Pickle v. People's Nat. Bank

• Decision Date: 16 January 1890
• Citation: 12 S.W. 919,88 Tenn. 380
• Parties: PICKLE v. PEOPLE'S NAT. BANK et al.
• Court: Tennessee Supreme Court

12 S.W. 919

88 Tenn. 380

PICKLE v. PEOPLE'S NAT. BANK et al.

Supreme Court of Tennessee.

January 16, 1890

Appeal from chancery court, Bedford county; WALTER S. BEARDEN Chancellor.

Cooper & Frierson, for complainant. Ivie & Ivie and Myers & Dayton for defendants.

LURTON J.

This is a bill in equity to recover the sum of $600, which complainant charges is due to him from either the People's National Bank or John T. Meese, both of whom are made defendants. The bill, in substance, alleges that Meese being indebted to complainant in the sum of $600, claims on the 26th of March, 1887, to have paid the debt in a check drawn by himself, against his account with the defendant bank, payable to complainant or his order, and that the check had been paid by the bank, and charged up against his account. The defendant bank claims that the check was presented to it for payment by complainant in person, and that it was paid to him. Complainant charges that the check has never been paid to him, or to his order, or to any one authorized by him. Upon these facts he prays for a decree against the defendants or either of them, as the law and facts may justify. The defendant Meese, in his answer, admits the indebtedness as charged, but insists that he has fully paid same by drawing and delivering his check for the sum of $600 to complainant, and that the check has been paid by the drawee to Thomas Pickle, and charged up to the account of the drawer. The answer of the bank admits the drawing of the check by Meese, payable to Thomas Pickle or order, and claims that it was presented by the payee, and paid to him in person. It admits that the check has never been indorsed by complainant, but insists that it never required the indorsement of such a check when presented for payment by the payee in person. The officers of the defendant bank do not in their depositions pretend to any memory as to the payment of this check. They prove that it was the rule and custom of the bank to require the indorsement of all checks drawn against it where the check is payable to the payee or order, when presented for payment by one other than the payee, but that when presented by the payee in person, they do not require his indorsement; that the check in question bears the bank stamp of payment as of March 28, 1887, and has no indorsement; and that, in view of their custom or rule, they would not have paid such a check to any one but complainant, unless indorsed by him. They further insist that the possession of such a check raises a presumption that it was paid to the payee named in the check.

The possession of an order by the person upon whom it is drawn is prima facie evidence that the articles or money specified therein were delivered or paid according to the order. Kincaid v. Kincaid, 8 Humph. 17; 2 Daniel, Neg. Inst. § 1647. This presumption is, however, rebutted by the positive and uncontradicted testimony of complainant that he in fact never did collect the check, or authorize any one to collect it for him. We have considered all the circumstances relied on by the defendant as tending to support the presumption of payment to complainant in person, and are of opinion that the weight of proof is that the check has never been paid to complainant. The custom of the defendant bank to pay such checks as the one now under consideration, to the payee, without his indorsement, is the occasion of this litigation. The contrary is the usage of commerce. Such a check, returned to the drawer when paid, and credited to his account, with the indorsement of the payee, would be a voucher for such payment in favor of the drawer against the payee. But, without such indorsement, it would not be evidence, as between drawer and payee, of such payment. 2 Daniel, Neg. Inst. § 1648. The almost universal custom of business is to make checks payable to the payee or order, for the purpose of making the check a voucher for the payment; so the indorsement by the payee would furnish the banker very high evidence of payment in accordance with the direction of the drawer. A check drawn in favor of a particular payee or order is payable only to the actual payee, or upon his genuine indorsement; and, if the bank mistake the identity of the payee, or pay upon a forged indorsement, it is not a payment in pursuance of its authority, and it will be responsible. Morgan v. Bank, 11 N.Y. 404; 2 Daniel, Neg. Inst. §§ 1618, 1663; Bank v. Whitman, 94 U.S. 343.

This brings us to the question as to whether complainant can recover upon this check as against the bank. While the authorities are not agreed, yet the decided weight of opinion is that the holder of a bank-check cannot sue the bank for refusing payment, in the absence of proof that it was accepted by the bank, or that it has done some other act equivalent to and implying acceptance. This has been the uniform view of this court. Bank v. Merritt, 7 Heisk. 177; Bank v. Keesee, Id. 200; Imboden v. Perrie, 13 Lea, 504. In the latter case the reasons for this doctrine are forcibly stated and the authorities collated by Judge TURNEY. We are unable to see any reason for disturbing the rule as heretofore declared by this court, especially as the decided weight of authority is in accord with our decision. Bank v. Millard, 10 Wall. 152; Bank v. Whitman, 94 U.S. 343; Carr v. Bank, 107 Mass. 45; Bank v. Bank, 46 N.Y. 82; Bank v. Cook, 73 Pa. St. 485; Saylor v. Bushong, 100 Pa. St. 23; Purcell v. Allemong, 22 Grat. 742; Bellamy v. Majoribanks, 8 Eng. Law & Eq. 523.

Has there been any acceptance by the defendant bank of the check in question? It is argued that the check, having been charged up to the account of the drawer, and returned to him, is tantamount to an acceptance. The authorities are not agreed as to the effect of such an act. The case of Bank v. Millard was the case of a payment made of a check upon a forged indorsement. It did not appear that the check had been charged to the drawer, and there was a judgment in favor of the bank. Mr. Justice DAVIS, in delivering the opinion of the court, in speaking of the effect of such a charge, said: "It may be, if it could be shown that the bank had charged the check on its books against the drawer, and settled with him on that basis, that the plaintiff could recover on the count for money had and received, on the ground that the rule ex equo et bono would be applicable; as the bank, having assented to the order, and communicated its assent to the paymaster, would be considered as holding the money * * * for the plaintiff's use, and therefore under an implied promise to him to pay it on demand." 10 Wall. 157. In the subsequent case of Bank v. Whitman the very question arose, when the court, through Mr. Justice HUNT, held that such a charge, having been made through mistake, and upon the assumption that it had in fact paid the check to one authorized to collect it, would not authorize the presumption of an acceptance and promise to pay it again. 94 U.S. 347.

Upon the question of commercial law, we should be generally inclined to follow any well-settled line of decisions by the supreme court of the United States when the question was in this state res integra. This question can hardly be regarded as one of "commercial law," in the ordinary sense of the phrase. It is rather a question as to weight and sufficiency of evidence tending to prove an acceptance. We agree that the holder of a check, for want of privity, cannot recover upon the check against the bank unless he can show an acceptance. The question presented is as to the weight to be attached to certain acts done by the bank, and the inference fairly to be drawn from these acts. Where a bank has negligently paid a check to an improper person, it would seem that, in good conscience, the true owner and payee ought not to be remitted to his action against a palpably insolvent drawer, for thereby he may lose his debt altogether. A legal principle, however, stands in the way, in that there is no privity between himself and the bank until the bank has assented to the order of the drawee requiring it to pay the holder of the check the sum of money named. The assent which is necessary before there is any contract relation between the holder of the check and the bank is what is meant by acceptance. This assent need not be by indorsement of "Good" across the check, or by any other particular words, either in writing or oral. The question of assent or acceptance is one of fact, and may be made out by any of the methods by which a fact is proven. Did the defendant bank assent to the directions of its customer to pay out of his funds on deposit the sum named in the check? If so, to whom did it assent to pay this sum? The answer is found by inspection of the check. If it assented to pay the check, it undertook and assumed to pay it to Thomas Pickle, or upon his order. Now, the facts which are relied upon as...