The prison mirror. [volume] (Stillwater, Minn.) 1887-1894, 1891-07-30

Legal Status of Bank Checks.

Legal Status of Bank Checks.
The bank check has gradually assumed a
position so firmly imbedded in the fabric of
commerce, that we pay but little more at
tention to its legal aspects than we do to
the chemical properties of air. And yet the
bank check involves many intricate princi-
piles of law. In the first place. considered
entirely without reference to special stat
utes which may be in force in different
states. check upon bank is simply an
assignment of claim against the bank, and
its value therefore depends wholly upon the
validity of the claim of the drawer against
the bank, and, further. upon the solvency of
the bank. In most states there are statutes
making it criminal offense to draw and
negoti tate check upon bank with which
the drawer has no account, but this does
not cover the drawing of the check for
more than the amount of the deposit, if
there be current account in existence be-
tween the bank and the maker. A check
for which there are no funds on deposit, in
the absence of any special statutory regula
ton, becomes, in legal effect note, and
may be sued and recovered upon as may a
demand note, and the endOrSers thereof are
liable in the same manner as endOrsers of
other paper.
Being an assignment of funds, or an Or
der to pay, it must be pursued with dill
gence. and failure to present check for
payment within reasonable time will re-
Iieve all parties to it of further liability
Hereunder. What is a reasonable time for
presenting a check for payment depends
entirely upon the circumstances of the case,
but as general rule immediate presenta-
tiOn is necessary. If person draws check
to the order of another at distant place,
and sends it there, he is presumed to hold
funds in his bank to meet it until in the or
dinary course of mail it would reach the
bank. But if the person to whom it was
sends it somewhere else so that it's course of
collection would be delayed. lie assumes the
chance of funds being withdrawn in the
meantime. and the consequent refusal of
payment. In order to maintain the life of
check it must be presented with diligence.
The failure to present check within
proper time, while it invalidates the check,
does not of course operate as an extension
of the debt for which it was given, but it
throws the parties back into the position
they occupied before the check was given.
If, between the time the check was given
and it's presentation, the bank upon which
it was drawn should become insOlvent. the
question of diligence in presentation be-
comes very material. If presented with
diligence the liability of the maker is un-
changed, but if there be delay in present
ing it, then the debt is DISCHARGED, and the
payer must look to the assets of the bank
for payment.
In the absence of any special agreement
to the contrary, no change takes place in
the relations of the parties until payment of
the check. That is. the giving OF check
is not payment of an account, and as mat
ter of law the taking of a check is not ac-
ceptance of payment. as the check is only
an order for money, so it cannot operate as
payment unless it be fulfilled.
The liabilities of the bank itself with ref
erence to checks. and funds on deposit pre-
sent some interesting phases. A person
who has a running account at bank has
right at any time to make a deposit for a
special purpose and if accepted subject to
such conditions the bank is bound by them.
A person whose account is overdrawn, may
still draw a check and make deposit with
instructions to apply it on the check. and if
draft. and refuses the check, it is liable in
damages as we'll as for the amount of the
check. 1t is settled that when a bank
wrOngfully or negligently refuses to pay
checks properly drawn upon it, the person
whose checks are refused may recover dam
ages for the injury he will be presumed to
have suffered from such a course.
1t is incumbent upon the bank to see that
when it pays check it is paid to the proper
person, and the bank is liable for payment
to any but the proper party. The bank
therefore has right to insist upon full and
complete identification of the person pre-
senting check for payment. And a per-
son who seeks to identify another at bank
for the purpose of securing payment of a
check, thereby assumes the responsibility of
the bank to that extent. and if mispay-