Moses v. President of the Franklin Bank

Alvey, J., delivered the opinion of the Court. Whether the check declared on in this case is in any proper sense an inland bill of exchange, and therefore protestable, within the meaning and object of sections 6 and 7 of Article 14 of the Code, is the first question presented; and we think the Court below was right in ruling in the affirmative. According to all the text writers on bills and notes, as well as in numerous decisions, a check is denominated a species of inland bill of exchange; not with all the incidents of an ordinary bill of exchange, it is true, but still it belongs to that class and character of commercial paper. Ryles on Rills, 10; 2 Parsons on Notes and Bills, 58; Cruger vs. Armstrong, 3 John. Cases, 5; Merchants’ Bank vs. Spicer, 6 Wend., 443; Harker vs. Anderson, 21 Wend., 372. The same reason, therefore, that would authorize the protest of an inland bill of' exchange for non-payment, would authorize the protest of a [580] check, the payment of which had been refused on presentment. Neither instrument was required by the general law merchant to be protested on dishonor; foreign bills alone being required to be protested by that law. But provision has been made by statute for protesting both inland bills of exchange and promissory notes, and we think a check drawn in the ordinary form, such as the one in question here, is embraced within the description of paper denominated inland bills of exchange by our statute. The protest, therefore, was properly admitted in evidence. The next question, whether, because the check was debited to the Cecil Bank by the Franklin Bank while holding sufficient funds of the Cecil Bank to pay the check, and that the latter bank, upon which the check was drawn, held sufficient funds of the drawers to pay the check at the time of presentment for payment, the check is, therefore, as between the Franklin Bank and the defendant, to be regarded as paid, we think was also rightly decided by the Court below. A check does not, as contended by the appellant, operate • as an assignment pro tanto of the fund upon which it is drawn, until it is accepted, or certified to be good, by the bank holding the funds. It is true, a bank, if in funds of the drawer, is ordinarily bound to take up his cheeks; but it ean only be held liable to the holder for its refusal to do so, upon the ground of fraud, whereby he loses the money or some part of it, for which the check is drawn. It is certainly a general rule, that a drawee who refuses to accept a bill of exchange cannot be held liable on the bill itself; nor to the holder for the refusal to accept, except it be upon the ground of fraud and loss to the latter. A bank upon which a check is drawn occupies in this respect a similar position to that of the drawee of a bill of exchange. It is but the agent of the depositor, holding his funds upon' an implied contract to honor and take up his checks to the extent of the funds deposited. _ The obligation to accept and pay is not to the holder of the check, but to the drawer. If, therefore, the [581] depositor should direct that a check should not be paid, the bank would be bound to observe the direction, unless it had previously accepted the check by certifying it to be good, in which ease it would be bound to pay; at any rate to a subsequent holder. The bank, therefore, ordinarily, owes no duty to the holder of a check drawn upon it, nor is it bound, except to the depositor, to accept or pay the check, though it may have sufficient funds of the drawer with which to do it. In the case of Bullard vs. Randall, 1 Gray, 605, it was held that a check for a portion of the drawer’s funds worked no assignment until presented for payment and accepted by the bank; and further, that it did not avail to bind the bank in any way, that the holder of the check gave notice to the bank of his holding the cheek; not even where the cashier of the bank, when absent from it, verbally assented to the drawing of the cheek. So, in the case of Chapman vs. White, 2 Seld., 412, it was expressly held that a check before acceptance neither operates as an assignment, nor creates any lien on the funds of the drawer. In this last case it was said, that “ a check is a bill of exchange payable on demand. The drawee owes no duty to the holder until the check is presented and accepted.” And in the case of Dykers vs. Leather Manufacturers’ Bank, 11 Paige, 612, it was held that, where the drawer had given checks exceeding in the aggregate the amount of his funds in the bank, and had forbidden the bank to pay, and finally drew out his funds to make ratable distribution among the check holders, the owner of a check presented before the withdrawal of the funds, but after orders not to pay, could maintain no action against the bank; that mere priority in drawing a check gives the holder no preference or priority in payment, over the holders of checks subsequently drawn. It follows from what has been stated, that the check, until it was accepted, did not operate as an assignment of the drawer’s funds in the Cecil Bank; and the acceptance or payment being refused, the Franklin Bank was remitted to [582] its remedies against the drawers and endorsers of the cheek. The fact that the check was debited to the Cecil Bank, upon the supposition that it would be paid on presentation, can make no manner of difference in the right of the bank to recover against the defendant as endorser. It could acquire no right against the Cecil Bank by charging up the amount of the check in its account without authority, and upon the dishonor of the check that charge was of course nullified. (Decided 22d June, 1871.) As to the second prayer of the appellant, that, we think, the Court below was right in refusing. There was evidence before the jury from which they could find that the appellant had received the' notice of the demand and refusal. The notarial certificate was evidence of the fact that notices of protest had been enclosed to the cashier of the Franklin Bank; and the only additional evidence required was, that the notice for the appellant had been delivered to him in due time. There was evidence certainly tending to prove that fact; and the presumption was, until the fact was shown to be otherwise, that the notice was in due form, and sufficient to charge .the appellant. The judgment must therefore be affirmed. Judgment affirmed.