Opinion
No. 30641.
May 22, 1933.
1. BANKS AND BANKING.
Instrument reading "Pay to order of `V.' one hundred dollars, with exchange. Value received and charge same to account of Peoples Bank Trust Co., North Carrollton, Miss. G.T. Lee, President," held "cashier's check" and not "draft" invalid for want of acceptance by People's Bank Trust Co.
2. BILLS AND NOTES.
Bank which pays out money to depositor prior to dishonor of cashier's check issued by another bank is "purchaser for value."
APPEAL from Circuit Court of Carroll County.
V.D. Rowe, of Winona, for appellant.
The court took the erroneous view that the instrument sued on was a bill of exchange and, as such had to be accepted by the drawee bank before the drawee bank could be held liable.
We submit that the instrument sued on herein is a banker's check. It is nothing more than a cashier's check; it is drawn by the president of the bank upon his own bank. Such an instrument needs no acceptance, and its issuance by the president of the bank on his own bank is the same as acceptance.
An acceptance is not necessary to make the drawee liable where the drawee is himself the drawer — such bill being in effect the note of the drawer.
8 C.J. 297.
A banker's check, as popularly understood, is a check, draft, or other order for payment of money, drawn by an authorized officer of a bank on either his own bank or some other bank in which funds of his bank are deposited.
7 C.J. 593, sec. 234.
A cashier's check, is a bill of exchange drawn by a bank upon itself, and accepted by the act of issuance.
Anderson, State Bank Examiner v. Bank of Tupelo, 100 So. 179.
The check or draft in this case, being the check of the president of the defendant bank on his own bank as drawee, became a negotiable instrument when it was delivered to the payee thereof. He deposited it in appellant bank. The appellant bank paid out its money on the instrument, thereby becoming a bona fide holder for value, or innocent purchaser, and the instrument in its hands, under the circumstances, is a liability that the drawee bank cannot evade.
Alexander, Alexander Satterfield, of Jackson, for appellant.
The instrument sued upon is a banker's or cashier's check, may not be counter-manded of stopped, and is a binding obligation on the People's Bank Trust Company of North Carrollton.
Anderson v. Bank of Tupelo, 100 So. 179, 135 Miss. 351.
The instrument here is identical with the instrument sued upon in the Anderson case, being drawn upon the People's Bank Trust Company of North Carrollton, Mississippi, and being signed "G.T. Lee, President."
The definition adopted by our court in the Anderson case, supra, that "a cashier's check is merely a bill of exchange drawn by a bank upon itself, and accepted by the act of issuance" is amply supported by the authorities, which further state with unanimity that such an instrument is not subject to the counter-manded or payment of the same stopped.
7 C.J., p. 702; 5 R.C.L., p. 483; Drinkall v. Movious State Bank, 11 N.D. 10, 88 N.W. 724, 57 L.R.A. 341, 95 Am. St. Rep. 693.
The Capital National Bank is a holder in due course of the instrument here sued upon, having given value for the same without notice of any infirmity therein.
Branham v. Drew Grocery Company, 145 Miss. 627, 111 So. 155; Bank of Gulfport v. Smith, 132 Miss. 63, 95 So. 785.
The addition of the words "financial agent" to the name of the payee was not notice to the appellant of any infirmity in the instrument.
8 C.J., p. 173; Morse on Banks and Banking, par. 604. F.R. Morgan, of Morgan City, for appellee.
There is nothing from which it may be presumed that the Capital National Bank gave cognizance to the signature "G.T. Lee, President" as relating in any way to an official act of the Peoples Bank Trust Co. when it took the instrument now in question from a "financial agent" "for collection."
It is respectfully suggested that this court take the opportunity presented by the case at bar to limit its definition of "cashier's checks" to those which are "complete and regular upon their face" or to, at least, limit a bank's liability for such checks to cases where, as in the Tupelo case, the question of patent irregularity in form can be properly disregarded.
With all due regard for the case of Anderson, State Bank Examiner, v. Bank of Tupelo, 100 So. 179, a "cashier's check," even so liberally defined as therein, is still subject to the provisions of the Negotiable Instruments Law. Whatever may be the correct denomination of the instrument now in question; in view of the manifest rascality on the part of Arthur R. Vail, "financial agent," payee in said instrument; it is incumbent upon appellant, in order to maintain its case here, to show that it is a "holder in due course" of said instrument.
Miss. Code 1930, secs. 2711-2712.
The instrument is manifestly incomplete and irregular upon its face. There is patent ambiguity on the face of the instrument.
The instrument is payable to a "financial agent" principal is not disclosed and whose authority to negotiate the instrument is open to question.
8 C.J. 516.
Appellant did not become the holder of the instrument before it was overdue, and without notice that it had been previously dishonored.
The endorsements on the instrument are ample evidence that appellant's status as "holder" was restricted under the endorsement "for collection," and that an attempt was later made to change this status by an unrestrictive endorsement which bears some earmarks of forgery after the instrument had been dishonored.
Miss. Code 1930, sec. 2679.
At the time the instrument was negotiated to appellant there was notice, on the face of the instrument itself, of infirmity in the instrument and defect in the title of the person negotiating it.
Joyce, Defenses to Commercial Paper, page 228.
Where commercial paper has been executed by an agent it is, as a general rule, incumbent on the holder to prove the agent's authority in order to render the principal liable, and the burden of making such proof is on such holder.
8 C.J. 1000.
The Capital National Bank brought suit against the People's Bank Trust Company of North Carrollton, upon an instrument reading as follows:
"Payment stopped "Carroll County Bank 85 — 537 "Carrollton, Miss., Dec. 4th, 1930
"Pay to the order of Arthur R. Vail, Financial Agent $100.00, with exchange. Value received and charge the same to account of Peoples Bank Trust Co.
"North Carrollton, Miss.
"G.T. Lee, President."
The indorsements on the draft were as follows: "For deposit and collection, A.R. Vail, Financial Agent. For deposit with Capital National Bank, Jackson, Mississippi, for account of Arthur R. Vail, Financial Agent. Pay to the order of any bank, banker or trust company (all prior indorsements guaranteed). Dec. 5, 1930. Jackson, Mississippi. Capital National Bank, 85, 27, Jackson, Mississippi."
It appears from the evidence that Arthur R. Vail carried an account with the Capital National Bank in his name as financial agent, from November 10, 1930, until about December 29, 1930. He deposited this check with the Capital National Bank and it was placed to his account therein, and the amount thereof was drawn out between the date of deposit and the date of the "stop payment" by the People's Bank Trust Company. He had deposited various other checks in the Capital National Bank and had drawn against them in the same way. When the check or draft in question was returned to the Capital National Bank unpaid, it (said Capital National Bank) sent one of its employees to look up Vail; but he had left the hotel where he had been staying, and could not be found, and never was located by said agent, but said bank was informed that he was between Jackson, Mississippi, and Montgomery, Alabama, and was later heard of in other states. The Capital National Bank was never able to get in touch with him, and consequently it sued the People's Bank Trust Company upon this instrument, and it defended upon the ground that the instrument was a draft and had never been accepted by the People's Bank Trust Company. When the instrument was offered in evidence, the trial judge excluded it or refused to permit it to be introduced; but permitted the appellant, the Capital National Bank, to prove facts in connection with the whole transaction for the purpose of the record, and at the conclusion of the making of the record by the appellant, judgment was entered against the Capital National Bank in favor of the People's Bank Trust Company, from which judgment the appellant has prosecuted this appeal.
The appellant relies upon the case of Anderson v. Bank of Tupelo, 135 Miss. 351, 100 So. 179, and contends that the instrument is, in legal effect, a cashier's check, or check of the bank. In the case of Anderson v. Bank of Tupelo, supra, the instrument involved reads as follows:
"85 — 127. The Bank of Tupelo.
"Tupelo, Miss., Dec. 20, 1922.
"At sight pay to the order of the Bank of Tupelo $500.00, five hundred and no/100 dollars, with exchange. W.M.B. Cox, Pres.
"To People's Bank, Baldwyn, Miss."
— and as a matter of fact, Cox was the president of that bank. It seems to us that this case is decisive of the issues here involved, as Lee was, in fact, the president of the People's Bank Trust Company, and we see no difference in the two instruments.
It is argued also by appellee (People's Bank Trust Company) that the Capital National Bank was not a purchaser for value, without notice, before maturity, etc. It is shown that the check was credited to Vail, as financial agent, and the amount of the deposit so made was checked out by Vail giving the proper checks thereon, and that although Vail had deposited other checks, and had drawn out the amount thereof subsequent to the deposit of this particular check, or draft, the rule prevails in this state that the first money in is the first money out, and the application of this rule to this case shows that there can be no question that Vail had checked out the funds represented by the check deposited to his account. Branham v. Drew Gro. Co., 145 Miss. 627, 111 So. 155.
In the case of Bank of Gulfport v. Smith, 132 Miss. 63, 95 So. 785, it was held that the payment of money to a depositor prior to a check being dishonored, constitutes the bank a purchaser for value.
We are therefore of the opinion that the court below was in error, and that it should have admitted the check in evidence, and should have rendered a judgment for the appellant.
As the evidence was put into the record, and is now before us, we must reverse the judgment of the court below and render a judgment for the appellant.
Reversed, and judgment for the appellant.