93 Tenn. 409 | Tenn. | 1894
This suit is brought by bill in chancery on an account for $745, alleged to be due from defendant. The defense was by answer, averring payment, and exhibiting the receipt in full of the account sued on. The defendant further set up in defense that the payment, was made by a check drawn in his favor by Sulzbacher Bros., and indorsed to the complainant. It was insisted that this check, which was indorsed June 19, 1891, had been accepted in payment of the account, but that, if only taken as a means of payment, the - check was not presented until June 22, and until- after the failure of the bank on which’it was di’awn— the Kashville Savings Bank — -and that the negligence of the complainant in the presentment of
The first question to be determined is whether the indorsement of the check was done in payment of the indebtedness. The settlement of that •question depends upon the intent of the parties, •as evidenced by express, agreement or the facts and circumstances of the transaction. The evidence on this subject is as follows: The member ■of the firm of Kirkpatrick & Co. with whom the ■transaction was had was asked:
“ Please state whether or not you took the ■cheeks as in themselves a payment [there were ■other checks indorsed with this not necessary to be noticed] for the amount of the account, or how you took them.”
Ans. — “ I supposed that the hank drafts and the ■Sulzbacher check were good, and took them expecting they would be paid, .and the money so*412 realized would go in payment of Puryear’s account and the cash I had advanced. I did not take them as a payment of the account, but only as a way of paying it, and for Puryear’s convenience. If the checks were not paid, I, of course, did not expect the account would thereby be paid.”
It is observed that he does not state what was said between them, uor deny what Puryear’s son and agent (to be subsequently shown) testifies as to what was said. At most, it is but the expression of his present view of the condition of his min’d at the time of the transaction. The son and agent of Puryear testifies, on being asked:
“ What did you say to him when you gave him the check, relative to its being a payment on y o u r fath er’s acco u nt ? ”
“ I did not say any thing, except told him that I wanted to pay thte account iu full as to the amount of it, and gave him the Sulzbacher check iir part payment of it.”
“Did Kirkpatrick & Go. raise any objection to taking the Sulzbacher check, or what did they say, if any thing, about it?”
“No, sir; they did not make any objection, but remarked that this was good for it.”
This, with the delivery up of the notes 'and the receipting of the account in full, constitutes the facts of the transaction, as developed in the evidence. It will be remembered that this is not the case of Puryear giving his own check for his
It is well settled that the taking of the debt- or’s check on account is not payment, unless it was so intended (Springfield v. Green, 7 Bax., 301); and it is true that the taking of a check of another by a creditor on account, is not necessarily payment, hut must have effect according to the intention of the parties. In the absence of proof of a special agreement, the giving up or retention of the original security will, in general, be a decisive circumstance in determining that question, for, if the creditor means, in any contingency, to resort to the original indebtedness,, he .will scarcely be willing to surrender all evidence of that indebtedness to his debtor without fortifying himself with some evidence of the real nature of the transaction. Morris v. Harvey, 75 Va., 726; Ins. Co. v. R. R. Co., 86 Va. (19 Am. Rep., 868).
Upon the facts of this transaction, as given by the son, and not denied by the complainant, we are of the opinion that the check was accepted in payment. In this connection it is objected that the pleadings raised no question as to notes delivered up with the receipt when the account was received; but receipt for the account is exhibited with the answer, and the account .itself- is proven
Where the creditor accepts the check of his debtor, it is his duty to make presentment and demand, and, of course, the same duty devolves upon him in the acceptance of an indorsed check, which is additional security. This check was not, in fact, presented until June 22, after the failure of the bank. Defendant averred, in answer, that Sulzbacher Bros, had on deposit at the time the check was drawn, and up to the failure of. the bank, an amount sufficient to have paid the check, and this amount was lost to him by the negligence of the complainant. It is not denied that if these facts be true (and the failure to make demand is proven, though no proof is offered as to the condition of Sulzbaeher’s account, as averred), that the defendant would be discharged; and without proof of the last one he would be discharged if this was a suit upon the check, but it is insisted that, being a suit upon the original account, the burden of proof is not only on the defendant to show that presentment and demand was not made by the plaintiff, but that Sulzbacher Bros, had the amount of money on deposit to pay it, and that defendant sustained the loss of that amount by reason of such negligence in presenting the check.
This exact question, in express terms, has not been adjudicated in this State, and there is a great dearth of authority upon it, although it would seem to be one which must have repeatedly arisen. It is settled in this State, and many others, that in suits on checks, where there has not been due demand and notice, the burden of proof is upon the holder of the check to show that the drawer has sustained no injury. 3 Am. & Eng. Ency. of Law, and eases cited under the note as to burden of proof. See Bank v. Merritt, 7 Heis., 177.
The same doctrine has been applied in this State to the case of suit on the original indebtedness. Betterton v. Roope, 3 Lea, 215. It is true
We think the sound rule is, whether the suit be on the check indorsed, or on the original indebtedness, and it appears in the proof that such check was not duly presented and payment demanded, where the check has been received as absolute or conditional payment, then the burden •of proof shifts to the holder to show that, notwithstanding such delay, the debtor was not injured. In - the Merritt case, already cited, it is said if the presentment and demand be not properly made, the presumption of injury from the negligence of the holder arises, and the onus of showing that no injury has resulted from delay to the drawer rests on the holder. The presumption is, that the check is drawn on actual funds.
It is insisted in the argument of complainant, that a different rule is settled in the case of Bradford v. Fox, 38 New York, 289, and Railroad Company v. Collins, 3 Lansing, 29 (New York Supreme Court). But this is an erroneous application of these cases. The first was the case of the debtor giving his own check in payment, which the bank refused to certify without explanation, thus creating the inference that the check was worthless. It is true that the Court in that case said “that cases regarding the laches of the
But that was simply applying the rule, which, as we understand it, is applied by Courts holding that the burden of proof, in case where the debtor has given his own check in payment of his indebtedness, is upon the holder to show both delay and loss. Such holding puts the burden upon him, not only to show delay in presentment of the check, but loss to himself in consequence. If, however, payment, absolute or conditional, has been made by the cheek of another, indorsed by the debtor, the failure to present such cheek and demand payment properly, will release the debtor as to his liability upon the check and original indebtedness. Smith v. Miller, 43 New York, 171; Daniel on Neg. Inst., Sec. 828, cited and approved, 3 Lea, 220.
The second case in Lansing’s reports, 3 Rew York, cited, was also a case where the debtor had given his own check, and in which the rule stated in the Bradford case was applied. Put, too, upon the ground that the action was upon the preexisting debt-, and was not, therefore, concluded by
“A different rule obtains as between the holder and drawer of a check. As between them, presentment may be made at any time, and delay in presentment does not discharge the liability of the drawer, unless loss to him has resulted. Little v. Phenix Bank, 2 Hill, 425.
“The action here is not upon the indorsement of the defendant, but upon the original -indebtedness. If the discharge of the defendant’s liability as indorser discharges also his liability as debtor for the original debt, the judgment must, on that ground, be reversed. In Hamilton v. Cunningham, 2 Black, 350, Chief Justice Marshall considered the effect of the neglect of the holder of a bill to give due notice of dishonor, whereby prior parties thereto were discharged upon the liability of 'the debtor for a debt for which the .bill was drawn. After showing that the authorities in which the debtor had been discharged, proceeded upon the theory that he has sustained an actual loss, he reached the conclusion that the true principle is ‘ that, if a bill be received as provisional payment, the omission to give defendant notice of its dishonor deprives the creditor of his action On
Andrews, Judge, who delivered tbe opinion in that case, adds: “ I am not sure that this doctrine is reconcilable with expressions in tbe opinion of this Court in Smith v. Miller, 43 N. Y., 171; 52 N. Y., 545.” He then quotes from that case, and shows that judgment was therein rendered for the defendant on two grounds: “First, in the absence of proof of demand and refusal, and notice to the drawer according to the usual course, there could be no recovery upon the draft or upon the indebtedness upon which it- was given; and, second, on the ground of negligence in failing to present the check on the day on which it was given. The last ground stated was, upon the facts, a satisfactory basis for the judgment; and the same principle was applied, upon similar facts, in Meadville First National Bank v. Fourth National Bank, 77 N. Y., 320.” The Court then declines to determine whether the cases cited were in conflict or not, or which class of cases stood upon the better reason, but gave the defendant a new trial upon the facts.
"We think, as therein indicated, that the ex-tinguishment of liability as indorser on the check was an extinguishment of liability for the original
The judgment is' therefore affirmed, with costs.