147 Mich. 72 | Mich. | 1907
Defendants were in partnership as brokers at Detroit. They dealt in stocks and bonds on the New York Stock Exchange and elsewhere. They executed orders for dealings in the New York market through other brokers. Frank C. Andrews was their
“$50,000. Detroit, Mich., Feb. 6, 1903.
“ Pay to the order of Cameron Currie and Co.
? Fifty Thousand......Dollars.
“ Yalue received, and charge the same to account of
“F. C. Andrews.
“Tothe City Savings Bank, Detroit.”
Defendants indorsed this check as follows:
“ Pay First National Bank, Detroit, Mich., or order.
“ Cameron Currie & Co.”
' Mr. Case deposited this check to the credit of defendants’ account in plaintiff bank and at the same time drew and gave to the bank defendants’ check for a like sum payable to the order of plaintiff’s cashier, and directed the plaintiff to wire its New York correspondent to pay that
“ Please deliver to Warren, Andrews and Co., 90,000 Union Pacific convertibles free. National Park will pay you $45,000, National Bank of Commerce for our credit.
“Cameron Currie & Company.”
This was received by Ladenburg, Thalman & Co. at 1:12 p. m. eastern standard time. Upon receiving the deposit of the Andrews check indorsed by defendants, and defendants’ own check with their directions for wiring money, the plaintiff sent the Andrews check to the City Savings Bank for certification. It was presented by plaintiff’s messenger to Joseph Schrage, paying teller of said bank, who had authority to certify checks drawn on ids bank, and who certified by writing across its face the words “ Good, Schrage, Teller.” The check was then returned to plaintiff, which then, at 12:35 p. m. central standard time (1:35 p. m. eastern standard time) sent to its New York correspondent, the National Bank of Commerce, a telegram as follows:
“Deposit to the credit of Cameron Currie & Co., Fifty Thousand dollars with Ladenburg, Thalman & Co. and charge to our account.
“First National Bank of Detroit.”
After payment was made by the National Bank of Commerce, as ordered by this telegram, the payment of $45,000 having been made through another bank, the bonds were delivered between 2 and 3 o’clock eastern standard time, by Landenburg, Thalman & Co., to Warren, Andrews & Co.
Defendants had previously had numerous transactions with Andrews in which they took his check but never had his check certified. Plaintiff had previously received at different times checks given by Andrews to defendants,
*77 “We hereby consent that the time of the payment of the check of Frank C. Andrews for $50,000 dated Feb. 6th, 1903, and indorsed by ns and deposited with the First National Bank for credit on onr account on that date, be extended pending the action of the Bankers’ Committee.
“Detroit, Mich. Feb. 8th, 1903.
“ Cameron Currie & Co.”
No further presentation was ever made. A verdict was directed for plaintiff for the amount of the check, with interest. Defendants claim that the court erred in directing such a verdict. The contentions on their behalf are:
“ 1. That the certification of the check for plaintiff at its request was equivalent to payment, and operated to release them as indorsers.
“ 3. That plaintiff, on presenting the check, elected to take certification which is the obligation of the drawee bank to pay, and deferred formal presentation of the certified check for payment until the next day. Had it demanded payment instead of certification, or upon 'certification, as it should, the check would either have been paid or dishonored. ’ If dishonored the plaintiff would not have remitted, and the bonds would not have been delivered, but remained in defendants’ control. Whether paid or dishonored neither party would have lost anything. So that plaintiff’s failure to demand payment at the time of certification caused the loss, and defendants cannot be held therefor.”
The dispute in this case is between the indorsee and the indorsers of a check. The following rules of the law merchant fixing the rights, duties, and liabilities of indorsee and indorser each to the other, and the effect of certification by the drawee bank upon such rights, duties, and liabilities, are well settled: The undertaking of the indorser of a check is that, if not paid on presentation within a reasonable time, he will pay it, provided he is properly notified. Such reasonable time for presentation and demand for payment is admitted to be within the day following the indorsement. The indorsee, ás , between
The certification of a check by a bank that it is “good” “is similar to the accepting of a bill, for he (the banker) admits hereby assets, and makes himself liable to pay.” Lord Mansfield in Robson v. Bennett, 2 Taunt. 388.
“ By the law merchant of this country the certificate of the bank that the check is good is equivalent to acceptance; it implies that the check is drawn upon sufficient funds in the hands of the drawee, that they have been set apart for its satisfaction, and that they shall be so ap: plied whenever the check is presented for payment. It is an undertaking that the check is good then, and shall continue good, and this agreement is as binding on the bank as its notes of circulation, a certificate of deposit payable to the order of the depositor, or any other obligation it can assume.” Mr. Justice Swayne in Merchants' Bank v. State Bank, 10 Wall. (U. S.) 604, 647.
Where the check is drawn against funds, the certification, if procured by the payee or indorsee, discharges both maker and indorser, because equivalent to payment. 2 Daniel on Negotiable Instruments (5th Ed.), § 1604;
The important question in the case at bar is whether certification of a check on presentation by the indorsee, though there are no funds, is equivalent to payment. As a general proposition we think it is, as to both the maker and indorser. 2 Daniel on Negotiable Instruments (5th Ed.), § .1604, and cases cited. The rules of the law merchant are inflexible and arbitrary, and necessarily so. An indorser may always insist that the conditions requisite to make his undertaking enforceable shall be strictly complied with; namely, presentation for payment and notice of dishonor. As to the indorsee the certifying bank is bound by estoppel where he has changed his position or parted with value on the strength of the certification. Brooklyn Trust Co. v. Toler, 65 Hun (N. Y.), 187, 138 N. Y. 675, and cases cited.
In this case plaintiff parted with no value before certification, but, relying upon the certification, transferred $50,000 to New York. We find, then, that as between the plaintiff and the bank there was a new and enforceable contract created by the certification of the check. Ordinarily there would be no question but that such condition released the indorsers. In this case, however, it is claimed that, although the check had not been presented for payment, but for certification, yet upon it as certified payment was demanded, and the check was protested, and notice duly given within the time which the same would have been given had the check been presented for payment instead of certification, and because defendant indorsers have suffered no loss by reason of certification, and are in no different position than if such payment had been demanded, therefore they are not released as indorsers. The claim that no loss has occurred to defendants, which we think is not supported by the facts in the case, can be eliminated, for the reason that the liability of the indorser is not predicated upon his loss. See cases cited, supra. The case relied upon by plaintiff to sustain its
In the case at bar plaintiff parted with value on the strength of the certification. No enforceable contract was entered into between the parties to this suit because plaintiff never parted with value relying upon the indorsement. As between the certifying bank and the plaintiff there could be no revocation by the bank. There was no claim of mistake on the part of the certifying bank or any attempt to revoke its certification. If the certification was
It was urged in the trial court, and is urged in this court, that the certification of the check in the absence of funds did not operate to release the maker from his liability thereon, and therefore the indorsers can occupy no better position than the maker and are not released, and upon this theory the trial court decided the case. No authorities are cited to us and we have been able to find none which support this proposition. As already stated, it is a general rule of law that where the holder of a check procures its certification by the bank upon which it is drawn, the drawer and all parties thereto are discharged. The relations of the different parties to a check and the nature of their contracts have already been sufficiently stated. The certification is an entirely new and different contract. By it the certifying bank becomes the primary debtor. The holder has released the maker and indorsers, and volum tarily accepted the obligation of the certifying bank. It is not unlawful for one to draw checks upon án overdrawn account. Neither is it unlawful for the bank to pay such a check and to charge the amount thereof against the drawer. In such case, as in any other case, the holder who obtains a certification has elected to accept the
It is urged that defendants, by giving plaintiff the memorandum of February 8th, above referred to, thereby recognizing their liability and assuming and exercising control over the check, have waived any defense upon the ground that by the act of the plaintiff they were released as indorsers. At the time this memorandum was made the maker and indorsers of this check had been released by the voluntary act of the plaintiff. Instead of the original undertaking of defendants, an entirely new contract had been entered into between the plaintiff and the certifying bank, in which the certifying bank was the primary debtor.
Upon the undisputed facts in this case the defendants were entitled, as a matter of law, to an instructed verdict in their favor. The court was in error in not granting their request to that effect.
The judgment is reversed, and a new trial ordered.