Virtue v. Danbury State Bank

• Decision Date: 14 February 1928
• Docket Number: 38623
• Parties: JOHN R. VIRTUE, Appellee, v. DANBURY STATE BANK, Appellant
• Court: Iowa Supreme Court

218 N.W. 58

205 Iowa 392

JOHN R. VIRTUE, Appellee, v. DANBURY STATE BANK, Appellant

No. 38623

Supreme Court of Iowa, Des Moines

February 14, 1928

Appeal from Woodbury District Court.--C. C. HAMILTON, Judge.

Plaintiff deposited with defendant bank a check drawn by another on the Danbury Trust & Savings Bank. Defendant presented the check at the drawee bank through the clearing. On the clearing there was a balance in favor of the defendant for an amount much larger than the amount of the check. For this balance the defendant received the draft of the Danbury Trust & Savings Bank on its correspondent bank. The Danbury Trust & Savings Bank did not open its doors after the date of presentment of the check, in consequence of which the draft was not paid. Defendant charged back to plaintiff's account an amount which it claimed was the proportionate amount of the draft received on account of the check. This action was thereupon brought, to recover the amount so charged back. Judgment for plaintiff. Defendant appeals.

Affirmed.

Henderson Fribourg, Hatfield & Fribourg, for appellant.

Prichard & Prichard, for appellee.

MORLING J. STEVENS, C. J., and DE GRAFF, ALBERT, and WAGNER, JJ concur.

OPINION

MORLING, J.

The defense is grounded principally on a rule of defendant bank adopted and prominently posted in its lobby about one month before it received the check in controversy. The rule, so far as material, is:

"In receiving checks, drafts or other items for collection or for credit, this bank acts only as its customer's agent. All items are received at owner's risk, and, if credited, shall be credited conditionally, subject to payment, and may be charged back at any time until the proofs thereof, in money, have been actually received by this bank. * * * This bank may accept for the account of its depositors or customers, in payment of any item, the check or draft of the bank on or by which the items are drawn * * * If any draft or check accepted as in this paragraph provided is dishonored, the dishonored paper will be turned over to the owner, if it is obtainable, in lieu of the original item. * * *"

The plaintiff's testimony, undisputed, is that he is not a stockholder of defendant, and did not see and knew nothing about the rule until after the commencement of this action. Defendant cites a number of cases holding, in substance, that the depositor is bound by the rules and regulations of the bank contained in the pass book received by him. Such cases are not in point. There is no claim here that the rule relied on by defendant was contained in any pass book or document which came into the possession or to the knowledge (unless by the posting) of the plaintiff. Plaintiff was a stranger to defendant's rules and regulations, and in the absence of an express agreement thereto, would not be bound thereby, unless they came to his knowledge under such circumstances that his assent to them might be implied. Dempster Mfg. Co. v. Downs, 126 Iowa 80, 101 N.W. 735; Wells v. Black, 117 Cal. 157 (48 P. 1090); 1 Thompson on Corporations (2d Ed.), Section 1056; 3 Cook on Corporations (6th Ed.), Section 725. Defendant seems to contend, also, that it had the right to charge back the check without regard to its rule, although it says in argument:

"The entire position assumed by appellant, and its claim herein, is that the appellee, being a depositor of the bank, was bound by the rule * * *"

It is to be observed that the check was not only not charged back, but was not redelivered to plaintiff; and, as will presently appear, the defendant had disabled itself from returning it.

In the absence of special authority, the defendant could not receive in payment of the check the drawee's draft. Andrew v Farmers State Bank, 203 Iowa 1014, 212 N.W. 124; Leach v. Battle Creek Sav. Bank, 202 Iowa 875, 211 N.W. 527; 7 Corpus Juris 614. Whether the...