Niblack v. Park National Bank

Mr. Justice Wilkin delivered the opinion of the court: It is contended by appellant, that inasmuch as at the time of the making and presentment of the check the Park National Bank held sufficient funds belonging to the maker of the check to pay it, and at that time had taken no steps to appropriate the deposit to the payment of the note in its favor, the bank could not afterwards appropriate this fund to the payment of its note and refuse to pay the check. On the other hand, it is contended by appellee, first, that the check was not properly presented for payment; and next, if it was presented, even after presentment the bank had the right to appropriate the maker’s funds then on deposit to the payment of its own note, rather than to the payment of the check. We think the check must be treated as properly presented to the bank for payment. It appears from the evidence that a notary public, with the check, went to the bank during banking hours for the purpose of demanding payment for appellant, but found the doors closed. He then made a demand of payment of 'the bank president. Everything was done to present the check for payment which could be done by the holder. If a check is presented to the bank for’payment during business hours, and the doors be closed, this is due diligence on the part of the holder of the check,, and it may be protested for non-payment. Bickford v. First Nat. Bank, 42 Ill. 238. It is a well settled rule in this State that the drawing and delivery of a check upon a fund in the bank are in effect an assignment to the holder of the check of so much of the fund as the check calls for. But the contention of appellee seems to be, that although the making and delivery are an equitable assignment of so much of the deposit, the banker has the right to refuse payment of the check, even when presented by a third person, and appropriate the money to the payment of a debt due from the maker to himself, on the theory that he has a lien upon the deposit in favor of himself to the extent of the maker’s indebtedness,—or, in other words, it is insisted that the bank has a right of set-off, to the extent of the note, against the maker of the check, and may exercise the right of set-off when the check which is held, even by the third person, is presented. The question in the case of Fourth Nat. Bank v. City Nat. Bank, 68 Ill. 398, is very similar to this. The banker holding a note, which was not due, against the maker of the check, refused to pay the check which was presented by a third party, although, at the time of making and presentment, there were sufficient funds on deposit to the maker’s credit to pay it. There, as here, the attempt was to maintain that the banker had a lien upon the funds in his possession to pay an indebtedness to himself. The court said (p. 402): “In the very nature of such transactions a banker’s lien cannot extend to the money left on deposit with him, according to the customs and usages of banks. It has never been so extended, but is confined to securities and valuables which may be in the banker’s custody as col-laterals. The credit must be given on the credit of the securities or valuables, either in possession or expectancy. This is the extent of a banker’s lien,”—citing Russell v. Hadduck, 3 Gilm. 233. The right of set-off was urged in favor of the bank as against the maker of the check, and the court further said: “The other proposition, that of a right to an equitable set-off, might be conceded if no third party was in the way. The third party here is the appellee, whose right to this money was fixed on the 17th of October,—the day the check was presented and payment demanded. This right of set-off, as claimed, is but another phase of the banker’s lien, and has no foundation in law or justice, as against a checkholder for value.” Had the maker himself presented this check the bank would have had the right to refuse payment, and could have appropriated his deposit to the payment of the indebtedness. It is also the law, where a bank holds a demand note, or a note past due, it has the right to charge such obligation up against the maker’s deposit account, and if it does so before a check drawn by the depositor is presented for payment it will be entitled to hold the deposit against any check afterwards presented. But here, Niblack, a third party, presented the check, which amounted to the transfer of so much of the fund to him as the check called for, and no. right of set-off existed in favor of the bank thereafter. He had received it for value. It had been drawn against a fund sufficient to pay it, belonging to the drawer. Taken iu the usual course of business, it was clothed with all the rights which the customs of business gave it for commercial convenience. When presented the fund still stood to the credit of the maker, and according to the decisions of this court the bank had no legal right then to refuse payment. Counsel for appellee contend that the note being due and the bank having passed into the hands of the comptroller when the check was presented, that state of facts itself transferred the deposit to the payment of the note. The fact that the comptroller took charge of the bank did not make any change in the relation of the parties. The comptroller, and the receiver afterwards appointed by him, acted for the bank. Having seen that the banker’s lien does not extend to money on deposit when checks are presented by third persons who are holders, in the regular course of business, neither the comptroller nor the receiver had any more right to make the transfer than the bank itself. It is also urged, that even if the Appellate Court was in error and its judgment must be reversed, the trial court erred in instructing the jury to allow interest upon the face of the check from the' 20th day of June, the day of protest, and for this reason the judgment of the latter court should be reversed. We are satisfied that the check was duly presented for payment on the 20th of June, and hence interest was properly allowable from that time. We find no merit in this contention. The judgment of the Apppellate Court reversing the judgment of the circuit court is reversed and the judgment of the circuit court is affirmed. Judgment reversed.