Simmons &c. Co. v. Bank of Greenwood

The opinion of the court was delivered by Mr. Chibe Justice MoIveb. The object of this action was to recover the amount of money mentioned in a check drawn by Jervey & Co. on the 2d of January, 1892, on the defendant bank, payable to the order of the plaintiff. Inasmuch as the plaintiff resided, and did business, in a distant State, the check was not presented for payment until the 8th of January, 1892, when payment was refused (“no funds”), and on the next day it was formally protested for non-payment. Without undertaking to set out the evidence adduced at the trial, which appears in the “Case,” it is sufficient to state here that there was testimony tending to show that Jervey & Co. were merchants in the town of Greenwood, also engaged in the business of buying and selling cotton; that they had been doing business with the defendant bank for several years, the bank advancing the money to buy the cotton, and taking from Jervey & Co. drafts drawn by them against the cotton so bought; that Jervey & Co. kept two deposit accounts with the bank, one of which is designated as the merchandise account, upon which was credited money.arising from the sales of merchandise, and upon which checks were drawn to pay for the merchandise bought, and the other designated as the cotton — 185 — account, upon which the money advanced to buy cotton was charged, and the drafts drawn against the cotton were credited; that the merchandise deposit account was headed “Jervey & Co.,” while the cotton deposit account was headed “Jervey & Co., C. A.;” chat the checks drawn on these two deposit accounts were of a different style, and were signed differently, one being “Jervey & Co.” and the other “Jervey & Co., O. A.,” so as to indicate to which of the two accounts they were to be charged; that the merchandise account ran regularly on from year to year, while the cotton account began and closed with the cotton season, and at the close of the season, the balance on the cotton account, which was usually, if not always, against Jervey & Co., was closed by note; that the bank had always previously been in the habit of paying the checks of Jervey & Co. on the merchandise deposit, whenever there was money sufficient to the credit of Jervey & Co., without regard to the fact that the balance was against them on the cotton deposit account, or that the bank held their past due notes given to close the previous cotton season’s account; that when the check here in question was presented for payment there appeared on the books of the bank a balance on the merchandise account in favor of Jervey & Co. more than sufficient to pay said check, and that the only reason given for refusing payment thereof, was that Jervey & Co. then owed the bank a large balance on the cotton account, besides notes past due to a large amount; that subsequently it was discovered that, owing to an error in the books of the bank, the balance in favor of Jervey & Co. on the merchandise account was, in fact, not sufficient to meet the check, but this discovery was not made until after the check had been protested, and after the commencement of this action. It seems that at the commencement of the trial a motion was made bo dismiss the complaint upon the ground that the facts stated therein were not sufficient to constitute a cause of action, inasmuch as there was no allegation that the check had been accepted by the bank; but this motion was refused, and the trial proceeded. At the close of the testimony on the part of the plaintiff a motion for a non-suit was made upon two — 186 — grounds: 1st. “Because there was no evidence that there was money enough on deposit in said bank to the credit of Jervey & Co. to pay the check sued on at the time the same was presented.” 2d. “Because there was no evidence that the check sued on had been accepted by the defendant bank, or certified by it as good.” At the close of the testimony and the argument of counsel the case went to the jury under the charge of his honor, Judge Izlar, and the verdict was in favor of the plaintiffs for the whole amount of the check with interest, and the defendant appeals upon twenty-seven grounds from the judgment entered upon the verdict. We shall not undertake to state or consider these numerous grounds in detail, but will confine ourselves to such questions as these grounds properly present: 1st. Whether there was error in refusing the motion to dismiss the complaint upon the ground above stated. 2d. Whether there was error in refusing the motion for a non-suit. 3d. Whether there was error in any of the rulings as to the competency of the testimony offered. 4th. Whether the action could be maintained without allegation and proof that the bank had accepted the check. 5th. Whether the bank had the right to set up as a .defence to the action the balance due to it by Jervey & Co. on the cotton account or on the past due notes. 6th. Whether there was error in misstating the testimony to the jury. 7th. Whether there was error in the instructions to the jury as to the right of plaintiffs to recover a part only of the amount mentioned in the check. 8th. Whether there was error in the instructions given to the jury as to the doctrine of estoppel. 1 As to the first ground upon which the motion for a non-suit was based, it is sufficient for us to say that we think there was some testimony tending to show that Jervey & Co. had sufficient funds to their credit on the merchandise deposit account to meet the check at the time it was presented, and, therefore, the non-suit was properly refused. As to the second ground of the motion for a non-suit, that, as well as the question whether the Circuit Judge erred in refusing to dismiss the complaint because it did not state facts sufficient to consti — 187 — tute a cause of action, will be considered when we reach the fourth question above stated. 2 The third general question above stated involves several rulings as to the competency of certain testimony. The first of these rulings, assailed in defendant’s second exception, is to that allowing the witness Sparkman, who was the managing partner of the firm of Jervey & Co., to testify as to the amount of money that firm had to their credit in the bank when the check was drawn, the point of the objection seeming to be that the bank or pass book was the best evidence. The “Case” does not show that the objection was based upon that ground, nor does it show that the pass book was called for, and if it had been, probably it would have been produced. Indeed, the “Case” does not show that any ruling was made. It simply shows that when Sparkman was asked the question, that an objection was interposed, but upon what ground does not appear. But as witness went on to say that he knew “of his own knowledge” the amount to the credit of the firm, we do not think there was any ground for the objection; for it seems from the case of Meade v. Carolina National Bank, 26 S. C., 608, reported more fully in 1 S. E. Rep., 410, the pass book is not always the most reliable evidence. 3 The next ruling as to the competency of the testimony assailed by defendant’s third exception is to allowing the same witness to testify as to the contents of a letter; but the “Case” shows that the objection to such testimony was sustained. 4 The next ruling assailed by defendant’s fourth exception is in sustaining plaintiffs’ objection to Sparkman’s testimony as to why the two deposit accounts were kept separate. The objection was properly sustained, because it was a mere matter of opinion and not the statement of a fact. For the same reason the objection to the statement of Greene, the cashier of the bank, assailed in defendant’s sixth exception, was properly sustained. The next ruling assailed in defendant’s seventh exception was not objectionable, as it was a simple statement of a fact explanatory of why, in some instances, checks were drawn by Jervey Sí Co. on the cotton account to — 188 — be deposited to the credit of the merchandise account, for the purpose of replacing money taken out of the store, instead of drawn from the bank, to pay for cotton purchased. 5 The remaining objection to the rulings, as to testimony taken by defendant’s eighth exception, is in allowing Mr. McGowan to state that he, as their attorney, had communicated to the plaintiffs the fact that he had learned from the cashier of the bank that Jervey & Co. had money in bank sufficient to meet the check before the action was commenced. Although the objection to this testimony was sustained when first offered, yet it was allowed to come out on the cross-examination without objection, and, therefore, it does not seem to us that the eighth exception can be sustained. Moreover, we do not think the testimony was incompetent, and if there was any error, it was in sustaining the objection in the first instance. 6 We come next to the fourth question stated above, which involves the most material and important inquiry in the case. It is not to be denied that upon this question — whether the holder of a check on a bank can maintain an action for the amount specified therein against the bank before it is accepted or certified as good by the bank, provided the drawer of the check has funds deposited in the bank to an amount sufficient to meet it when presented for paymént— there is very considerable conflict of authority. The cases on the one side and the other of this question may be found collated in Morse on Banks, sections 493-4, where the author expresses a very decided opinion in favor of the affirmative of the question. We need not, however, go into any discussion of these conflicting cases, for we have a decision in this State, in the case of Fogarties & Stillman v. State Bank, 12 Rich., 518, which, in our judgment, is absolutely conclusive of the question, and we are bound by the authority of that case. In that case it was distinctly held that an action could be maintained by the holder of a check under the circumstances mentioned. The opinion was delivered by that able jurist, Johnstone, J., and we think his conclusion is fully vindicated by his reasoning and the authorities which he cites. It would be idle for us to attempt to add anything to what is there so well said, — 189 — and we follow that decision, not only because it is authoritative, but also because it is fully supported by reason. That case shows, just what the Circuit Judge held in this case, that the true theory is that, when a bank receives the money of a depositor and places the amount to the credit of such depositor on his deposit account, the implied contract on the part of the bank is, that it will pay all checks drawn by the depositor, in such amounts and to such persons as may be mentioned in such cheeks, as long as there remains to the credit of the depositor on such account an amount sufficient to pay such checks. That case also shows that it is an entire mistake to say, as has been said in some of the cases, that there is no privity between the bank and the holder of the check, for, as we have seen, the contract of the bank is to pay any person who may present the check of the depositor, it matters not who he may be. In this respect it is analogous to the case of an ordinary promissory note, payable to a named payee, or order, what particular person may, by the order of the payee, become entitled to receive the money mentioned in the note may not be known to either maker or payee at the time the original promise was made, but no one ever supposed that there was any want of privity, by reason of that fact, between the maker of the note and the person to whom it was endorsed. So here the promise of the bank is to pay to whoever may be named in the check, and, therefore, upon the breach of such promise the person named has a right of action for such breach. But, as we have said, in view of the masterly discussion of this question by Johnstone, J., in the case above cited, we need not pursue the subject further. 7 It seems to us that the conflict of authority upon this point arises, partly at least, from confounding a check with an ordinary bill of exchange. While it is true that there is a resemblance between these two classes of instruments, there are also radical differences, one of which is that the former need not be accepted, while the latter must be, in order to fix liability on the drawee. As to the difference between these two classes of instruments, see Story on Promis — 190 — sory Hotes, section 489; Bull v. Bank of Kasson, 123 U. S., at page 109. 8 The fifth question involves the inquiry whether the bank had a right to set up the past due notes of Jervey & Co. and the balance against them on the cotton account. If, as we have seen, the bank received the deposits on the merchandise account under an implied promise to pay the checks of Jervey & Co. on that account as they were presented, then there was an application of that fund to that purpose, and the bank could not afterwards apply the same to any other purpose; certainly not without the consent of, or previous notice to, Jervey & Co. There being testimony to show that it was the long continued habit of the bank to pay such checks notwithstanding the constant balances against Jervey & Go. on the cotton account, as well as the outstanding past due notes, it seems to us that the bank could not depart from such long continued usage and custom, without some notice to Jervey & Co. 9 As to the sixth question, which arises out of the 9th excepception, in which the Circuit Judge is charged with misstating the testimony to the jury. In the first place, such an exception raises no question of law which can be considered, the remedy being by a motion for a new trial in the Circuit Court, or by calling the attention of the judge to the misstatement at the time it is made. State v. Jones, 21 S. C., 596, which has been followed in numerous cases. In the second place, there was no real mistake in the statement of the testimony, for we do not find any testimony teuding to show that any checks were drawn on the cotton account “to pay amounts owing on the merchandise account.” On the contrary, the testimony was that checks were sometimes drawn on the cotton account to replace money taken out of the store to buy cotton with. 10 The seventh question is whether there was error in the instructions to the jury as to the right of the plaintiffs to recover apart of the amount of the check. Inasmuch as the verdiet of the jury was for the whole amouut of the check, with interest, this question loses all practical importance, and need not, therefore, be considered. — 191 — 11 The eighth question raises the inquiry as to the instructions given to the jury in regard to the doctrine of estoppel. It seems to us that a bare reading of the charge (which should be incorporated in the report of the ease) is quite sufficient to show that there was no error here. Whether the evidence was sufficient to sustain the estoppel, was a question for the jury, and not for us, as there certainly was some evidence upon the subject. 12 Iu some of the exceptions, it seems to be intimated that the judge erred in charging on the facts; but after a careful examination of the charge, we areuuable to discover a single instance in which the judge even intimated any opinion as to any one of the disputed questions of fact. 13 The fifteenth exception, as to the agency of the cashier Greene, cannot be sustained. Surely the cashier is the agent of the bank, and the continuing agent, and the testimony as to his admissions that there was a sufficient balance in favor of Jervey & Co. on the merchandise account to pay the cheek at the time it was presented, was unquestionably binding on the bank. The judgment of this court is, that the judgment of the Circuit Court be affirmed.