State Sav. Ass'n v. Boatmen's Sav. Bank

• Decision Date: 13 December 1881
• Citation: 11 Mo.App. 292
• Parties: STATE SAVINGS ASSOCIATION, Respondent, v. BOATMEN'S SAVINGS BANK, Appellant.
• Court: Missouri Court of Appeals

11 Mo.App. 292

STATE SAVINGS ASSOCIATION, Respondent,

v.BOATMEN'S SAVINGS BANK, Appellant.

St. Louis Court of Appeals, Missouri.

Dec. 13, 1881.

1. The holder of a check may maintain an action against the bank having funds of the drawer and failing to pay upon presentment and demand.

2. A bank has no lien upon, and cannot sequestrate, the deposit of a customer for the purpose of indemnifying the bank against a possible loss upon unmatured commercial paper of the customer discounted by the bank.

3. A bank which, through mistake, pays a check and places it upon the cancelling knife, is not thereby prevented from recovering upon it against the drawer.

4. Where a bank, a drawee, for the purpose of indemnifying itself against possible loss on the drawer's unmatured paper discounted by it, sequestrates the drawer's deposit and refuses to pay his check, that the check-holder does not sue on the check until after the drawee has adjusted its claim, in bankruptcy, against the drawer, does not estop the holder from recovering on the check against the drawee.

APPEAL from the St. Louis Circuit Court, THAYER, J.

Affirmed.

NOBLE & ORRICK and A. M. GARDNER, for the appellant: A payee or indorser cannot maintain an action on an unaccepted check against drawee refusing payment. “A check is a bill of exchange.”-- Ivory v. Bank of Missouri, 43 Mo. 475. “A check is under the same rules as a draft.”-- Moody v. Mack, 43 Mo. 212; Murray v. Judah, 6 Cow. 484; Hakres v. Anderson, 21 Wend. 372; Barnett v. Smith, 10 Frost (N. H.), 256. The drawer of a check only is liable.-- Morrison v. McCartney, 30 Mo. 188. The drawer is liable to the drawee for the act of not accepting.-- Adams v. Darby & Barksdale, 28 Mo. 162. The payee cannot sue on an unaccepted draft.-- Clements v. Yeates, 69 Mo. 623; Kimball v. Donald, 20 Mo. 577; Ford v. Angelrodt, 37 Mo. 57; Bank of Commerce v. Bogy, 44 Mo. 17; Kneck's Administrator v. Savings Instn., 2 Mo. App. 563 (approved in Union Bank of Quincy v. Tutt, 5 Mo. 346). A check is not an assignment of the money deposited, or of the right to it.-- Dyken v. Leather Manufacturers' Bank, 11 Paige, 616; Dana v. Bank, 13 Allen, 445; Hancock v. Colyer, 98 Mass. 247; Chapman v. White, 6 N. Y. 412; Wharton v. Welker, 4 Barn. & Cress. 163. The drawer of a check may at any time before payment countermand it, and there was such countermand in this case.-- McGrade v. Bank, 4 Mo. App. 339. The defendant knew the insolvency of the debtor before presentation, and was bound to refuse to pay the check, under the bankrupt law.-- Fox v. Gardner, 21 Wall. 475; Bank of Commerce v. Russell, 2 Dill. 217. The plaintiff acquiesced in the application by defendants of the deposits to the draft when it matured, and this application resulted now in pecuniary loss to defendant, if plaintiff is allowed to recover. Such acquiescence amounts to an estoppel herein. Defendant's instructions on this point should have been given.--Big. on Estop. 477, 525; Herm. on Estop., sects. 320, 321, 323 et seq.; Welland v. Hathaway, 8 Wend. 480; Lindell v. McLaughlin, 30 Mo. 33; Costello v. Meade, 55 How. Pr. 356.

GLOVER & SHEPLEY, for the respondent: A cancellation of a check by mistake has no effect upon the right of recovery thereon.-- Rees v. Overbaugh, 6 Cow. 748; United States v. Spalding, 2 Mason, 482; Nevins v. DeGrand, 15 Mass. 436; Add. on Con., sect. 391.

BAKEWELL, J., delivered the opinion of the court.

Plaintiff and defendant are banking corporations doing business in St. Louis. The action is upon two checks drawn upon defendant and held by plaintiff. The cause was tried by the court, a jury being waived. The finding and judgment were for plaintiff.

The following facts appear from the pleadings, evidence, and admissions on the trial. Cobb, Delhonde & Co. were depositors in the bank of plaintiff, and also in the bank of defendant. They drew the checks in suit, one for $623.42 to the order of Henry Ames & Co., and the second to bearer. These checks were drawn upon defendant. The persons to whom these checks were delivered by the maker, indorsed them, and presented them, about October 23, 1874, at the counter of plaintiff. The blank printed checks of Cobb, Delhonde & Co., upon the two banks, had a general similarity of appearance. The cashier of plaintiff carelessly supposed the checks were upon plaintiff's bank, and stuck them upon the cancelling knife, and they were by plaintiff's book-keeper charged to Cobb, Delhonde & Co., and credited to the parties by whom they were respectively presented. About October 31, 1874, the president of plaintiff heard that Cobb, Delhonde & Co. were embarrassed, and directed an examination of their account. It appeared to be overdrawn, but examination showed that it was not overdrawn, but that the apparent overdraft was caused by the mistake as to these two checks, really drawn, not upon plaintiff, but upon defendant. On October 31, 1874, Cobb, Delhonde & Co. had at defendant's bank to their credit a sum more than sufficient to pay these checks; and defendant, at that date, held a draft made by one Bartley, and accepted by Cobb, Delhonde & Co., dated October 3, 1874, payable forty days after date, for $3,172. Defendants, on the same October 31st, received written notice from Cobb, Delhonde & Co. that they had suspended. On the same day, and after this notice, plaintiff's clerk presented the two checks in question to the president of defendant, explained how they came to be torn by the cancelling knife, and asked defendant to pay them. The president replied that he did not think they had the money. To this the clerk answered that he had just been informed by Delhonde's son, at the office, that the Boatmen's Savings Bank had more than enough to pay these checks. The president of defendant then said that they held paper of Cobb, Delhonde & Co., to mature; and on the part of defendant, he declined to pay the checks. However, as it was possible that Bartley might pay the draft which Cobb, Delhonde & Co. had accepted, and on which the defendant had advanced money, on November 5, 1874, defendant delivered to a third person, Mr. John R. Shepley, of counsel for plaintiff in this action, its cashier's check for the amount of these drafts, and received the checks in controversy; but all hope of payment of this draft being subsequently given up, the cashier's check was returned to defendant, and the checks in controversy were given back to plaintiff, about May 5, 1875, leaving the parties just as they were. Had the Cobb, Delhonde & Co. acceptance been paid, the check delivered to the third person was, by agreement, to have been delivered to plaintiff.

Cobb, Delhonde & Co. were adjudicated bankrupts in the United States District Court at New Orleans, on March 23, 1875, on their petition filed January 8, 1875. The draft of Bartley was credited by defendant with the amount of the balance on open account in their favor, and defendant proved up in bankruptcy the difference only. The credit thus given was $688, being the entire balance of Cobb, Delhonde & Co. with defendant on the opening of its bank on October 31, 1874, the day the checks were presented. Defendant received a dividend on the balance only. Cobb, Delhonde & Co. were afterwards discharged in bankruptcy.

There was some attempt to show that the question of the liability of the defendant was, by agreement, left to John R. Shepley to determine. The trial court found that no such agreement was made, and no more need be said as to that.

The books of defendant show, and it is not disputed, that defendant, from the date of these checks until after their presentation, was in funds to pay them.

1. The accidental defacement of the checks by the holder, does not at all impair its right to recover. It would appear, therefore, that according to the doctrine announced by this court in McGrade v. German Savings Institution (4 Mo. App. 330), and in Senter v. Bank (7 Mo. App. 532), the judgment in this case ought not to be disturbed. Accordingly, we are asked to review the doctrine of those cases, and mainly, as we understand appellant's counsel, on the ground that we ought to follow the ruling of the supreme court of the United States on commercial questions, where the question is a vexed one and has not been passed upon by the supreme court of the state.

The decisions of respectable courts may be adduced for and against the proposition that the holder of a banker's check may maintain an action at law against the bank having funds of the drawer where presentation has been duly made and payment demanded. After careful consideration we have held that the action is maintainable. To say that our conclusion is one against which strong reasons may not be urged, would be to say that the question is not a vexata quæstio. But it is a vexata quæstio. We shall neither examine it, nor discuss it, again. I do not believe that the learned, able, and diligent counsel for appellant in the present case have suggested anything against the rule laid down by us in the cases just referred to, that was not urged before us, or that did not occur to the members then constituting this court, when those cases were...