United States Fidelity & Guaranty Co. v. Jacobs

• Decision Date: 07 October 1926
• Docket Number: (No. 395.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 287 S.W. 504
• Court: Texas Court of Appeals
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. JACOBS.

Page 504

287 S.W. 504

UNITED STATES FIDELITY & GUARANTY CO. v. JACOBS.

(No. 395.)^*

Court of Civil Appeals of Texas. Waco.

October 7, 1926.

Rehearing Denied November 4, 1926.

Appeal from Navarro County Court; Warren Hicks, Judge.

Action by the United States Fidelity & Guaranty Company against J. Jacobs. From a judgment for defendant, plaintiff appeals. Affirmed.

Davis, Jester & Tarver, of Corsicana, for appellant.

Richard & A. P. Mays, of Corsicana, for appellee.

BARCUS, J.

On August 23, 1923, a man representing himself to be A. D. Thomas, indorsed and presented to appellee, Jacobs, a merchant in Corsicana, a check for $275, drawn on the Exchange National Bank of Shreveport, La., and purporting to be signed by Latex Drilling Company, Inc., by A. C. Benson, president, and payable to A. D. Thomas. At said time Jacobs delivered to the person who indorsed and gave him the check about $25 in merchandise and $100 in cash, and a duebill for the remaining $150, to be paid so soon as returns came in on the check. Jacobs immediately indorsed the check and deposited same to his account in the Central State Bank of Corsicana, and the check was sent in due course through various banks to the Exchange National Bank of Shreveport, where it was received on August 28th and promptly paid by said bank. The Central State Bank of Corsicana was notified that said check had been paid, and it in turn notified Jacobs, who thereupon paid to the party who delivered the check to him the remaining $150. On September 1st, after the check was paid, the Latex Drilling Company had its books balanced and said canceled check was delivered to said company, who pronounced same a forgery, and the check was returned to the Shreveport bank, which reimbursed the Latex Company for said amount. Appellee, Jacobs, was not notified of the alleged forgery for more than 30 days thereafter and the Shreveport bank never returned the check to the bank in Corsicana nor to Jacobs, but reported same to appellant with whom it carried an indemnity insurance contract against forgery. Appellant, in March, 1924, paid to the Shreveport bank the $275 and had the check transferred to it, and then demanded of Jacobs that he pay the check. Jacobs refused payment and this suit was filed against him as indorser on said check. The cause was tried to a jury, and, at the conclusion of the testimony the court instructed the jury to return a verdict for appellee.

The controlling questions in this case are whether, under the Negotiable Instruments Act (Vernon's Ann. Civ. St. 1925, arts. 5932-5948), the Shreveport bank, under the facts, accepted said check either by having paid same or by having retained it for more than 24 hours without returning same to the source from which it came. H. A. Blocker, the only representative of the Shreveport bank who testified, stated that:

"Said check was accepted by the (Shreveport) bank on August 28, 1923, and was charged to the account of said Latex Drilling Company the same day."

Section 126 of the Negotiable Instruments Act (Vernon's Ann. Civ. St. 1925, art. 5940) defines a bill of exchange, and section 185 of said act (Vernon's Ann. Civ. St. 1925, art. 5947) states that a check is a bill of exchange. Section 137 of said act (Vernon's Ann. Civ. St. 1925, art. 5941) provides that where a drawee, to whom a bill of exchange is delivered, refuses within 24 hours after such delivery to return the bill, accepted or nonaccepted, to the holder, he will be deemed to have accepted the same. Section 188 of said act (Vernon's Ann. Civ. St. 1925, art. 5947) provides that where the holder of a check procures it to be accepted or certified, the drawer and all indorsers are discharged from liability. The weight of authority seems to be that where a check is presented to the bank on which it is drawn and the bank receives and pays same, it thereby accepts said check under the term, as used in the Negotiable Instruments Act. Bull v. Novice State Bank (Tex. Civ. App.) ...