Polotsky v. Artisans Savings Bank
| Decision Date | 27 October 1936 |
| Citation | 37 Del. 151,188 A. 63 |
| Court | Supreme Court of Delaware |
| Parties | SOL POLOTSKY, Plaintiff Below, Plaintiff in Error, v. ARTISANS SAVINGS BANK, Defendant Below, Defendant in Error |
Supreme Court, No. 2, January Term, 1936.
Writ of Error to the Superior Court sitting in and for New Castle County.
The judgment is affirmed.
Cohen and Cohen for plaintiff in error.
Horace G. Eastburn and Bayard W. Allmond for defendant in error.
OPINION
WOLCOTT, Chancellor (delivering the opinion of the Court):
Polotsky, the plaintiff, sued the defendant, a bank, in the court below in assumpsit to recover two hundred dollars which the plaintiff had deposited with the defendant. The declaration averred the indebtedness, a demand therefor and a refusal by the defendant to pay the same. It contained also the common counts for money had and received and money found due upon an account stated.
The case was tried before the court without a jury, the parties so stipulating.
The question before the court below was a question of law, there being no substantial dispute between the parties upon the facts. The court below found in favor of the defendant and entered judgment accordingly. The plaintiff duly excepted and sued out the pending writ of error.
The facts are as follows. On January 6, 1934, the plaintiff had on deposit with the defendant the sum of two hundred dollars. Plaintiff entered into a contract with The Eugenics Company of Alliance, Ohio, by the terms of which the plaintiff agreed to purchase from The Eugenics Company certain birth control literature and contraceptive preparations. Plaintiff was to have the right of exclusive sale and distribution of the said preparations in designated territory. The literature was to be circulated by the plaintiff in advertisement of the preparations and their effectiveness as contraceptive agents. The contract obligated the plaintiff to pay five hundred and four dollars, of which two hundred was to be paid before the literature and contraceptive materials were shipped by The Eugenics Company to the plaintiff.
On January 6, 1934, the plaintiff called at the defendant's banking house to withdraw two hundred dollars with which to make the first payment on the contract. He had with him his pass book. The bank, a savings institution, required the presentation of the depositor's bank book before a withdrawal would be permitted. It was the custom of the bank to pay all withdrawals of two hundred dollars or less in cash, and of amounts in excess of that sum by its check upon another bank in which it had funds on deposit.
Plaintiff requested the defendant not to give him the cash. He requested a check. In response to the request, the defendant drew its check for two hundred dollars on Wilmington Trust Company, to the order of the plaintiff. Proper entries were made by the defendant upon the plaintiff's pass book and upon its own ledger, showing the withdrawal by the plaintiff of the sum of two hundred dollars.
In the presence of an officer of the bank, plaintiff endorsed the check as follows: "Pay to the order of The Eugenics Co." He forwarded the check so endorsed to The Eugenics Company. Before the check was presented to Wilmington Trust Company for payment, the plaintiff concluded that his contract with the Eugenics Company was tainted with illegality. Thereupon he requested the defendant to stop payment on the check. This the defendant refused to do unless plaintiff furnished it with an indemnity bond to protect it against possible damage in the event of suit against it by any subsequent holder.
The check was forwarded to Wilmington Trust Company by The Eugenics Company through regular banking channels, was presented for payment and was duly paid by Wilmington Trust Company on January 10, 1936.
On this state of facts the plaintiff contends that the defendant was under the duty of stopping payment upon the check on the plaintiff's demand, and is liable to the plaintiff for its refusal so to do.
The question is whether the plaintiff as payee of the check was entitled as a matter of law to require the defendant to exercise the right of countermand. Otherwise put, the question is--has the payee of a check of the kind here involved the right to stop its payment?
The court below answered this question in the negative. (See 7 W. W. Harr. (37 Del.) 142, 180 A. 791.) It took the view that a check drawn by one bank upon another is not subject to countermand by the drawer. If the law recognized no power in the maker to countermand, it followed, said the court below, that there could be no right in the payee to require a countermand. If the premise on which the court below relied be accepted as sound, viz., that the maker of the check in question had no right in law to countermand its payment, it would follow of course that the payee had no right in law to require the maker to attempt the legally impossible act.
We are of the opinion that the premise upon which the court below proceeded was an erroneous one. If the check in this case had been one wherein the maker was not a bank, the right of the maker to stop payment thereof at any time before payment would be unquestioned. 5 R. C. L. 526. The court below recognized this proposition. But it held that where the maker of the check is a bank the right to stop payment is not allowed by the law. The principal authority upon which the court below relied for its holding is Kohler v. First National Bank of Tonasket, 157 Wash. 417, 289 P. 47. Upon the point in question, the decision in that case was by a closely divided court, four of the judges holding that a bank draft drawn by one bank upon another in which it had funds on deposit was not subject to countermand, and three holding to the contrary. The majority opinion in the cited case categorized bankers' checks so far as the right is concerned to stop payment thereof, with national banknotes, certified checks and cashiers' checks. In the instant case the check may be characterized as a banker's check, that is to say a check drawn by a bank to the order of a third party upon another bank with which the drawing bank has funds on deposit. Such checks possess distinguishing features which set them forth in strong contrast with national banknotes, certified checks and cashiers' checks.
A national banknote is made impossible of countermand or, more accurately speaking, of repudiation, by act of Congress and is endowed by legislative fiat with the quality of a monetary circulating medium. A banker's check has of course no such legislative aid to sustain the permanence of its vitality. It is therefore distinguishable from a national banknote in a highly important particular other than in the point of security beneath it, which was the only point of substantial differentiation between the two that the majority of the court in Kohler v. First National Bank of Tonasket, supra, adverted to. The distinctive feature of a legislatively imposed character which is possessed by a national banknote is wholly lacking in a banker's check. This feature, rather than the one of greater security (which in our opinion is merely incidental) is the only important feature to be taken into account when the question of susceptibility to countermand is under consideration.
A banker's check as we have defined the term, is likewise distinguishable from a certified check in a respect that bears a logical relation in legal conception to the question of whether the same right to countermand should attach to the one as to the other. Where a check in the ordinary form is drawn, whether by an individual or a bank and the same is not certified, there is no transfer nor assignment of funds from the maker's account to the credit of the payee. The check remains nothing but an order revocable at any time before acceptance. Tremont Trust Co. v. Burack, 235 Mass. 398, 126 N.E. 782, 9 A. L. R. 1067. Where, however, the check has been certified by the bank its character as a mere order has so far been lost to it that the question of the maker's control over its payment is tested by entirely different principles, due to the arising of a liability on part of the drawee-bank because of its certification. Causey v. Eiland, 175 Ark. 929, 1 S.W.(2d) 1008, 56 A. L. R. 529. This liability of the certifying bank introduces a new party who, in varying circumstances that need not here be elaborated upon, will be regarded by the law as independently liable to the holder. The following two cases from New Jersey are illustrative of some at least of the alterations in legal rights which the factor of certification introduces into the relation of the parties. Times Square Automobile Co. v. Rutherford...
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