Anderson v. Rodgers

The opinion of the court was delivered by Allen, J.: The only question we deem it necessary to consider is, whether the negligence of Rodgers and his agent, the Hamilton County Bank, in sending the check directly to the drawee, operates, under the facts agreed upon, to discharge Anderson from liability. It is true, as was said by this court in Gregg v. George, 16 Kas. 546, that— “ In order to charge the drawee of a check, the same strict rule of diligence in making demand and giving notice of nonpayment does not obtain as in cases of ordinary bills of exchange. As a general rule, he is not discharged unless he suffers some loss in consequence of the delay of the holder.” If the drawee of a check has no funds on deposit to meet it, or if, having funds in the bank at the time, he afterward withdraws them, and the check is not paid on that account, the drawee, having suffered no injury by reason of delay in its presentment, will not be discharged from liability. But when a person having funds on deposit in a bank draws a check against them, the holder of the check, if he delays its [547] presentment, assumes the risk of the failure of the bank. It, is said in 2 Daniel on Negotiable Instruments, § 1586: “ The fact that the check is presumed to be drawn against deposited funds makes it of even greater importance than in the case of a bill that a cheek should be presented, and that the drawer should be notified of nonpayment, in order that he may speedily inquire into the causes of refusal, and be placed in a position to secure his funds which were deposited in the bank.” The rule, however, as to the time allowed the holder for presentment of a check, in order to relieve him from the risk of loss by failure of the drawer, is definitely fixed by the-authorities: (1) Where the payee to whom the check is delivered receives it in the place where the bank on which it indrawn is located, he must present it by the close of banking-hours on the next business day. (2) Where the check, as in this ease, is drawn on a bank located at a place distant from that in which it was received by the payee, it must be sent, for presentment for payment by mail on the next secular day-after it is received, and presented on the next day after its-receipt. (2 Daniel, Neg. Inst., § 1592, and cases cited.) In this case the check seems to have been forwarded for-payment in due time, but it was sent directly to the drawee by mail, with the request that the Bank of Richfield remit the amount by mail in exchange on Kansas City. The Hamilton County Bank therefore selected the drawee of the check as its agent for collection. That this was negligence, is well settled by the authorities. It is said in 1 Daniel on Negotiable Instruments, § 328a: “For purposes of collection, the collecting bank must employ a suitable subagent. It must not transmit its checks or bills directly to the bank or party by whom payment is to-be made, with the request the remittances be made therefor-It is considered that no firm, bank, corporation or individual can be deemed a suitable agent in contemplation of law to-enforce in behalf of another a claim against itself.” This proposition is sustained by abundant authorities. (Bank v. Provision Co., 117 Ill. 100; Bank v. Burns, 12 Colo. [548] 539; Bank v. Goodman, 109 Pa. St. 422; Bank of Evansville v. Bank of Louisville, 56 Fed. Rep. 967; Farwell v. Curtis, 7 Biss. 160. It is insisted that, inasmuch as the check was forwarded in due time, and came into the hands of the drawee, which refused payment and returned the check with the statement “No funds in bank,” the defendant was not injured by the mode of presentment; that an answer of “No funds,” sent by mail, is as effectual a refusal to pay as though made across the counter at the bank. Where due presentment is not made, the burden of proof is upon the holder of the check to show that the drawer has not suffered injury. (Little v. Bank, 2 Hill, 425; Ford v. McClung, 5 W.Va. 166; 2 Pars. Bills & Notes, 71; 2 Dan. Neg. Inst., §1588; Daniel v. Kyle, 1 Ga. 304.) From the agreed statement, it appears that the check reached Richfield on the 12th of December, 1889, after business hours; that the bank on which it was drawn was open, doing a general business, receiving deposits and paying money on checks, during its regular banking hours on the 13th. During that day a letter was written, addressed to the Hamilton County Bank, within which was inclosed the check, and the statement, “No funds in bank.” This letter was deposited in the post office after banking hours, and received at Syracuse after business hours on the 14th. The refusal to pay was therefore not communicated to anyone until the 14th. Can it be presumed that, if the check had been regularly presented over the counter to the Richfield bank on the 13th, a false answer would have been given, as was in fact given by letter, and payment refused? It is admitted that the defendant had more than money enough to his credit to meet the check. Had presentment been made by another agent of the plaintiff and payment refused, steps might have been taken immediately to protect the drawer’s rights; but the cheek being in the hands of the drawee, of course no effort would be made by it to prosecute itself, and the fact that payment was refused was not communicated to the Hamilton County Bank [549] until the night of the day following the last one on which the Richfield bank was open for business. It might be that the answer, “No funds in bank,” was literally true, and that the Richfield bank had not the money with which to make payment at any time during the day of the 13th, but we are not at liberty to indulge in any presumption of that kind, the agreed facts showing that it received deposits] and paid checks during the whole of that business day. This case must be decided in accordance with established principles, and the fact that the Richfield |bank was a small concern, in a very sparsely-peopled part of the state, and perhaps never had any large amount of funds in its possession, cannot be made a pretext for breaking down those wholesome rules of business which have been built up and defined with so much care and precision. ' The request in this case by letter was not an ordinary demand of payment, calling for current funds, but was a request for Kansas City exchange, which the drawee would, of course, be at perfect liberty to refuse. In cases of this kind a hardship necessarily results to one party or another. Courts, in their decisions, must be guided by fixed rules. The plaintiff, having trusted in the good faith of the Richfield bank by sending the cheek to it, must bear the burden of the loss occasioned by its failure occurring after the day on which regular presentment should have been made. The judgment is reversed, and the case remanded, with directions to enter judgment on the agreed statement of facts in favor of defendant, Anderson, for costs. All the Justices concurring.