Hunt v. Security State Bank

179 P. 248, 91 Or. 362, 1919 Ore. LEXIS 46

• Court: Oregon Supreme Court
• Decided: March 4, 1919
• Status: Published

Opinion

HARRIS, J.

1. The defendant vigorously contends that it was entitled to a directed verdict. This contention proceeds upon the theory that the act of stamping the check “paid” followed by the act of placing it upon the spindle where all “paid” checks were kept until entries were made upon the books, after.having first ascertained that there were sufficient funds to the credit of the drawer and that the signature was genuine, operated as a charge against the drawer and as a credit to the holder of the check and amounted to payment. The plaintiff insists that the acts of the defendant did not effect a transfer of credit from Hunt to the United States National Bank of Portland, the holder.

2, 3. The relation existing between a bank and its depositor is that of debtor and creditor; a check is simply an order signed by the creditor (depositor) directing the debtor (bank) to pay money to a named person; an uncertified check of itself does not operate as a legal or-as an equitable assignment of any part of the funds in the bank and, unless it accepts the check, the bank is not liable to the holder; and consequently the drawer of the check can, if he chooses, countermand the check or first order and the bank will be obliged to obey the second or countermanding order unless the bank has paid or has become obligated to pay the check: Section 6022, L. O. L.; United States Nat. Bank v. First Trust & Savings Bank, 60 Or. 266, 272 (119 Pac. 343); Marks v. First Nat. Bank, 84 Or. 601, 603 (165 Pac. 673); Pullen v. Placer County Bank, 138 Cal. 169, 172 (66 Pac. 740, 71 Pac. 83, 94 Am. St. Rep. 19); Rogers Com. Co. v. Bank of Leslie, 100 Ark. 537 (140 S. W. 992); Pease & Dwyer v. State Nat. Bank, 114 Tenn. 693 (88 S. W. 172); First Nat. Bank of Durant v. School District No. 4, Bryan County, 31 Okl. 139 (120 Pac. 614, 39 L. R. A. (N. S.) 655); Hentz v. National City Bank, 159 App. Div. 745 (144 N. Y. Supp. 979); Kahn v. Walton, 46 Ohio St. 195 (20 N. E. 203); Van Buskirk v. State Bank, 35 Colo. 142 (83 Pac. 778, 117 Am. St. Rep. 182); Usher v. Tucker Co., 217 Mass. 441 (105 N. E. 360, L. R. A. 1916F, 826); 5 R. C. L. 526; 7 C. J. 701; 2 Michie on Banks and Banking, 1101.

If what the bank did prior to Hunt’s conversation with Hoff amounted to payment, then Hunt had lost the right to countermand payment of the check.

4. During the investigation we must not lose sight of the fact that payment and acceptance are essentially different. Payment is the natural, expected and intended end of a check. Acceptance strengthens the vitality of a check and serves to prolong rather than to terminate the life of it: Elyria Savings & Banking Co. v. Walker Bin Co., 92 Ohio St. 406 (111 N. E. 147, Ann. Cas. 1917D, 1055, L. R. A. 1916D, 433); Guthrie Nat. Bank v. Gill, 6 Okl. 560 (54 Pac. 434). We must remember, too, that the case now under consideration is not like those where the holder enters a bank with a check, presents it and is given credit for the amount as a deposit; nor is this case like those where the holder mails a check to the drawee bank and the latter, in obedience to instructions, charges the account of the drawer and credits the account of the holder with the amount of the check, for in all those cases payment is made just as completely as it is when the hank actually pays the money over the counter to the holder and he at once returns it to and deposits it with the hank: Consolidated Nat. Bank v. First Nat. Bank, 129 App. Div. 538 (114 N. Y. Supp. 308); National Bank v. Burkhardt, 100 U. S. 686, 689 (25 L. Ed. 766); American Nat. Bank v. Miller, 229 U. S. 517, 520 (57 L. Ed. 1013, 33 Sup. Ct. Rep. 883); Albers v. Commercial Bank, 85 Mo. 173 (55 Am. Rep. 355); 2 Michie on Banks and Banking, 1140, 1414, 1415. The instructions to the defendant were to “remit in Portland exchange.” The Woodhurn hank did not draw or mail its draft for the purpose of remitting to the United States National Bank of Portland until after Hunt countermanded payment of the Burdick check, and, therefore, we need not decide whether payment was completed when the draft was deposited in the postoffice or when received hy the Portland bank: See Buell v. Chapin, 99 Mass. 594 (97 Am. Dec. 58); Canterbury v. Bank of Sparta, 91 Wis. 53 (64 N. W. 311, 51 Am. St. Rep. 870, 30 L. R. A. 845); Steinhart v. D. O. Mills & Company, 94 Cal. 362 (29 Pac. 717, 28 Am. St. Rep. 132); Winchester Milling Co. v. Bank of Winchester, 120 Tenn. 225 (111 S. W. 248, 18 L. R. A. (N. S.) 441).

When Hunt ordered the defendant not to pay the check the bank had done nothing more than to satisfy itself that the check was genuine and that there were sufficient funds to pay it, and to stamp it “paid” and to place it upon the spindle. All this was merely preparing to pay; it-was simply a step towards payment; it was not payment. No entry was made on the books. The drawer was not charged; the holder was not credited. It may be assumed that the bank intended to make appropriate entries on its books and to remit; but we are confronted with a situation where the bank had not yet executed its intention. An intention to pay is not payment. What the bank did was done in contemplation of payment; but payment was not completed: Guthrie Nat. Bank v. Gill, 6 Okl. 560 (54 Pac. 434); First Nat. Bank of Murfreesboro v. First Nat. Bank of Nashville, 127 Tenn. 205 (154 S. W. 965); German Nat. Bank v. Farmers’ Deposit Nat. Bank, 118 Pa. St. 294 (12 Atl. 303); Irving Bank v. Wetherald, 36 N. Y. 335, 338; Watervliet Bank v. White, 1 Denio (N. Y.), 608, 611; National Bank of Rockville v. Second National Bank of Lafayette, 69 Ind. 479, 485 (35 Am. Rep. 236).

5. The plaintiff cannot recover if what was done by the defendant resulted in an acceptance of the check. While we are accustomed to associate the word “acceptance” with bills of exchange rather than with checks for the reason that bills of exchange ordinarily contemplate presentation for acceptance and acceptance, and checks ordinarily contemplate presentation for payment and payment, and although there are points of difference between the two classes of instruments, yet it will tend to promote the harmony and preserve the integrity of the Negotiable Instruments Act -(Sections 5834-6027, L. O. L.) if we use the nomenclature employed by that statute: Hawley, Dodd & Co. v. Jette & Clark, 10 Or. 31 (45 Am. Rep. 129); First Nat. Bank v. Commercial Savings Bank, 74 Kan. 606 (87 Pac. 746, 118 Am. St. Rep. 340, 342, 11 Ann. Cas. 281, 8 L. R. A. (N. S.) 1148); Van Buskirk v. State Bank of Rocky Ford, 35 Colo. 142 (83 Pac. 778, 117 Am. St. Rep. 182); 8 C. J. 38, 40; Selover on Negotiable Instruments (2 ed.), 117; 3 R. C. L. 831. See note in 118 Am. St. Rep. 348; and 5 R. C. L 516. The Negotiable Instruments Act defines a bill of exchange (Section 5959, L. O. L.); and it declares not only that

“a check is a bill of exchange drawn on a bank payable on demand,” but also that “Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on demand apply to a check”: Section 6018, L. O. L.

Among the provisions applicable to bills of exchange, and therefore applicable to checks, is Section 5965, L. O. L., which states that: “the acceptance of a bill is the signification by the drawee of his assent to the order of the drawer”: Van Buskirk v. State Bank of Rocky Ford, 35 Colo. 142 (83 Pac. 778, 117 Am. St. Rep. 182); 8 C. J. 308.

6. The “acceptance” of a bill of exchange is the act by which the drawee manifests his consent to comply with the request contained in the bill of exchange directed to him; and it contemplates an engagement or promise to pay: Van Buskirk v. State Bank of Rocky Ford, 35 Colo. 142 (83 Pac. 778, 117 Am. St. Rep. 182, 184); Guthrie Nat. Bank v. Gill, 6 Okl. 560, 565 (54 Pac. 434); First Nat. Bank v. Commercial Savings Bank, 74 Kan. 606 (87 Pac. 746, 118 Am. St. Rep. 340, 11 Ann. Cas. 281, 8 L. R. A. (N. S.) 1148); Elyria Savings & Banking Co. v. Walker Bin Co., 92 Ohio St. 406 (111 N. E. 147, Ann. Cas. 1917D, 1055, L. R. A. 1916D, 433); 2 Michie on Banks and Banking, 1125; 3 R. C. L. 534; 8 C. J. 296.

A parol acceptance confers no right upon the holder, for Section 5965, L. O. L., expressly provides that ‘ ‘ The acceptance must he in writing and signed by the drawee”: United States Nat. Bank v. First Trust & Savings Bank, 60 Or. 266, 271 (119 Pac. 343); First Nat. Bank v. School District, 31 Okl. 139 (120 Pac. 614, 39 L. R. A. (N. S.) 655); 8 C. J. 303. It will not be necessary to determine whether Section 5970, L. O. L., applies to checks, for the reason that this section is not involved in this controversy. An interesting discussion of the question may be found, however, in Wisner v. First Nat. Bank, 220 Pa. 21 (68 Atl. 955, 17 L. R. A. (N. S.) 1266). See, also, 8 C. J. 302, 303, 319. We have already noticed that Section 5965, L. O. L., states that “the acceptance of a bill is the signification by the drawee of his assent to the order of the drawer”; and in this connection we may also notice that Section 6020, L. O. L., provides that: ‘ ‘.where a check is certified by the bank on which it is drawn, the certification is equivalent to an acceptance”; and, hence, whatever written words would constitute an acceptance of a bill of exchange as well as whatever written words would constitute a certification of a cheek would, if found upon a check, also constitute an acceptance of the check.

7. The acceptance of a bill of exchange is usually evidenced by writing the word “accepted” on the face of the bill and the certification of a check is usually effected by writing or stamping the word “good” or “certified”; but the law does not require any particular form of word or words to constitute an acceptance, and any words or expressions intended to be an acceptance by the bank will be sufficient: 8 C. J. 303; 3 R. C. L. 1304; 5 R. C. L. 520; Selover on Negotiable Instruments (2 ed.), 134; First Nat. Bank v. Commercial Savings Bank, 74 Kan. 606, (87 Pac. 746, 118 Am. St. Rep. 340, 11 Ann. Cas. 281, 8 L. R. A. (N. S.) 1148); 7 C. J. 705; Magee on Banks & Banking (2 ed.), 319. It was held in Plaza Farmers’ Union Warehouse & Elevator Co. v. Ryan, 78 Wash. 124 (138 Pac. 651), that the written signification of assent, required by the Negotiable Instruments Law, “means an express assent, or the use of words necessarily implying an assent”: See, also, 8 C. J. 307.

The word “paid” was stamped upon the check by the defendant. When determining whether this constituted an acceptance within the meaning of the law we must not forget the essential difference between payment and acceptance. Payment ends the life of a check. Acceptance reinvigorates it. The word “paid” tends to indicate, if it evidences anything, extinction . rather than rejuvenation of the check. To the extent that it speaks at all, the word “paid” tells of what has been done rather than of what will be done. In Guthrie Nat. Bank v. Gill, 6 Okl. 560, 565 (54 Pac. 434, 436), it was decided that the word “paid” stamped upon a draft, “had no tendency to establish an acceptance” because it did not evidence “an agreement or promise to do something.” To the same effect is: Elyria Savings & Banking Co. v. Walker Bin Co., 92 Ohio St. 406 (111 N. E. 147, Ann. Cas. 1917D, 1055, 1056, L. R. A. 1916D, 433). See, also, 2 Michie on Banks and Banking, 1129. Stamping the word “paid” did not of itself produce an acceptance of -the check.

There is yet another reason for concluding that the acts of the bank did not work an acceptance of the check so as to make the drawee liable to the holder. Section 6023, L. O. L., declares that:

“In this act, unless the context otherwise requires, ‘acceptance’ means an acceptance completed by delivery or notification.”

Even though it be assumed that writing the word “paid” on a check evidences a promise to pay and, therefore, indicates an acceptance, nevertheless the acceptance was not completed by delivery or notification. It was held in First Nat. Bank of Murfreesboro v. First Nat. Bank of Nashville, 127 Tenn. 205, 216 (154 S. W. 965, 968), that,

“there can be no acceptance upon the part of the drawee, receiving remittances from a distance, and acting in the dual capacity of collecting agent of the holder and as agent of the drawer to pay, until and unless the transaction is completed by a delivery to the remitting bank in due course, or a notification to someone entitled to be notified.”

See, also, Guthrie Nat. Bank v. Gill, 6 Okl. 560, 565 (54 Pac. 434); 2 Michie on Banks and Banking, 1129.

8. In Section 6022, L. O. L., it is said that “the bank is not liable to the holder unless and until it accepts or certifies to the check.” Hunt countermanded payment of the check before the bank had either paid or accepted it; and the judgment appealed from must therefore be affirmed.

Affirmed.

McBride, C. J., and Bean and Johns, JJ., concur.