, charging J. M. Pease with $574.23, the amount of said check, and on the same day credited the same amount to the Merchants' Exchange Bank in the regular cash-book. Such entries were made by Davis & Co. upon the supposition that the check had been presented and paid by the bank, and in ignorance of the fact that it had not been presented or paid.

At the time the check was drawn, on the day when the same was presented for payment, and down to the time of the presentation for payment, and down to the time of the presentation of the petition of Pease in this matter, the hearing of such petition, and the making of the order by the county court, from which this appeal is taken, the firm of E. D. Davis & Co. had a deposit account in said bank, upon which there was due to said firm a sum exceeding the amount of said check, and against which no other checks had been drawn or presented for payment.

On the fifth day of August, and before the check was presented for payment, an action was commenced by E. D. Davis against Ezra Michelbacker, in the county court of Milwaukee county, to dissolve the partnership of E. D. Davis & Co. and close up the business of the firm, and on the same day Max Landauer was appointed by said court receiver of the assets of said firm, and he duly qualified as such receiver. It also appears that before the check was presented for payment, the Merchants' Exchange Bank had notice of the appointment of the receiver in such action, and the receipt of such notice is alleged as the reason for refusing payment of the check on presentation. The bank also alleges that it still holds the money due to said firm, subject to the determination by the court of the rights of all concerned. The bank also alleges, upon information and belief, that on the tenth of September, 1884, Joseph M. Pease made an assignment for the benefit of creditors, under the laws of the state of New York, to one Alexander E. Orr, of the city of New York, who claims as such assignee to be the owner of the money due upon the check. This allegation is denied, upon information and belief, by the attorney now acting for the appellant.

It also appears that the Merchants' National Bank of the city of New York commenced an action in the county court of Milwaukee county against Joseph M. Pease, and that process of garnishment was issued in said action, which garnishee process was duly served upon said Merchants' Exchange Bank, summoning it as garnishee of Joseph M. Pease, claiming that said bank had in its possession property of the said Pease; by which garnishee process the said Merchants' National Bank of the city of New York seeks to reach the amount of said bank-account standing to the credit of E. D. Davis & Co. at the time of the appointment of the receiver, so much as is represented by the check held by Pease. The Merchants' Exchange Bank alleges that it has no interest in the controversy in regard to the money in said bank, represented by the check drawn in favor of Pease, except to pay it to the person lawfully entitled thereto, and asks the court to make Alexander E. Orr and the Merchants' National Bank of New York parties to this proceeding before any final order is made in the action. The court, on the twentieth of September, 1884, so ordered, and directed that a copy of the order be mailed to Alexander E. Orr, before the fourth of October, 1884; and the hearing of the petition and order to show cause was fixed for the twenty-ninth day of November, 1884. There was no evidence before the court of the fact of any assignment having been made by Joseph M. Pease, except the statement made by Nunnemacher, the cashier of the Merchants' Exchange Bank, that he is informed and believes that such is the fact. Upon the hearing of the order no one appeared for Alexander E. Orr as assignee.

Upon the foregoing facts and upon his petition the said Pease asked the court to make an order requiring the Merchants' Exchange Bank to pay said check out of the funds standing to the credit of said firm, and for such other relief as was just and equitable. Upon the hearing of the order to show cause, E. D. Davis, Max Landauer, as receiver, the Merchants' Exchange Bank of Milwaukee, J. M. Pease, and the Merchants' National Bank of New York, appeared by their respective attorneys, and the court, after hearing the case, denied the prayer of the petitioner Pease and of the Merchants' National Bank of New York, and ordered the Merchants' Exchange Bank of Milwaukee to pay to Max Landauer, as receiver, the amount standing to the credit of said firm of E. D. Davis & Co. Joseph M. Pease appealed from the order, and the interest of Pease and the Merchants' National Bank of New York having by mutual arrangement been united, the attorneys for said bank appear for the appellant upon this appeal, waiving their right to the money by virtue of their garnishee proceedings.

It will be seen from the foregoing statement of facts that the question whether the holder of a check can maintain an action at law against the bank upon which it is drawn, to recover the amount thereof, upon a refusal of payment on presentation, the drawer of the check having a deposit account in such bank to his credit for an amount equal to or in excess of the amount of the check at the time of presentation, is not involved in this case. Nor do we think the other question is involved, viz., whether the drawer of the check may lawfully, as between himself and the bank, direct the bank to refuse payment of his check drawn upon his account; or, in other words, stop payment of his check before presentation, so that the bank, though willing, would have no authority in law to pay the same on presentation. For the purposes of the consideration of this appeal, it may be admitted that the decided weight of authority is in favor of the proposition that no action at law can be maintained by the check-holder against the bank for a refusal to pay the same on presentation, and that the drawer may, before presentation, stop payment, so that the bank would have no legal authority to pay the same. The argument upon these questions, upon both sides, is clearly and ably stated by Mr. Morse in his work on Banks & Banking, (2d Ed.,) 29, 35, 258, 263, 265, 266-275, 302-304, 525-538; and see cases cited.

It seems to us that the real question presented in this case is whether, in equity, as between the holder of a check for value and the drawer, the bank being indifferent as to whether the amount due to the drawer shall be paid to him or the check-holder, the check-holder should be paid in preference to the drawer. The receiver in this case stands in no...