182 N.E. 513 | Ohio | 1932
It must first be determined in this case whether a withdrawal check upon a savings account is within the meaning and the true intent of Section 713, General Code; that is to say, whether it is "a check drawn by a depositor." This presents a question of no difficulty. Any distinctions sought to be made between the form of the withdrawal check and the ordinary check upon a checking account are purely technical, as an examination of the withdrawal check will clearly disclose. The withdrawal check was signed by the depositor, and it was an order upon the savings department of the trust company to pay the cash to her. True, it might equally be said to be payable to the order of "cash," which is only another form of making it payable to bearer. It is the practice of such institutions to honor withdrawal checks only by the payment of cash, and not to regard them as negotiable. Upon this point the record is not as clear as it might be, because the case was disposed of in the courts below upon demurrer to the petition, and the petition does not in detail set forth the rules of the savings department of the trust company. We are therefore limited to an examination of the withdrawal check, uninfluenced by any possible rules of the institution which might adversely affect the situation. It is difficult, however, to imagine any rules which could affect the withdrawal check otherwise than to render it nonnegotiable. Inasmuch as Mrs. Blodgett never attempted to negotiate it, and immediately employed it in the purchase of a draft by the same bank, that question cannot influence the result in this case. We are therefore of the opinion that the withdrawal check comes within the meaning and intent of Section 713, General Code.
Section 713, the meaning and validity of which must be determined in this case, reads as follows: "In any case where any bank incorporated under the laws of this state or any unincorporated bank doing business *522 within this state shall have presented to it for collection and payment, a check drawn by a depositor in such bank or unincorporated bank who at the time such check is presented to it for collection and payment has on deposit an amount equal to such check, if after the receipt thereof such bank or unincorporated bank shall charge the account of such depositor with the amount thereof and shall in payment thereof draw a draft upon another banking institution, which draft shall remain unpaid at the time that such bank drawing same is closed by the superintendent of banks of Ohio or by action of its board of directors or other proper legal action, in such event the assets of such closed bank shall be impressed with a trust for the payment of such draft, and the superintendent of banks of Ohio or any one legally charged with the liquidation of such closed bank, shall pay such draft as a preferred claim out of the assets of such failed bank."
While the point has never been decided by this court, as to whether the purchaser of a draft is entitled at common law to preferred payment for the amount thereof, if the bank of issue fails before the draft is paid by the drawee, it is established by the overwhelming weight of authority that the holder of the draft is a common-law creditor at common law, and such we believe to be the rule of reason, though it is not necessary to so declare in the instant case. It must have been assumed by the General Assembly to be the rule in Ohio, as otherwise there would have been no occasion for the announcement of a different rule in Section 713, General Code.
The controversy as to the construction of this section turns upon the meaning of the expression "collection and payment." There would be no controversy if the draft in each instance had been issued by the bank of issue in the transmission of funds held by the bank as the proceeds of a collection item. It is *523
insisted by counsel for the superintendent of banks that Section 713 was intended to apply only to collection items. It is his insistence that the word "collection" should be strictly construed, and that it was intended by the Legislature that the section should only apply where the bank is acting as a collecting agent, and therefore, in fact, has the funds, not as owner, but as a trustee of the proceeds of a collection for the benefit of the party for whom the collection has been made. It is indisputable that under such circumstances the bank would be a trustee, but in that event it would be wholly unnecessary to enact a statute to impress the fund with a trust, or to create a preference in payment. The very character of the transaction renders the bank an agent, and the person for whom the collection has been made a principal. This was declared inJones v. Kilbreth,
Does the statute thus interpreted contravene constitutional limitations? It is claimed that it is violative of Section 2, Article I, of the Constitution, which guarantees the equal protection of the laws, and of Section 26, Article II, which requires that all laws of a general nature shall have uniform operation throughout the state. More particularly, it is argued that such an interpretation renders the statute discriminatory against cashier's checks. It only operates as a discrimination because the bank lends its deposits to other banks instead of keeping them at all times in its vaults. If the cashier's check were immediately presented and paid, a legal preference would be obtained. This could not happen in the ordinary course, because there would be no occasion to issue a cashier's check in exchange for an ordinary check, if the bank had sufficient currency in its vaults to honor the check. It is not the province of the court to justify this statute, and yet it must be said in its favor that it encourages the use of depositaries by banking institutions, thereby keeping money in active use instead of accumulating in the vaults. It is also in harmony with modern methods of executing commercial transactions by means of credit exchanges instead of payments in currency. It permits a country bank to deposit its reserves in distant banks, and thereby seek the security of sound financial institutions in metropolitan centers, and yet preserve the liquidity which is essential in times of financial stress. This section does result in a discrimination between a cashier's check and a draft drawn upon another bank. For the reasons already stated, this discrimination is upon a sound and reasonable basis, in the interest of expedition and simplicity in banking transactions, and to encourage the use of credits in the execution of such transactions. We are of the opinion that the *526 statute does not contravene any of the inhibitions of the Constitution.
The judgment of the Court of Appeals in each case will be affirmed.
Judgments affirmed.
MATTHIAS, DAY, ALLEN and STEPHENSON, JJ., concur.
JONES and KINKADE, JJ., not participating.