Opinion
No. 54/440.
02-25-1924
BODNER v. ROTMAN et ux.
Herman Waldman, of Newark, for complainant. T. Raymond Bazley, of Long Branch, for defendants.
Suit by Herman Bodner against Michael Rotman and wife. On motion to strike out answer. Motion granted.
Herman Waldman, of Newark, for complainant.
T. Raymond Bazley, of Long Branch, for defendants.
CHURCH, V. C. This is a motion to strike out the answer filed by the defendants in the above-entitled cause. The facts are as follows:
On January 22, 1923, Michael Rotman executed a bond and mortgage to David Hollander in the sum of $S,000, payable $2,000 on September 1, 1923, $3,000 on September 1, 1924, and $3,000 on September 1, 1925, with interest at 6 per cent., payable semiannually. Both bond and mortgage contained an agreement that if any installment of interest should remain unpaid for 60 days after the same fell due, the whole principal sum, with all unpaid interest, should, at the option of the mortgagee, his heirs and assigns, become immediately due.
On March 2, 1923, this mortgage was assigned to the complainant. On July 22, 1923, 6 months' interest fell due on said bond and mortgage. On September 8, 1923, a check was forwarded to the complainant for $240 in payment of said interest, which the complainant kept until September 28, 1923. Said check for interest was deposited on September 28, 1923, and was returned by the bank for want of funds.
On September 28, 1923, the $2,000 installment of principal was paid to the complainant before the check for the payment of the interest was protested, and before the complainant had any notice that the check in payment of the interest would not be paid by the bank upon which it was drawn.
The first point is whether the delay of complainant in presenting the cheek for payment worked such an injury to the defendants that complainant should not be allowed to proceed with the foreclosure until the matter has been heard on final hearing. Section 186 of the Negotiable Instruments Act (3 Comp. St. 1910, p. 3756) provides that a check must be presented for payment within a reasonable time after its issue or drawer will be discharged from liability thereon to the extent of the loss caused by the delay. It is true that neglect to present a check for 20 days after its receipt would probably be called an unreasonable delay; but in this instance when the check was presented it was returned for lack of funds, and the delay in presenting the check would have worked no injury to the defendant had he allowed funds to meet it remain in the bank until its presentment.
First National Bank of Portland v. Linn County Bank, 30 Or. 296, 47 Pac. 614:
"The holder's laches in presenting a check for payment constitutes no defense in an action against the drawer unless he is damaged by the delay, and then only to the extent of his loss. A check purports to be made upon a deposit to meet it. and presupposes funds of the drawer in the hands of the drawee. But, if the drawer has no such funds at the time of drawing his check, or subsequently withdraws them, he commits a fraud upon the payee, and can suffer no loss or damage from the holder's delay in respect to presentment or notice. In such case he is liable, and cannot insist upon a formal demand or notice of nonpayment."
The other point raised is that the complainant accepted on September 28, $2,000 as an installment on the principal, and that the defendant contends is sufficient to waive any rights the complainant might have on account of the returned protested check. In the first place, the letter inclosing the check specifically says that the inclosed check is a payment due on the mortgage, and that under the circumstances the complainant had no option except to apply it on the principal. There is another doctrine also involved in this case, and that is that the creditor may apply the payment in whatever way he pleases; but in the case at bar he could not apply it to anything but the principle because the debtor instructed him to pay it on account of X>rincipal. Moreover, the complainant was unaware that the check for interest was bad when he accepted the $2,000.
Under these circumstances, it seems to me that the case comes within the doctrine laiddown by Newark Trunk Co. v. Clark (N. J. Ch.) 118 Atl. 263, and I will grant the motion to strike out the answer.