Case Title: The Commercial Bank v. Hall

Citation: 94 So. 2d 198

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1957-04-04T00:00:00Z

Document:
94 So. 2d 198 (1957)
THE COMMERCIAL BANK
v.
L. F. HALL et al.
4 Div. 886.

Supreme Court of Alabama.
April 4, 1957.
Albrittons & Rankin, Andalusia, for appellant.
A. R. Powell, Jr., and W. H. Baldwin, Andalusia, for appellees.
MERRILL, Justice.
This cause was tried by the circuit court without a jury under Count 5 of the complaint, in which appellees, L. F. and J. V. Hall, partners d/b/a Hall Tie & Timber Agency, sued appellant, The Commercial Bank at Andalusia, for $1,868.04 for paying a check for that amount after the Halls had filed a written stop payment order with the bank. The trial court entered judgment in favor of plaintiffs and the bank appealed.
The cause is here on an agreed stipulation of facts which, in short, are as follows:
The Halls' bank account was styled "Hall Tie and Timber Agency" and either L. F. Hall or J. V. Hall could sign checks. On May 27, 1954, L. F. Hall issued a check on the account for $1,868.04, being payable to W. M. Avery. On May 29, 1954, J. V. Hall gave the bank a written stop payment order on said check. On June 9, 1954, W. M. Avery presented the check for payment and one of the tellers paid it. The *199 bank did not debit the Hall account with the check until July 15, 1954.
When J. V. Hall wanted to stop payment on the check, he went to the bank, stated his business and was presented with a red bordered form furnished by the bank, and a stenographer employed by the bank filled it out for him. The stop payment order filed by Hall contained the following qualification:
The trial court, in sustaining a demurrer to a plea setting up this qualification, or release as we shall subsequently term it, held, in effect, that the release was void as being contrary to public policy.
Practically all the authorities cited infra hold that the drawer of an uncertified check has a legal right to stop payment thereof by giving a seasonable stop payment notice to the bank on which it is drawn, and, if the bank thereafter pays such check, it is liable therefor. That is the bank's common law liability and it grows out of the relationship of the parties, which is that of debtor and creditor. After receipt of a notice to stop payment, the bank pays at its peril. See also, Southern Bank & Trust Co. v. Whited, 25 Ala.App. 309, 145 So. 832; Bank of Moulton v. Rankin, 24 Ala.App. 110, 131 So. 450, certiorari denied 222 Ala. 188, 131 So. 454; Peoples Savings Bank & Trust Co. v. Lacy, 146 Ala. 688, reported in full 40 So. 346.
Appellant aptly states the major question in these words"the primary point for consideration and decision in this case is the validity of that provision of the written stop payment order relieving drawee bank of all liability should payment be made through inadvertence or accident only."
This question is one of first impression in this Court, and has been decided in only eight states. The first case was decided in 1920, in Tremont Trust Co. v. Burack, 235 Mass. 398, 126 N.E. 782, 9 A.L.R. 1067. It was there held that the consideration for the clause relieving the bank from its liability springs from the mercantile relation of the parties and the reciprocal rights and obligations which the law attaches to that relation. It further held that the provision was not void as against public policy, despite the fact that it, in effect, relieved the bank from liability for payment through the negligence of its employees. In 1926, the Court of Appeals of New York followed the Massachusetts case in Gaita v. Windsor Bank, 251 N.Y. 152, 167 N.E. 203. In 1932, the Indiana Appellate Court followed the Massachusetts and New York cases in Hodnick v. Fidelity Trust Co., 96 Ind.App. 342, 183 N.E. 488.
The first case to hold differently was Hiroshima v. Bank of Italy, 78 Cal. App. 362, 248 P. 947, decided in 1926. It was there held that such a provision relieving the bank against liability was void as against public policy. There appears to be some question as to the applicability of some California statutes to the question, but the issue was met squarely by the Ohio Supreme Court in 1948, in the case of Speroff v. First-Central Trust Co., 149 Ohio St. 415, 79 N.E.2d 119, 1 A.L.R.2d 1150. That court considered the cases previously decided on the point and held that the release was void, both on the ground of lack of consideration and as being against public policy. (An annotation on the subject is found in 1 A.L.R.2d 1155).
*200 A year later, 1949, the question was presented to the Supreme Court of Errors of Connecticut. That court reviewed the cases on both sides of the question and held that the release was not supported by a consideration and was unenforceable. Having reached such a conclusion, it did not consider the question of whether it was void as against public policy. Calamita v. Tradesmens Nat. Bank, 135 Conn. 326, 64 A.2d 46.
In 1950, in Michaels v. First National Bank of Scranton, 73 Pa.Dist. & Co.R. 29, the court reached the same conclusion as that reached by the Connecticut court, but apparently without the benefit of that decision as it is not cited.
Then in 1951, the New Jersey Superior Court followed the Connecticut decision after reviewing the authorities in Reinhardt v. Passaic-Clifton Nat. Bank & Trust Co., 16 N.J.Super. 430, 84 A.2d 741, affirmed 9 N.J. 607, 89 A.2d 242.
We have carefully considered the cases on each side of the question and we have concluded that the better reasoning is found in those cases which hold the release void for the lack of consideration. Chief Justice Weygandt, speaking for the Ohio Supreme Court, in Speroff v. First-Central Trust Co., 149 Ohio St. 415, 79 N.E.2d 119, 122, 1 A.L.R.2d 1150, said:
We quote from Calamita v. Tradesmens Nat. Bank, 135 Conn. 326, 64 A.2d 46, 49:
Also pertinent is the following from Reinhardt v. Passaic-Clifton Nat. Bank & Trust Co., 16 N.J.Super. 430, 84 A.2d 741, 744:
We might add as a practical matter, that it does not appear reasonable to hold that a stop payment order seasonably made orally, by telegram or by letter, can impose liability on a bank when disregarded, and yet hold that a regular red bordered stop payment form, furnished by the bank, removes all liability for negligence in failing to heed the stop payment order, merely because a release is printed under the stop payment order.
Having held the release to be void for the lack of consideration, it is not necessary to discuss the question of public policy.
Appellant urges that the stop payment order did not properly describe the check because the check was signed "Hall Tie & Timber Agency by L. F. Hall," while the stop payment order was signed "Hall Tie & Timber Agency by J. V. Hall." The stipulation of facts shows that either L. F. or J. V. Hall were authorized to sign checks against the account of Hall Tie & Timber Agency. We think this sufficient to show the lack of merit in appellant's contention, and we need not go into the question of estoppel raised by the bank's acceptance of the stop payment order and its failure to debit the account of Hall Tie and Timber Agency with the amount of the check until more than thirty days after it had paid same.
It is also argued by appellant that the trial court erred in overruling and denying the bank's motion to transfer the cause to equity.
The denial of a motion to transfer a cause from the law docket to the equity docket, under Tit. 13, § 153, Code 1940, is not reviewable on appeal. Wiggins v. Stewart Bros., 215 Ala. 9, 109 So. 101; Pickens County v. Johnson, 227 Ala. 190, 149 So. 252. Mandamus is the proper remedy. Ex parte Tennessee Valley Bank, 231 Ala. 545, 166 So. 1; Ex parte City of Bessemer, 240 Ala. 52, 197 So. 20; Edge v. Bonner, 257 Ala. 385, 59 So. 2d 683.
The judgment of the circuit court is affirmed.
Affirmed.
LIVINGSTON, C. J., and LAWSON and STAKELY, JJ., concur.