Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1890-03-01
THE BANK WINS.
AN IMPORTANT DECISION TO FINAH-
CIAL INSTITUTIONS.
Superior Judge Armstrong Renders Judg-
ment in the Case of steinhart
VS.. d. o. Mills Bank.

The decision is regarded an important one
to banks and persons having dealings with
them
In the Superior Court of Sacramento county,
state Of California. W. and l. Steinhsrt plsint-
IFS. VS.. the National Bank Of D. o. Mills & Co.,
This Is an action by plaintiffs against the
defendant o banking corporation, tor money
had and received TO the use of the plaintiffs.
The answer puts in issue the material alega-
items Of the complaint.
The evidence Establishes the following facts
one G Politz on the 18th cay OF December,
IasS made his pTOmissOry note 10 the plaintiffs
for $3.50, payable TWO months after date, at the
bank OF the defendant Ihls note fell due the
17th day OF February, 1885, the lsth being sun
day They delivered to the London, Paris and
American Bank for collection, who forwarded
it to the defendant al sacramento TO be pre-
scented for payment which was received Sun
day the l7ih day OF February, 1889. The maker
was a customer of the defendant, and ON the
morning OF the 18th he deposited with the de-
fendant SOD, on general account While he
was at the bank at the time he made the de-
post a clerk of the defendant presented the
note for payment. The maker wrote across the
lace of the note, Please charge the same 10 my
account G. Poiitz." The clerk then wrote on
field The clerk, Litslefcld then stamped
these WORDS on the back OF the note within a
square, National Bank OF D. o Mills & Co,
February is, $50. sacramento, Cal" The
square and words were in red ink
aud understood 10 mean Cancelled"
The clerk then charged the amount Of the note
in the pass-bOok OF the maker and ia the journal
of the defendant in his account Before the
close OF the business hours Of the day the de-
feudant drew its check in favor OF the London,
Paris and American Bank upon the Bank OF
California and after the close of busin' IS hours
inclosed its check in an envelope with a letter
OF advice addressed 10 the London, Paris and
American Bank. At the time OF this transac-
ton polijZ the maker Of the note, had no money
+f.afs ffr4flz n M
Some time previous he had made his note gay
able one day after date to the defendant to cover
oYerdTaits Tor the SUN of IS 500, which was &C.
credited 10 his account Allowing this note ss
a credit in account with Folitz, the maker Of
the note due the plaintiffs, and charging him
with the amount Of said cheek, the journal OF
the defendant at the close of the business hour
On that day showed g nominal credit in his
favor of s367; but in fact he had overdrawn his
account in secess Of his note, then overdue. and
moneys deposited more than 5000. AT the
time the defendant recsived from Politz the
note for $500 TO cover oyer-draftS he was III
god credit, but in fact insolyent, and was in-
solvent on the 18th day Of February, 1859, at the
time of the transaction out of which this
action arose; and about O'Clock of the after
noon of that day he made general assignment
under the provisions OF the Civil Code for the
benefit OF his creditors. The defendant knew
nothing of the insolvency OF Poiitz until after
the assignment was made. On the same day,
end Immediately after ascertaining that he was
ins0lgent, the defendant procured the envelope
cancelled il. and Immediately Endorsed
on the back of the note these words:
enlarged in Error; f. Miller, Cashier ="
Cancelled In Error; F. Miller Cashier" And
Immediately, on the same evening, returned the
note by mail with letter OF advice as to what
had been done, 10 the London, Paris and Amer
lean Bank at san Francisco. There are no in
dOrseTs on the note due plaintiffs. Neither the
plaintiffs nor the London, Paris and American
Bank knew OF had any notice of the trensac-
tioa between the defendant and PolltZ the
maker OF the note due the plaintiffs, or of the
drawing of the draft by the defendant until
after the check had been Cancelled and the de-
fenGaut had declined to advance the money to
pay the note The defendant did not receive
any money or other valuable thing from Politz
10 or for the Of the plaintiffs, and they have
lost no rights 1y the acts of the defendant.
These are all the fsets of the case. The de-
feucant objects 10 a recovery by the plaintiffs
the case DO not show any liability Of the de-
feudauti second, if the facts show a liability,
still the plaintiffs cannot recover in this form
of action.
These objections will be considered in the
order in which they are stated: L 1t may be
stated, IL timie, that the fact that the defendant
is a co poration engaged in banking business
does not take the case out Of the operation of
the general rules OF law applicable to traEs-
actions between Individuals.
The learned counsel for the plaintiffs. after
stating that The transaction between the de-
PENDANT and the maker of the note was a pay
ment Of il, in their brief say The plaintiffs
in the case could not dispute the fact that the
defendant was their duly authorized agent for
the purpose OF collection. Let US assume that
INSTEAD of Mr.. Politz making an assignment on
the evening of the 18th day of February, 1889,
and after the payment as above of the note
that the defendant bank had failed in business,
could the plaintiffs in this case then have re-
covered from Politz The amount OF this note?
We think not. Payment to an authorized agent
discharges the debt"
II is true that payment to an authorized agent
discharges the debt but did the transaction
between the defendant and Poitz constitute
payment? This is the question to be decided,
Ia the case Of Indig VS.. National City Bank,
so y. Y, ltO, the plaintiff deposited with the
defendant note to which there was no en-
dorser, payable at the Bank of LowYille, OF
which bank the maker was customer The
defendant sent the note by mai to that bank,
which was an ordinary method of transacting
such business; the note reached the bank the
day 1t fell due; upon the next day 1t sent its
draft on New York in payment and sent the
note 70 the maker; then on the s. aie day failed
The amount OF the draft was charged IN the &C
count of the maker, but he had not quite sui
ficient on deposit TO pay the moi the deficit
was made W after the failure. Tee defendant
received the drait the next day, y hich was Sat
urday, after business hours, and forwarded il
on Monday morning in the usual course OF bus
iness to the clearing house in New York and il
was returned mot good
The plaintiff the payee of the note com
meneed his action sgalnss the defendant to re-
cover the amount Of the nate because of the al
legged negligence of the sub agent, the Bank OF
LowviIle. The plaintiff was nen-suited, and
the Judgment was affirmed on appeal. and IN
deciding the case the Court said:
"Where a tote is payable at q bank. and en-
tire failure to present 1t for pay aent does not
discharge the maker (Walcotl rs. Van SAINT
wood, u John, rs; Green vs.. 10ings Barb,
652i Caldwell VS. Cassidy, S Cow, 27ll If the
maker has not sufficient funds in
the bank the omission to present il
is OF no consequence. II ne has fnnds
then he can plead y by way OF tender ana IS
relieved from liability only FOR interest and
costs; and even If be fails with the funds in its
hands, this Is no defense 10 the note. (Ruggles
VS. Patton. Mass, $50. Fenton rs. GoundTy, 10
Eas., 47S; Turner vs. Hayden, 1 Barn and cFes.
u. he BANK IN such cases is regarded simply
as the agent or depository Of the maker OF the
note. or acceptor OF the bill, aud he alone suf-
feIs by lis failure, and his promise to pay is not
discharged.
an this 1epeot only note or bill payable at
bauE differs from cneck. Therefore ii there
had been no presentment whateyer. md the
bank had failed, with sufficient funds Of the
maker in It's hands. 70 pss the note. the maker
wss still liable. The attempt of the bank TO
pay the note By draft which was not good was
no payment and on notice of the non payment
of the drsf. the plaintiff could have rendered il
back and demanded his note, or could have
sued uuon the note, even without giving indem-
nity, as the note was in the possession Of the
maker, having been returned to him By the
bank. The maker could net even set up in bar
of costs and interest that he had the money IN
the bank. for his account there was short, sid
wss not made up until after the bank had
allied
This case, il seems, decides the question pro
pounded By the learned counsel for the plaiut-
III adversely 70 the conclusion arrived at by
{ hem. The piaiutifs IN tbs case were at liberty
to reject the cheek OF the defendant. but If lhey
had received it Il would nos constitute payment
of the note due them nom P0iitz until they had
received the money on II. In Daniel on Ne
goaabie Instruments, Section 1923 the rule IS
correctly stated. thus 10 respect to payment BY
chsCk. a creditor may, II he plesses, accept IN
absolute dischaTse OF the debt: but when q
CHECK is received by g creditor there is no pre-
sumption thsi ne takes Il in payment, but
on she contrary. the implication is that 1t is
only TO be regarded as payment If easheG; AID
O strong is this implication, the cheek being
personal---very. drawn upon a fund deposited 20
meet Il, that mere evidence Is required to prove
hat q check gisen 10 take up note Is re
ceived IN satisfaction and discharge than Is de-
named when enc note Is given for another.
Cer5ainiy the holder OF bill or note Is not
bound 70 give i up on receipt OF check until
the later is paid i IS the settled law Ia this
state that the delivery OF check, dFaA or note