Commercial National Bank v. First National Bank of Gastonia

Clark, J.: The holder of a check cannot maintain an action against the bank' upon which the check is drawn until after the acceptance of the check by the bank. Bank v. Mallard, 10 Wallace, 153; Hawes v. Blackwell, 107 N. C., 196; Marriner v. Lurnber Co., 113 N. C., 52. *787 This is the uniform line of decisions in the Federal courts aud our own, and it is sustained by the overwhelming weight of authority in other courts, though there are a few decisions in other states to the contrary. The bank is the agent of the drawer; till acceptance of the check, it has assumed no liability to the payee; its liability, if any, is to the drawer whose checks it has agreed to pay if it has the drawer’s funds in hand, and for breach of that contract it is liable to the drawer, not to the payee — “ To its own master it must stand or fall.” A check is simply an order given by the principal upon his agent, and it is always open to the principal to countermand an order to> its agent before it is executed, and there are occasions when it is important, to prevent imposition, that the drawer should have power to stop the payment of his check, without casting any liability upon the drawee. If the principal, the drawer, die before a check is presented, it becomes invalid, which could not be the case if the mere drawing the check created any liability in the drawee. But the more important point, since it is now presented to us for the first time, is the validity of the stipulation stamped on the face of the check: “ This check will positively not be paid to the Gastonia Banking Company or its agents.” It appears that the check has never been presented to the drawee, the defendant bank, except by an agent of the Gastonia Banking Company. Consequently, if this restriction is valid, the holder cannot maintain this action against the drawer till the check has been presented to the drawee by some other agency and payment refused. In England the system of “crossed checks” has long been recognized as valid. 2 Daniel Neg. Inst., Section 1585, a ; Smith v. Bank, 10 L. R., (O. B.,) 295, which was affirmed on appeal, and is reported 1 L. R., 2 B. Div., 31. By that system there is stamped across the face of *788 the check the name of a certain banker through whom it must be presented for payment, and if presented by any one else it will not be honored. This does not destroy its negotiability in any wise. The present case does not go that far, but merely stipulates that the check will not be honored if presented through one agency named. This cannot be deemed an unreasonable restriction of trade. Nor is it a boycott. There is no evidence of a conspiracy to injure the agency named, but it is agreed as a fact that it was an effort on the part of the drawer firm to prevent its transactions and the nature and extent of its business becoming known to a rival house by its checks passing through that channel. Resides, if it were a boycott, the parties to it are the drawer and the payee who accepted the check with that restriction stamped on it. And if it was an illegal transaction, the check itself, and not merely the stipulation which is part of it, would be void. Kx mala causa non oritur actio. The restriction is a part of the check, (Tiedman Com. Paper, Sections 41 and 42; Benedict v. Cowen, 49 N. Y., 396,) and if it is invalid the court could not separate the good from the bad, (Saratoga v. King, 44 N. Y., 87,) but it'would all be bad and the holder could not recover. In analogy, a conveyance of property, real or personal, with a condition not to alien to a certain person or class of persons, or for a certain time, is valid. Cowell v. Springs, 100 U. S., 57; Gray v. Blanchard, 8 Pick., 288; Sheppard’s Touch Stone, 129, 131 ; Coke on Littleton, 223. In Smith v. Lawrence, 2 N. C., 200, this Court held that a note could be limited so as to be* payable to the payee only. Rut it is not necessary to consider here the principle maintained in that case, that the drawee can by stipulation therein make the check not assignable, for this is not attempted here, but there is simply a stipula *789 tion that it shall not be paid if presented through the agency named. Wilcoxon v. Logan, 91 N. C., 449, holds merely that where a note is made payable to A. B., without the addition of the words “ or order,” or “ bearer,” the holder thereof can maintain an action thereon, being the party in interest. There can be no question raised as to the validity of an express'stipulation that the note could not be assigned at all, or would not be honored if presented by a particular party, as in this case, nor by any party except one named, as in the case of the English u cross checks.” These questions could not arise, for there was in that case no stipulation to either effect. On the facts agreed, judgment should have been entered for the defendants. Reversed.