Wingfield v. Security National Bank

W'H’ITIN'G, J. Appeal from an order sustaining a demurrer to a complaint. The following is a statement of the facts admitted by the demurrer. Bank A, holding two checks against Bank B (one a cashier’s check executed by bank B), sends them to Bank C for collection and credit. In the town where bank B was located, there was no other bank, but there was an office of an express company, which company was engaged in the business of collecting and transmitting money. Instead of sending the checks to the express company for purpose of collection, bank C sent them direct to bank B, which bank remitted its draft on bank D' in payment of such checks. This draft'was dishonored. If bank C had sent the checks to the express company, the same could and would have been presented for payment on November ioth. Up to November 13th bank B paid all checks and demands drawn and mad'e upon it, and it would have paid these checks in cash if they had been presented1 and payment in money demanded on or before November 131th. Bank B was insolvent on November ioth, at the time said checks could, in regular course of business, have been presented by the express company, and it has ’•emained insolvent and unable to pay its obligations- in full. On November 13th it passed into the charge of the public ex [493] aminer. Bank A passed into the charge of the public examiner prior to the bringing .of this action. Appellant claims that bank C is liable for the amount of said checks, owing to its negligence in sending said checks to- the payor bank and accepting from it a draft instead of sending the checks to the express company and thus procuring cash. Respondent claims: First, that it was not negligent in sending the checks direct to payor bank; second, that, inasmuch as the payoi bank was in fact insolvent when such checks would have been presented if presented by the express company, the payor could not rightfully have paid such checks in full, and therefore appellant has suffered lm damage. [1] That it was negligence for bank C, under the admitted facts, to send the checks to the payor bank is clearly the law. 3 R. C. L. 627; Michie, Banks and Banking, 1045; Winchester Milling Co. v. Bank of Winchester, 120 Tenn. 225, 111 S. W. 248; 18 L. R. A. (N. S.) 441, and note; Givan v. Bank of Alexandria (Tenn.) 52 S. W. 923, 47 L. R. A. 270; Pinkney v. Kanawha Valley Bank, 68 W Va. 234, 69 S. E. 1012, 32 L. R. A. (N. S.) 987, Ann. Cas. 1912B, 115, and note; First Nat. Bank v. Bank of Whittier 221 Ill. 319, 77 N. E. 563, 5 Ann. Cas. 653, and note; Farley Nat. Bank v. Pollock, 145 Ala. 321, 39 South. 612, 2 L. R. A. (N. S.) 194, 117 Am. St. Rep. 44, 8 Ann. Cas. 370, and note; Carson, Pirie, Scott & Co. v. Fincher, 129 Mich. 687, 89 N. W. 570, 95 Am. St. Rep. 449. This rule applies with additional force in the case of the cashier’s check. First Nat. Bank v. Bank of Whittier supra, and notes 5 Ann. Cas. 658; Anderson v. Rogers, 53 Kan. 542, 36 Pac. 1067, 27 L. R. A. 248. [2] It appears that the decision of the trial court sustaining the demurrer to the complaint was based upon the holding of this court in Lamro Bank v. Bank of Winner, 34 S. D. 417, 148 N. W. 851. In that casé this court held that, when a check upon an insolvent bank is 'presented for payment, the holder of such check is “entitled to only its pro rata share with the other creditors in the assets of the * * * bank.” We also held that it would be presumed that an insolvent bank would refuse payment if a check was presented. A legal presumption has no standing as against an admitted fact. Here it is admitted that the payor bank, though [494] insolvent, would have paid the checks in cash if such checks had been presented and cash demanded. There is nothing to show that either bank A or C knew of the insolvency of hank B prior to November 13th. If neither of the other banks knew of such insolvency on November roth and hank B had paid the checks, other creditors of bank B could not have held bank A liable to restore the -proceeds of same to' the insolvent 'bank. Michie, Banks and Banking, 507; 3 R. C. L. 646; Livingstain v. Columbian Bkg. & T. Co., 81 S. C. 244, 62 S. E. 249, 22 L. R. A. (N. S.) 445; Stone v. Jenison, 111 Mich. 592, 70 N. W. 149, 36 L. R. A. 675; McGregor v. Battle, 128 Ga. 577, 58 S. E. 28, 13 L. R. A. (N. S.) 185. [3] It follows that bank C is liable under the facts conceded. It is incumbent on it to prove facts establishing due diligence on its part or else to establish that the loss would have been the same if it had used due diligence. 3 R. C. L. 628; Michie, Banks and Banking, 1407; cases cited in note 8 Ann. Cas. 373; cases cited in note Ann. Cas. 1912B; 123. The order appealed from is reversed.