Smith v. Mills

• Decision Date: 12 November 1924
• Citation: 112 Or. 496,230 P. 350
• Parties: SMITH v. MILLS.
• Court: Oregon Supreme Court

230 P. 350

112 Or. 496

SMITH v. MILLS.

Supreme Court of Oregon

November 12, 1924

Department 2.

Appeal from Circuit Court, Multnomah County; T. E. J. Duffy, Judge.

Suit by G. G. Smith against Mrs. C. G. Mills. Decree for defendant and plaintiff appeals. Reversed.

The object of this suit is to recover a note and mortgage for the sum of $5,032, in the hands of the defendant, and to enjoin the transfer of the said note and mortgage and the recording thereof.

The complaint alleges that the plaintiff, appellant here, was the owner of a certain note and mortgage executed by R. A. Chapin and Madge D. Chapin, husband and wife, on the 10th day of January, 1922, and due on the 10th day of January, 1925. The mortgage covered certain property in Multnomah county, which it is not material here to describe. The complaint charges that the plaintiff sold and assigned this mortgage to the defendant, respondent here, for the sum of $5,032, the face of the note with accrued interest; that he assigned the note and mortgage to the defendant, and that the defendant delivered to plaintiff a check for the amount on a bank in Portland, Or., on the 15th day of February, 1922; that upon presentation of the check payment was refused, the bank having closed its doors on the 16th of February. The plaintiff alleges that he tendered the return of the check and demanded the return of the note and mortgage, but that the defendant refused to return the note or mortgage or cancel the assignment thereof. The complaint further alleges that the defendant was financially not responsible, and asked for an injunction against the defendant, against selling or transferring the note and mortgage.

The defendant admits the assignment of the securities, and that the plaintiff tendered her a return of the check and demanded a return of the note and mortgage, and that she refused. In a further and separate answer to the amended answer the defendant alleges that on the 15th day of February, 1922, the plaintiff agreed to sell and the defendant agreed to purchase from the plaintiff said note and mortgage for the agreed sum of $5,032; that in contemplation of said purchase, and prior to the 15th of February, she withdrew from her savings account the sum of $5,000, and withdrew $35 on her personal check, and offered the said sum to the plaintiff in lawful money of the United States, which he refused, and then and there requested a draft or cashier's check on the State Bank of Portland in his favor; that a cashier's check was accordingly issued by the said bank to plaintiff, as payee in full payment of said purchase.

It appeared from the evidence that the plaintiff desired to sell the note and mortgage in question and employed one Mr. Bader to find a purchaser therefor and make the sale. Mr. Bader found Mr. Eckhorn, who represented the respondent in the subsequent transaction, and the two agents, in behalf of their principals, made the contract of sale. On the 14th of February it appears that Mr. Eckhorn, defendant's agent telephoned her to come to the bank and draw out the money with which to pay for the note and mortgage, which would come in soon. Not being able to come, she authorized him to draw $5,000 from the bank for that purpose. He drew the money, put it in an envelope, and the next day the defendant came in and signed the proper withdrawal slip to evidence her withdrawal of the money from the bank. The amount withdrawn lacked $32 of the purchase price, and she drew her check for that amount upon the bank and put it with the $5,000. To corroborate her testimony and that of Mr. Eckhorn as to the withdrawal of the money for the purpose stated, she offered her passbook and a page of the bank's ledger, and called as her witness an officer of the bank, so that it appears from her evidence without dispute, that she delivered to her agent the sum of $5,032 in money. On the 15th of February Mr. Bader brought to the bank the note and mortgage, and delivered the same to Mr Eckhorn, and the defendant testified that her agent delivered the note and mortgage to her, and that she took them to the collection window in the bank and deposited them, taking a receipt therefor, and that she then went from the bank to keep an engagement with Mr. Robert Strong, and did not return to the bank or participate any further in the transaction. She left the bank at 20 minutes past 2 o'clock on that day. After she was gone, Mr. Eckhorn testifies that he asked Mr. Bader whether he wanted the payment in money, draft, or check, and that Mr. Bader said he would take a cashier's check, and at the same time, in response to a question by Mr. Eckhorn, told him to make the check payable to the plaintiff, G. G. Smith. Mr. Eckhorn then went back to a counter and deposited the defendant's money which he had in his possession in the bank, and himself, as vice president of the bank, which office he then held, drew a check for $5,032, made payable to the plaintiff. Mr. Eckhorn then came back and delivered the check to Mr. Bader, who accepted the same.

The delivery of the check was between half past 2 o'cock and 3 o'clock, probably about 15 minutes before 3. The evidence shows that the business hours of the bank were from 10 o'clock in the morning to 3 in the afternoon. Mr. Bader delivered the check to the plaintiff who, the next morning at about the opening hour of the bank, went to the bank and presented the check, but found the bank closed. He presented the check to the receiver and demanded payment, which was refused. He then went with Mr. Bader to the office of Mr. Eckhorn, in the same building, and was told that the bank had closed, and that the check would not be paid. He immediately inquired the address of the defendant from Mr. Eckhorn and went to her and offered the return of the cashier's check, informing her that the bank had closed, and demanded the return of the note and mortgage. He testified that she agreed to accede to that demand, but she denies that she did. In any event, within a day or two she announced her decision that she would not return the note and mortgage, and would not pay anything on account of its purchase, claiming that the cashier's check which the plaintiff had received was payment in full of her debt, and that she was released. The next day the plaintiff brought this suit, and it having been dismissed, he appeals.

The question to be determined in this case is whether or not the acceptance of the cashier's check by the plaintiff's agent was a payment of the defendant's debt, or whether it was accepted on condition that it would be honored by the bank. The determination of this question will determine which of the two innocent parties is to bear the loss occasioned by the failure of the bank.

G. G. Smith, of Portland (L. P. Hewitt, of Portland, on the brief), for appellant.

Sidney J. Graham, of Portland (C. A. Marsch, of Portland, on the brief), for respondent.

PIPES, J. (after stating the facts as above).

The pleadings of the parties are in accord that the transaction was a sale of the note and mortgage by appellant to respondent in consideration of her promise to pay therefor the sum of $5,032.

The complaint alleges:

"That on the 15th day of February, 1922, the plaintiff sold, assigned, and transferred said promissory note by an indorsement thereof to the defendant, and at the same time the plaintiff made an assignment to the defendant of said mortgage for the consideration of $5,032, and which sum the defendant agreed to pay the plaintiff for said sale and transfer."

The respondent's amended answer alleges:

"That on or about the 15th day of February, 1922, the plaintiff agreed to sell to the defendant and the defendant agreed to purchase from the plaintiff said note and mortgage for the agreed sum of $5,032.00."

This contract called for a payment in money. In the absence of any agreement, either expressed or clearly implied, payment means the discharge of a debt or obligation in money, and in such case money is the sole medium of payment. 21 R. C. L. p. 9, § 3; Ibid, p. 37, § 34; Borland v. Nevada Bank, 99 Cal. 89, 33 P. 737, 37 Am. St. Rep. 32; Mansfield v. Dameron, 42 W.Va. 794, 26 S.E. 527, 57 Am. St. Rep. 884, note 100 Am. St. Rep. 393; Marine Bank v. Chandler, 27 Ill. 525, 81 Am. Dec. 249; Graydon v. Patterson, 13 Iowa, 256, 81 Am. Dec. 432, and note; State Bank v. Byrne, 97 Mich. 178, 56 N.W. 355, 21 L. R. A. 753, 37 Am. St. Rep. 332, and note.

But anything of value delivered by the debtor and accepted by the creditor in discharge of the debt will constitute payment. Tennessee Bond Cases, 114 U.S. 663, 5 S.Ct. 974, 1098, 29 L.Ed. 281; Parker v. Carter, 91 Ark. 162, 120 S.W. 836, 134 Am. St. Rep. 60; Ryan v. Dunlap, 17 Ill. 40, 63 Am. Dec. 334. In such case it is the distinct agreement of the creditor to accept the thing in discharge of the debt that gives it the characer of payment. Borland v. Nevada Bank, supra.

The respondent's contention is that she paid her admitted debt by the delivery to appellant of a cashier's check drawn by the State Bank of Portland for $5,032, in appellant's favor, and by his acceptance of the check in discharge of her debt. The burden is on the respondent to prove payment. Willis v. Holmes, 28 Or. 265, 268, 42 P. 989; Peterson v. Thompson, 78 Or. 158, 151 P 721, 152 P. 497. And since the payment relied upon consists of the acceptance by appellant of the cashier's check in satisfaction of her debt, the burden remains with her to prove such acceptance, in that sense, by evidence or presumption. We have been favored with exhaustive briefs by counsel on the question of the presumption arising from the acceptance of the paper obligation of third persons in payment of a debt. The appellant's contention is that the...