State Trust & Savings Bank v. Malitz

Alexander, J. This, action, wasi brought, by H. ;G. Malitz ' against'.:the State!¡Trust Savings Bank-.for ■damages;for.-injuries td.plaintiff’s credit and reputation alleged ,to. have been sustained by ::him::by reason Of the-failure of. the bank to • .pay, e'er tain-.checks'.drawn by, the plaintiffon -¡said:bank...: In .November,/192,9, the plaintiff ¡maintained a checking account with said bank ■add hadron deposit, therein-the sum of $477.17. At that ifime he was indebted to the hank in a -¡sum largely: in. excess of the above amount,' :.whieh"indeb.tedness -was ev-ideneed.by his notes • payable, to the bank.on demand. From Novem- ■ ber !3.th to. the 23d the:plaintiffi.executed and i delivered-to various creditors’cheeks .drawn on said, account ,in-, the aggregate of $256. The bank refused to pay said checks. At that time it was endeavoring to secure an adjustment of its debt, against the plaintiff, and was holding the amount so on deposit for the purpose of applying same as a credit on said notes. Having failed to secure an adjustment of said indebtedness, it thereafter, on November 23d, applied the amount on deposit in said account as a credit on said notes. The jury found, in answer to special issues, that at the time said checks were presented to the bank for payment the plaintiff had on deposit in said account sufficient funds to cover same, and that the plaintiff was damaged in the sum of $1,000 by the refusal of the bank to pay said checks. The court entered judgment accordingly, and ithe defendant appealed. .' It is a well-settled principle of law in this state that a bank has a right to charge off and apply the amount of a depositor’s account to the payment of a note held by It against the depositor, provided the’note is ' due. Schoelkopf v. Phillips, 88 Tex. 31, 29 S. W. 645, 646; Harper v. First State Bank (Tex. Civ. App.) 3 S.W.(2d) 552, par. 3 (writ ref.); Cook & Arrington v. Citizens’ State Bank (Tex. Civ. App.) 282 S. W. 888, par. 3; Guaranty State Bank v. Beard (Tex. Civ. App.) 18 S.W.(2d) 679; Black v. Gray (Tex. Com. App.) 280 S. W. 573; Beatty-Folsom Co. v. Edwards (Tex. Civ. App.) 238 S. W. 340, par. 5; Austin v. Wasaff (Tex. Civ. App.) 284 S. W. 694, par. 1. The appellant assigns as error the refusal of the trial court to give an instructed verdict in its-favor. ; In this case, the notes held by the bank were payable 'on demand and the evidence does not show conclusively that demand for payment was made before payment of the ■checks was-refused by the Bank. However, this does not .appear to be material. Under the rule in force in this state, a demand note is due immediately upon its execution and delivery, and .without the necessity of demand for payment Henry v. Roe, 83 Tex. 446, 18 S. W. 806, 808; State National Bank v. East Coast Oil Co. (Tex. Civ. App.) 208 S. W. 190, par. 1; Waggoner Banking Co. v. Gray County State Bank (Tex. Civ. App.) 165 S. W. 922, par. 1; Koethe v. Huggins (Tex. Civ. App.) 290 S. W. 790, par. 1; Hall v. First Nat’l Bank (Tex. Civ. App.) 252 S. W. 828, par. 17. The above rule was not changed by the Uniform- Negotiable. Instruments Act. Revised Statutes, article 5937, § 70; Shuman v. Citizens’ State Bank, 27 N. D. 599, 147 N. W. 388, L. R. A. 1915A, page 728. Since the appellee was indebted to the bank- ina-sum", larger than the amount o¡n deposit to his credit, and the indebtedness to the .bank was -due,' the- bank had the right to hold the am.ount so -on deposit and to later apply the same to the paymeht of said indebtedness, and the appellee was not entitled [1071] to recover damages for the failure to pay said checks. The court should , have given the instructed verdict as requested. The judgment of the trial court is reversed, and judgment here rendered for the appellant.