Russell Grader Manufacturing Co. v. Farmers' Exchange State Bank

BeoksoN, Ch. J. One Dunahey gave to plaintiff an order for a road grader. Plaintiff refused to accept the order or ship the grader unless payment therefor or the assurance of payment was made. Then, through a telephonic conversation, defendant bank advised plaintiff that they would take Dunaliey’s check for the first payment of $500 and pay plaintiff the money on September 1st, 1918. Dunahey executed a check dated May 28th, 1918, not cashable until September 1st, 1918, drawn on defendant bank, and payable to the order of plaintiff for $500. On May 28th, 1918, defendant bank wrote to plaintiff: “Mr. Ohas. I. Dunahey, of this town, has given us a check for $500, payable to your order and drawn on this bank. The check is payable September 1st, 1918, and is to apply then as a first payment on a grader which Mr. Dunahey is buying from your firm. The check will be paid on that date.” On May 31st, 1918, defendant bank again wrote to plaintiff: “Answering your letter of May 28th in regard to order of Mr. Ohas. Dunahey, will say that a letter was written to your Fargo office some time ago regarding this matter, which we think will be satisfactory.” Accordingly, plaintiff shipped the grader on June 6th, 1918. This check first came into the hands of plaintiff between November 5th and November 18th, 1918. Then it was sent through plaintiff’s bank with a draft for collection. It was returned unpaid and marked “not sufficient funds.” No testimony was given by defendant’s officers concerning the method by which the bank handled this deal with Dunahey or [1002] under wbat circumstances it issued tbe letter or bad tbe telephonic conversation with plaintiff. This suit was instituted to recover $500 upon tbe check and defendant’s agreement. Trial was bad before a jury. .Both parties moved for a dir&cted verdict at tbe close of tbe testimony. Tbe court thereupon dismissed tbe jury and made findings in plaintiff’s favor. Defendant has appealed from tbe judgment entered thereupon and from an order denying a motion for a new trial. It is tbe contention of defendant that tbe transaction constituted a guaranty of tbe check in excess of tbe bank’s powers. That, in any event, the transaction, if deemed a certification or acceptance of a check, was in excess of banking powers for tbe reason that tbe check, being postdated, carried its face notice that any certification or acceptance, if made, was made without funds in tbe bank to meet tbe same and, therefore, was simply a loaning of tbe bank’s credit, citing Swenson Bros. v. Commercial State Bank, 98 Neb. 702, L.R.A.1917F, 1006, 154 N. W. 233, and Bowen v. Needles Nat. Bank (C. C.) 87 Fed. 433. Upon the record plaintiff required defendant’s definite undertaking for payment before shipping tbe grader. Pursuant to the telephonic-conversation, tbe bank specifically agreed to take Dunahoy’s check and to pay plaintiff tbe money on September 1st, 1918. Defendant’s letters, considered with this telephonic conversation, confirmed this agreement. Tbe obligation was definite. Tbe check was delivered to defendant bank. Defendant in its letter, agreeing to pay the same advised plaintiff of its receipt. Plaintiff thereupon shipped the grader. No evidence was offered to show that defendant made this undertaking without consideration or without first obtaining required security from Dunahey. Tbe transaction may properly be considered as an independent undertaking in tbe nature of a letter of credit within banking powers. Border Nat. Bank v. American Nat. Bank (C. C. A.) 282 Fed. 73; 7 C. J. 594, 595. See subdiv. 7, § 5150, Comp. Laws, 1913. Tbe judgment is affirmed with costs to respondent. ChbxstiaNSON, Nuessle, Johnson, and Bieuzell, JJ., concur.