Girard Bank v. Bank of Penn Township

The opinion of the court was delivered,

by Strons, J.

Were this a suit against the Bank of Penn Township by the original depositor, the Statute of Limitations would be interposed in vain, not so much because a bank is a technical trustee for its depositor's, as for the reason that the liability assumed by receiving a deposit is to pay when actual demand shall be made. The engagement of a bank with its depositor is not to pay absolutely and immediately, but when payment shall be required at the banking-house. It becomes a mere custodian, and is not in default or liable to resрond in damages until demand has been made and payment refused. Such are the terms of the contract implied in the transaction of receiving money on deposit, terms necessax-y alike to the depositor and the banker. And it is only because such is the contract, that the bank is not under the obligation of a common debtor to go after its customer and return the deposit wherever he may be found. Hence it follows, that no right of action exists, and the Statute of Limitations does not begin to run until the demand stipulated for in the contract has been duly made. For this, authorities are hardly necessary. Two were cited in the court below, and they suffice : The Union Bank v. The Planters’ Bank, 9 Gill & Johnson 439-461, and Johnson v. The Farmers’ Bank, 1 Harrington 117-119.

Nor is it easy to see why the holder of a check marked “good,” stands in any different position from that of thе original depositor. Presenting a check and having it thus certified, is clearly not a demand for the money deposited. Its purpose is not to demand payment, but to obtain evidence that the sum mentioned in the check remains on deposit to answer the check when presented. It contemplates that the bank is still to retain the custody of the money. How retain it ? Asa depository, or as value paid for the acceptance of a bill of exchange ? Certainly not as the latter, for then no demand at the banking-house would be necessary before suit, and the presentment of a bill payable on demand, merely for acceptance, is an absurdity. When a check payable to bearer, or order, is presented with a view to its being markеd “good,” and is so certified, the sum mentioned in it must necessarily cease to stand to the credit of the depositor. It thenceforth passes to the credit of the holder of the check, and is specifically appropriated to pay it when рresented, and as the purpose of having it so certified is not to obtain payment, but to continue with the bank the custody of the money, the holder can have no greater rights than those of any other depositor. Certainly he has no right of action until pаyment has been actually demanded and refused. That he stands on the footing of an ordinary depositor is the doctrine of Willetts v. The Phoenix Bank, 2 Duer 121. In that case it was said by Chief Justice Oakley, “ it is the duty of the officer certifying a check, to cause it to be immediately chargеd as paid in the account of the drawer, and when this is done the sum thus charged will remain as a deposit in the bank to the credit of the check, and be for ever withdrawn from the control of the maker, except as a holder of the check. Such a deposit stands exactly upon the same ground as any other. The bank, ‍​​‌​​‌​​‌‌‌‌​‌‌​‌‌​​‌​‌‌‌​​​‌​‌​‌​​​​​​‌‌​‌‌‌​​​‍instead of being prejudiced, is benefited by the delay of the owner in calling for its payment, and can with no more propriety impute laches to the unknown holder of the check than tо a known holder of an ordinary deposit.” Marking a check “good,” was held to be an unconditional engagement to hold a sufficient amount of the funds of the drawer to meet the check whenever it should be presented for payment. The Farmers’ and Mеchanics’ Bank v. The Butchers’ and Drovers’ Bank, 4 Duer 219, is to the same effect. The doctrine is sound. Checks on a bank marked “ good,” are to be regarded as evidences of deposit to the credit of the holder, and laches in making a demand for payment is no more imputable to him than to any other depositor.

These principles were conceded by the learned judge of the District Court, but he was of opinion that inasmuch as there was no evidence, in this case, of any demand made by the holder of the check within six years from the date of the contract, the plaintiffs could not recover. The сheck ivas drawn on the 7th of October 1852. When it was certified does not appear, but it probably was when it was drawn. It was not presented for payment until September 3d 1859. Nearly seven years, therefore, elapsed from the date of the deposit befоre demand was made for its return, and the question now is whether such delay in making the demand bars the plaintiff from a recovery. If it does, then this artificial rule which is said to have been adopted in analogy to the Statute of Limitations, is far more severe upon depositors than is the statute itself. The statute begins to run, not from the date of the deposit, but from the time when the depositor makes demand for payment, and is met with a refusal. This rule completes the bar in six years from the date of the deposit, and as it was applied in the present case, it amounts to a presumption incapable of being rebutted. On the 10th of October 1854, within six years from the commencement of this suit, the defendants paid the money to Adam Dietrich, the original depositor, taking his bond of indemnity against thе certified check which he claimed to have lost, though in truth he had endorsed it away. This paying a duplicate check, and taking a bond of indemnity, was a distinct acknowledgment that the money then remained in bank, on deposit to the credit of the holder of the check which had been certified. It was certainly sufficient to rebut any presumption less than a conclusive one, that it had been paid. Now, as no statute requires that, in cases where a creditor must make a demand before he can sue, thе demand shall be made within six years from the date of the contract, or action be debarred; any rule exacting demand within that time can have no other basis upon which to rest than a presumption that the debt has been paid, or the deposit withdrawn. Whаt becomes of such a presumption in the face of a clear acknowledgment of the debtor that the debt remains unpaid, or that the deposit is a continuing one ?

We cannot agree that there is any such rule applicable to an оrdinary case of debtor and creditor, banker or depositor, or bailor and bailee. It would be mischievous in its operation upon contracts generally, and mischievous in the extreme when applied to contracts of bailment. And we think it would be a surprise, were Ave to hold that banks or other corporations can defend themselves against claims for deposits or undraAvn dividends, on the ground that no actual demand has been made for them Avithin six years.

In Thorpe and Wife v. Booth, 1 Ryan & Moody 388, 21 Eng. C. L. Rep. 468, it appeared ‍​​‌​​‌​​‌‌‌‌​‌‌​‌‌​​‌​‌‌‌​​​‌​‌​‌​​​​​​‌‌​‌‌‌​​​‍that suit had been brought upon a promissory note dated March 12th 1813, whereby the defendant promised to pay seven hundred pounds “ twenty-four months after demand.” The note was not presented for payment until June 28th 1823; more than ten years after it was given. The defendant pleaded the general issue and the Statute of Limitations. But the plaintiff was held entitled to recover, on the ground that the cause of action did not arise until twenty-four months after the demand was actually made. That it was not made within six years from the date of the note wаs treated as of no consequence. This was a case between a simple debtor and creditor. There is even less reason for requiring a depositor to make speedy demand, for it would defeat the very purposes of the deposit.

It is true there are cases, and we have been referred to some of them during the argument, in which it was held to be incumbent upon a plaintiff to make a demand, where actual demand was necessary, within a reasonable time from the making of the contrаct, and generally within the time limited by the Statute of Limitations for bringing the action. The circumstances of all these cases are, however, peculiar, and none of them were between an ordinary creditor and debtor, or depositor and depositary, or bailor and bailee for custody. The first of them is Codman v. Rogers, 10 Pick. 112. It was a bill in equity brought to compel the settlement of a partnership account twenty-five years after the firm had been dissolved, and nineteen years after a partial account had bеen settled. From 1809 to 1826, no demand was made for a further settlement. The bill was dismissed on account of the laches of the complainant. The observations made by Wilde, J., in delivering the opinion of the court, were unnecessary to the case, mere obiter dicta, though worthy of consideration. In remarking upon the time within which demand should be made, where demand is necessary previous to the commencement of an action, he said, a demand must be made within a reasonable time, otherwise the claim is considered stale, and no relief will be granted in a court of equity. What is considered a reasonable time for this purpose does not appear to be settled by any precise rule. It must depend upon circumstances. If no cause for delay ‍​​‌​​‌​​‌‌‌‌​‌‌​‌‌​​‌​‌‌‌​​​‌​‌​‌​​​​​​‌‌​‌‌‌​​​‍can be shown, it would seem reasonable to require the demand to be made within the time limited by the statute for bringing the action. He then proceeded to show that the complainant had been guilty of great laches in lying by for seventeen years, without making any claim, until after the death of the person whose estate he sought to charge, and until after the papers of the decedent had been destroyed by fire, and decreed that the plaintiff was not entitled to relief in a court of equity. Surely there is nothing in this case to support the doctrine that a depositor must make a demand for his deposit within six years, or be debarred from recovering it by action. Yet this case is the leader of all the others which have been cited. In the Pittsburgh & Connellsville Railroad Co. v. Byers, 8 Casey 22, Same v. McCully, 8 Id. 25, and Same v. Graham, 12 Id. 77, it was held, that the railroad company having permitted more than six years to pass from the time of subscription to its capital stock, without making calls upon the subscribers, was barred from maintaining an action. The contract of subscription was a peculiar contract; the legislature had fixed fivе years as the limit within which the construction of the road should be commenced. It was the duty of the company to commence it, and to prosecute it vigorously, and of course, to make the calls without delay. Nothing like a continuing relation of prоmissor and promissee was contemplated. The parties stood in a very different position towards each other from that which a depositor holds towards his banker, and as the company had taken no steps within the six years to prosecute their road, there was warrant for a presumption that their rights against subscribers to the capital stock had been abandoned. The only other case is Morrison’s Administrator v. Mullin, 10 Casey 12. There a receipt had been given to the sheriff by a judgment-creditor, for pаrt of the proceeds of a sheriff’s sale, with a stipulation, that if on a settlement of the liens on the debtor’s interest in the lands sold, the creditor was not entitled to the money received, he would refund it, or so much as he was not entitled to retain. ‍​​‌​​‌​​‌‌‌‌​‌‌​‌‌​​‌​‌‌‌​​​‌​‌​‌​​​​​​‌‌​‌‌‌​​​‍Twenty-two yeаrs afterwards the sheriff brought suit on the stipulation contained in the recent, and the Statute of Limitations was pleaded. This court held that the action could not be maintained in consequence of the sheriff’s delay in procuring a settlement of the liens. In faсt, the twenty years presumption stood in the way of recovery.

In delivering the opinion of the court, Mr. Justice Thompson referred to the rulings in Codman v. Rogers, and Railroad Co. v. Byers, but without laying down, or intending to assert a general doctrine that where demand is necessary under a simple contract before bringing an action, it must in all cases be made within six years from the date of the contract.

Indeed all the cases, from Codman v. Rogers down, when speaking of the reasonable time within which demand ought to be made, and defining it as generally the statutory period for limitations, add, “when no cause of delay is shown.” Even this qualification is an important one as applied to the present case. An early demand would have defeated the object of the deposit, and the certified check was mislaid for years.

Upon the whole, we find nothing in the adjudicated cases which requires us to hold that a depositor ‍​​‌​​‌​​‌‌‌‌​‌‌​‌‌​​‌​‌‌‌​​​‌​‌​‌​​​​​​‌‌​‌‌‌​​​‍is barred of his action against his banker by delaying to call for his deposit more than six years from tbe time when he placed the money in bank. And we think such a doctrine would be alike impolitic and unjust.

The judgment for the defendants, non obstante veredicto, must therefore be reversed, and judgment entered on the verdict for the plaintiffs.

Judgment reversed, and judgment on the verdict for the plaintiffs.

Case Details

Case Name: Girard Bank v. Bank of Penn Township

Court Name: Supreme Court of Pennsylvania

Date Published: May 6, 1861

Citation: 1861 Pa. LEXIS 167

Court Abbreviation: Pa.