McCord v. California National Bank

Temple, C. — This is an appeal from the judgment, and from an order refusing a new trial. The action is by a bank depositor; - and the question is, whether the bank rightfully paid a certain check for one thousand dollars. The case was tried without a jury. At the trial there was a material and substantial conflict between the testimony of the bank teller and the testimony of the plaintiff, who was corroborated by another witness. The findings support the testimony of the teller, whose statement, therefore, we are forced to adopt. On the 4th of November, 1890, the plaintiff made a bet upon the result of an election. What the election was does not appear, but it seems to be conceded that the wager was forbidden by our codes. The wager was at night, and a check for one thousand dollars upon defendant was drawn in favor of J. A. McRae, — the other party to the wager, — and placed in the hands of one Hickman, as stake-holder. The next morning, one Frederick, who was authorized by plaintiff to notify the bank not to pay the check, met the paying-teller in the street, and told him about the bet and the drawing of the check, and advised him not to pay the check, saying that he had no interest in the [200] matter except as the friend of McCord, and would not like to see the boy lose his money. The teller testified that “ he did not at any time demand that I should not pay the check, and conveyed the impression to me that he was acting on his own responsibility.” That same day Hickman presented the check for payment, but the teller refused to pay it. Later in the day Hickman and McRae called together for the same purpose, but payment was again refused. The refusal was because of what Frederick had said, and to give plaintiff a chance to stop the payment. On the morning of the 6th, Hickman again presented the check and asked that it be certified. Hot having heard from plaintiff, and thinking he had declined to páy as long as he would be justified in doing, the teller consented. Of course the bank then became the principal debtor, and the check was then virtually paid. The teller at the time drew a memorandum check against plaintiff’s account, as his custom was in such cases. On the 12th the check was paid, and the amount carried to the account of Hickman, and on the same day, after such payment, plaintiff .drew his check for the amount and presented it in person. Payment was refused on the ground that plaintiff had no balance to his credit at the bank. If the facts had been found according to the contention of plaintiff, and as testified to by his witnesses, he would have had a good case. That theory was, that he had countermanded the payment of the check. But as the court found for the defendant on that issue, the question is simply whether the fact that the defendant knew that the money was intended to be used for an illegal purpose will enable the plaintiff to recover. A case can be imagined in which to pay a check might be to aid and abet a crime, but even then it is difficult to see how a guilty principal can sue the depositary for obeying his orders. But independently of that consideration, it would not do to permit a banker to decline payment on the ground [201] that bad use is to be made of the money. His undertaking is to honor his customer’s orders so long as he has sufficient funds in his hands; subject to certain limitations for the protection of the banker against spurious orders, the funds are intended and understood to be as much under the control of the depositor as though they were in his own safe. Morse on Banks and Banking, section 311, lays down the law upon this subject as follows: “ The banker cannot excuse his disobedience of his customer’s orders, in the due course of business, by setting up that he knew or had reason to believe that the customer’s orders were given in promotion of an unlawful purpose.” The banker in paying a check is not, as appellant seems to contend, in the position of one who purchases negotiable paper. He is a custodian of funds, and payment of a check of his customer is payment to his customer, who is in no position to complain. And besides, public policy would not permit a banker to shirk his duty under such defenses. So obvious is this, that the books contain no cases .where «the question is raised, except where the deposit is of trust funds or by an agent. Under these views, it is obvious that the alleged errors of law were not errors, or were harmless. I advise that the judgment and order be affirmed. Belcher, 0., and Haynes, 0., concurred. For the reasons given in the foregoing opinion, the judgment and order appealed from are affirmed. Harrison, J., Paterson, J., Garotjtte, J.