Case ID: kan-app_6/html/0533-01.html
Source: Caselaw Access Project
Author: {"author": "Dennison, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Chanute National Bank v. E. I. Crowell et al.
    
    No. 176.
    Contract Made eor the Beneeit oe Another — checks drawn by one member of firm to pay firm debt, bank having agreed to pay such check, is, and drawer can sue. Where a bank agrees with the members of a partnership engaged in buying and shipping stock that it will pay the checks given by any member of the firm for stock bought by him for the partnership, and receive the proceeds arising from the sale of such stock to reimburse it therefor, the bank cannot refuse to pay such checks, and apply the proceeds arising from the sale of such stock to the individual debt of one member of said partnership ; and if the bank refuses to 'pay such checks, the check holders can maintain an action upon the contract made between the bank and the members of the partnership for the benefit of such check holders, and can compel the bank to apply the funds to the payment of their checks.
    Error from Allen District Court. Hon. L. Stillwell, Judge.
    Opinion filed December 22, 1897.
    
      Affirmed.
    
    
      '■ This action was commenced in the District Court of Allen County, Kansas, by Crowell, as plaintiff, against the Chanute National Bank, E. J. Nooner and A. P. Gibson, to recover judgment upon certain bank checks drawn by Nooner upon the Bank and held by Crowell.
    Crowell and several others living at Humboldt, Kan.-, sold stock to Nooner — a partner of Gibson in buying stock — and received inpayment the individual check of Nooner drawn upon the plaintiff in error. The oheclcs were cashed at the Humboldt First National Bank, and were forwarded to the Chanute National Bank for payment. Payment was refused and the checks protested. The check holders paid the Humboldt Bank, and the other check holders assigned their checks to Crowell.
    Nooner and Gibson, during this transaction, were partners in buying and shipping stock, but kept their bank accounts in their individual names ; and when either of them bought stock he gave his individual check upon the Chanute National Bank in payment thereof. They would then ship the stock to market and have the proceeds arising from the sale deposited with the National Bank of Kansas City, Mo., to the credit of the Chanute National Bank. After .the partnership between Nooner and Gibson was formed,, it was understood between them and the Chanute National Bank that the Bank would pay the checks drawn by either member of the firm in their business, and that the proceeds arising from the sale of stock should be remitted to the Bank to reimburse it for paying such checks ; and this was repeatedly done.
    At the time the checks sued on were presented for payment and protested, the Chanute National Bank was owing to the partnership of Nooner and Gibson, on account of money received by them from the sale of the stock bought at Humboldt by Nooner, the sum of $700.22, and the Bank knew that the money belonged to Nooner and Gibson as proceeds arising from their partnership business. These facts were found by the jury upon the questions submitted to them.
    The Chanute National- Bank refused to pay these checks, and applied the money to the payment of an individual indebtedness owing to it by Nooner, which had been contracted prior to the partnership transactions referred to. Judgment was for Crowell. The Bank brings these proceedings.
    
      J. L. Denison, for plaintiff in error.
    
      C. A. Cox and E. A. Barber, for defendants in error.
   Dennison, P. J.

The plaintiff in error questions the right of the check holders to maintain the action against the drawee of the checks, and cites paragraphs 484, 485, 486, 487 and 488 of the General Statutes of 1889, which provide that no person shall be charged as an acceptor of a bill of exchange unless his acceptance be in writing, etc. It seems to us clear that the Bank cannot be charged as an acceptor. On the contrary it refused to accept the checks, and protested them.

• If the Bank is held liable, it must be for the reason that it is in- possession of a fund which in equity and good conscience it ought to apply to the payment of the check's, ancbbecause it had agreed with Nooner and Gibson that it would pay the checks given by-either of them for partnership stock. The Bank had agreed with Nooner and Gibson that it would pay the checks drawn by either member of the firm in their business, and that it should be reimbursed by the remittance of the proceeds of the sale of stock. It had received the proceeds of the sale of the stock for which the checks were given, and knew they belonged to the partnership of Nooner and Gibson.

It is contended by the defendants in error that the check holders may maintain an action against the Bank because the Bank promised Nooner and Gibson that it would pay said checks from the remittances. We are cited to the case of Anthony v. Herman (14 Kan. 494) and many other decisions of our Supreme Court, which hold that “a person may maintain an action upon a contract made by another for his benefit, although he was not a party to the contract.”

We think this transaction fairly comes within the rule. The Chanute National Bank contracted to .pay the checks which either Nooner or Gibson gave for the purchase of stock in their partnership business. The remittances from the sales of the stock were the consideration received for the promises. The contract was made for the benefit of any one who sold either Nooner or Gibson stock in their partnership business, and thereby became the holder of a check upon the Bank signed by either of them. . Besides this, the Bank had the funds which it knew were funds of the partnership, and in equity and good conscience it ought to have paid the checks given for the partnership stock which was sold to procure the remittance then in their hands.

The check holders can maintain this action. We base our decision upon the grounds just stated. We do not decide whether a check holder can maintain an action against the drawee of an unaccepted check. The United States courts and the courts of many of the states have decided that he cannot maintain such an action. On the other hand, many of the best test writers and the courts of many of the states hold that such an action can be maintained. So far as we are able to ascertain, our Supreme Court has not passed upon this question.

Where there are so 'many acceptable authorities upon each side of a question of so much importance as this one, we think it better that the Supreme Court should first indicate which line of authorities it will adopt, especially as it is unnecessary for 'us to pass upon the question in reviewing the errors assigned in this case.

The plaintiff in error questions the sufficiency of the assignment to Crowell by the other check holders. We think the assignment is not only sufficient, but that the best interests of the plaintiff in error were served by having the matter litigated in one suit.

The judgment of the District Court is affirmed.