Speroff v. First-Central Trust Co.

• Citation: 149 Ohio St. 415,79 N.E.2d 119
• Decision Date: 21 April 1948
• Docket Number: 31189.
• Parties: SPEROFF v. FIRST--CENT. TRUST CO.
• Court: United States State Supreme Court of Ohio

79 N.E.2d 119

149 Ohio St. 415

SPEROFF v. FIRST--CENT. TRUST CO.

No. 31189.

Supreme Court of Ohio

April 21, 1948

Syllabus by the Court

1. The relationship between a bank and a general depositor is that of debtor and creditor.

2. The giving of a check is not an assignment of so much of the creditor's claim but is simply an order which may be countermanded or revoked by the drawer any time before it is actually cashed or accepted.

3. An order to stop payment of a check may by either oral or in writing so long as it conveys to the bank a definite instruction to that effect.

4. Under the reciprocal rights and obligations inherent in the relationship existing between a bank and its depositors, it is the duty of the bank to act in good faith and exercise reasonable care not to pay a check after receiving such an order from the drawer.

5. A purported release from liability for inadvertency or oversight obtained by a bank from a depositor as a condition of such order to stop payment of a check is void for want of consideration and as against public policy and does not relieve a bank of its duty to act in good faith and exercise reasonable care not to pay such check.

Appeal from Court of Appeals, Summit County.

In the Municipal Court of Akron the plaintiff, Vassil Speroff, sued to recover from the defendant, The First-Central Trust Company, the amount of a check which he had drawn on the defendant but which he later notified the defendant not to pay.

In its amended answer the defendant admitted the drawing of the check and the notice not to pay. However as a defense, the defendant pleaded further that the plaintiff signed the following:

'Stop Payment Request to The First-Central Trust Co

'Akron O.

'April 26, 1945

'Please stop payment on:

'Check No. _____ Dated 5-1-45

'Payable to the order of J.C. Hardman

'Endorsed)

'Signed)

By ________

For the Sum of $60

'The undersigned hereby agrees to indemnify The First-Central Trust Company against any loss resulting from nonpayment of said check, and it is expressly understood that you will in no way be held responsible if you should pay this check through inadvertency or oversight.

'Signed--Vassil Speroff'

To the defendant's amended answer the plaintiff filed a demurrer on the ground that 'the matters and things therein contained are insufficient in law to constitute a defense.'

The demurrer was overruled.

The plaintiff then filed a motion for a judgment in his favor on the pleadings.

This motion was overruled.

The trial court then rendered a judgment for the defendant.

On an appeal to the Court of Appeals on questions of law the judgment of the trial court was reversed and a final judgment was rendered for the plaintiff on the grounds that the statement or release signed by the plaintiff is void for want of consideration and also because it is contrary to public policy.

The case is in this court for review by reason of the allowance of the defendant's motion to certify the record.

Fred E. Renkert, of Akron, for appellant.

Bailey & Bailey, of Akron, for appellee.

WEYGANDT Chief Justice.

The single question of law before this court is whether the statement or release signed by the plaintiff constitutes a valid defense to his action.

In his opinion in the case of Cincinnati, H. & D. R. Co. v Metropolitan Nat. Bank, 54 Ohio St. 60, on page 71, 42 N.E. 700, on page 702, 56 Am.St.Rep. 700, 31 L.R.A. 653, Judge Spear summarized the law relating to banks and depositors as follows: 'As applicable to such case we believe that reason, and the great preponderance of authority establish the following conclusions: The relation of bank and general depositor is simply the ordinary one of debtor and creditor, not of agent and principal, or trustee and cestui que trust. The bank agrees with its depositor to receive his deposits, to account with him for the amount, to repay to him on demand, and to honor his checks to the amount of his credit when the checks are presented; and for any breach of that agreement the bank is liable to an action by him. The deposits become the absolute property of the bank, impressed with no trust, and the bank's right to use the money for its own benefit is immediate and continuous, which right constitutes the consideration for the bank's promise to the depositor. The bank's agreement with the depositor involves or implies no agreement with the holder of a check. The giving of a check is not an assignment of so much of the creditor's claim. It passes no title, legal or equitable, to the holder in the moneys previously deposited; nor does it create a lien on the fund, for there is no special fund out of which the check can be paid, nor does it transfer any money to the credit of the holder. It is simply an order which may be countermanded and payment forbidden by the drawer any time before it is actually cashed or accepted. * * *'

And in the third paragraph of the syllabus in the case of Kahn, Jr., v. Waltoin, 46 Ohio St. 195, 20 N.E. 203, 204, this court held: 'A bank check, being an order on the bank by the drawer to pay his money as therein directed, is revocable by him before its presentation for payment, unless the bank on which it is drawn has accepted or certified it, or otherwise become committed to its payment * * *.' 5 Ohio Jurisprudence, 403, Section 102 a; 9 Corpus Juris Secundum, Banks and Banking, § 344, page 692; 5 Ruling Case Law, 526.

Hence, the plaintiff clearly had the right to countermand or revoke the check. According to the facts as alleged in the defendant's amended answer and admitted by the plaintiff's demurrer, the check was issued April 26, 1945, and was countermanded or revoked later the same day. However, nearly a month thereafter on May 22, 1945, the defendant nevertheless paid the check. In its amended answer the defendant alleges that this 'was occasioned solely by inadvertence and/or oversight.'

Under these circumstances is the defendant ant relieved from liability for its failure to comply with its obligation not to pay the check? More specifically, is the defendant excused therefrom solely for the reason that the plaintiff signed a statement or release to the effect that 'you will in no way be held responsible if you should pay this check through inadvertency or oversight'?

The Court of Appeals answered these questions in the negative on the two grounds that the so-called agreement is without consideration and also contrary to public policy.

In 9 Corpus Juris Secundum, Banks and Banking, § 344, page 695, appears the following summary of the law relating to this subject:

'Stipulations releasing the bank from liability for negligent payment after receiving a stop payment notice are held valid by some courts and invalid by others.

'According to some authorities the common-law liability of the bank for paying a check or order in disregard of the drawer's countermand * * * may be limited by contract. Under this view a stipulation releasing the bank from liability for paying as a result of inadvertence or...