Watkins v. Parsons

[435] The opinion of the court was delivered by Brewer, J.: This is a proceeding to reverse the judgment of the district court of Wyandotte county, based upon the report of a referee. Before us are the pleadings, the findings and conclusions of the referee, and the judgment. The testimony is not preserved. The following quotation from the report of the referee presents all the facts bearing upon the question raised and discussed by counsel: “And I further find that at the same time I tried the issues between the several defendants herein, and took an account between the said Thomas A. Shaw, Stephen S. Sharp and Louis Hammerslaugh, constituting the firm of Sharp, Shaw & Co., and the said Levi Parsons, Francis Skiddy, H. A. Johnson, David Crawford, Jr., August Belmont, Shepard Gandy and Robert S. Stevens, partners under the style of the Land Grant Railway & Trust Company, as to all matters of account put in issue between them herein. And I find that before the commencement of this action, the said account of Sharp, Shaw & Co., was assigned to, and all title thereto vested in, the defendant John Q. Watkins, and on said account I find due to said Watkins, as assignee of said Sharp, Shaw & Co., $3,059.41. And I find that the said Watkins is entitled to judgment against the said defendants Parsons, Skiddy, Johnson, Crawford, Belmont, Gandy and Stevens, for the said sum of $3,059.41, with interest from the date of this report at seven per cent, per annum, and costs, as hereinafter stated. “And I further find as facts in this cause, that the charge of $25,000 made by said Land Grant Railway & Trust Company, and dated August 12th, 1869, (appearing upon schedule £A/ hereto attached,) was for a check drawn by said Land Grant Railway & Trust Company, by their agent, A. P. Robinson, upon the bank of Hiram F. Hale, by the name of Hale & Rice, bankers, (that being the name in which said Hale did business as a banker, and the bank being solely the bank of said Hale,) payable to Sharp, Shaw & Co., or order; that said Hale then owned an interest in the co-partnership called the Land Grant Railway & Trust Company, but kept said bank on his sole account, as his individual business; that said Land Grant Railway & Trust Company were keeping funds in said bank by drawing drafts on New York in its [436] favor, and delivering the same to said bank, and were making monthly payments for work to Sharp, Shaw & Co., by drawing checks upon said bank; that Sharp, Shaw & Co. at the same time kept their funds in said bank; that on the 12th of August, 1869, the said A. P. Robinson as such agent drew a check on said bank for $25,000, payable to Sharp, Shaw & Co., or order, arid placed the- same in said bank for Sharp, Shaw & Co., who soon after took the same and indorsed it, and caused the amount thereof to be placed to their credit on the books of the bank; that at. the time said check was deposited by said Robinson, and indorsed by said Sharp, Shaw & Co., and placed to their credit, said Hale was insolvent, and afterward, and on or about the 17th of the same month, stopped business as a banker; that at the time he so stopped business, he was indebted to said Sharp, Shaw & Co. on their said bank account, in the sum of $15,289.26; that at the time said check was made and deposited in Hale’s bank, and when the same was indorsed- by Sharp, Shaw & Co., and credited to them oh the books of the bank, said Hale had knowledge of his insolvency, and at the same time the said Land Grant Railway & Trust Company, and A. P. Robinson, their agent, had notice that he was embarrassed in his finances, and said Sharp, Shaw & Co. had no such knowledge or notice; that at the time said check of $25,000 was so drawn, delivered, indorsed, and credited to Sharp, Shaw & Co. said Land Grant Railway & Trust Company had a balance in their favor, owing by said Hale to them, standing to their credit upon the books of the bank, more than sufficient in amount to pay the said check of $25,000; that afterward, the said Hale having been adjudged a bankrupt in the-United States District Court, for the District of Kansas, the defendant Watkins, after the assignment of the said demand to him, proved up in said court, as assignee of said Sharp, Shaw & Co., and as a debt due from said Hale to said Sharp, Shaw & Co., the balance of bank account so due from said Hale to them, including said check of $25,000, as credit to them, and the same was so proved up and established at the amount of $19,-107.96, including interest to the time of filing the petition in bankruptcy; that afterward, in June 1872, the said Watkins received on said debt, as a dividend of assets of bankruptcy, the sum of $2,388.50, said bankrupt’s estate not having then been fully settled. ’ “And I further report that I allowed said check of $25,- [437] 000 as a payment by said Land Grant Railway & Trust Company to Sharp, Shaw & Co., in stating said accounts. I append hereto a schedule marked ‘A/ of the accounts, both debit and credit, as kept by the Land Grant Railway & Trust Company, passed upon by me, with such charges as were rejected by me, marked ‘Rejected’ in the margin, all the other items of the account having been allowed, which schedule is a part of this report. And I further find that the plaintiffs are entitled to recover from the defendants Shaw and Sharp the costs of recovering judgment upon the note and mortgage in their favor, and the defendant Watkins is entitled to recover the costs of stating the account and recovering the judgment in his favor. All which is respectfully submitted. “Jauuary 2, 1873. Nelson Cobb, Referee.” We think the referee was right in his conclusions, and that the judgment must be affirmed. The authorities cited by the learned counsel for plaintiff in error are not in point. Under what circumstances the receipt of a check operates as payment, is a question of wide limit, but one into which it is not necessary in this case to enter. For here the check was both received and used, and for aught that appears in the. record the entire amount of money it called for also received and used. The check was drawn on the 12th of August, was received by the payees, deposited in Hale’s bank, and the amount passed to their credit. It nowhere appears what transaction took place, during the ensuing five days prior to the suspension of the bank, between the bank and Sharp, Shaw & Co. Many times the amount of this check may have been drawn and used by them. The bank continued in business, and we must presume honored and paid checks as presented. Evidently there were some transactions, for while the amount of the check was $25,000, the balance due Sharp, Shaw & Co. at the time of suspension was less than $16,000. If Robinson, instead of leaving the check for Sharp, Shaw & Co., had drawn the money and given it to them, and they had then deposited it in the bank, or if they on receipt of the check had themselves drawn the money, and then deposited it, there would be no question as to the payment. No-more can there be if after depositing the check to their credit they drew the amount [438] thereof out on their own cheeks. Indeed, by the deposit of the check to their credit, the latter had performed its office, and had become a dead instrument. They had elected to take the bank as their debtor, rather than the defendants an error; and even if there were no subsequent transactions betwen them and the bank it might well be questioned whether they could recover of the drawers. Certainly they could not without proof of the actual loss. And where a party both receives and uses a check, the presumption is that he realized the full amount thereof, and if thereafter he seeks to recover the amount from the drawers, it is incumbent on him to show that he did in fact fail to realize. This appearing to us as a fatal objection to the plaintiff’s right of recovery, it is unnecessary to consider the other questions discussed. The judgment will be affirmed. All the Justices concurring.