Case Name: LOLAND v. NELSON et al.
Court: Oregon Supreme Court
Jurisdiction: Oregon
Decision Date: 1932-02-24
Citations: 139 Or. 581
Docket Number: 
Parties: LOLAND v. NELSON et al.
Judges: Bean, C. J., and Rand, J., concur.
Reporter: Oregon Reports
Volume: 139
Pages: 581–591

Head Matter:
Argued January 21;
reversed February 24;
rehearing denied April 19; second petition for rehearing denied June 7, 1932
LOLAND v. NELSON et al.
(8 P. (2d) 82)
Richard Sleight, of Portland (Roy K. Terry, of Portland, on the brief), for appellants.
R. C. Bradshaw, of Portland (Joseph, Haney & Veatch, of Portland, on the brief), for respondent Lo-land.
Bowerman & Kavanaugh, of Portland, for respondent Schramm.

Opinion:
KELLY, J.
The basis of plaintiff's claim for the relief sought herein is an alleged mistake. Plaintiff held a mortgage upon certain real property owned by defendants Jenning, which mortgage was executed to secure the payment of a note in the principal sum of $2,000. Messrs. Joseph, Haney and Littlefield, of Portland, were the representatives of plaintiff and on November 29, 1926, as such representatives, accepted a check drawn by the defendant J. D. Jenning in said sum of $2,000 upon the Bank of Kenton, which bank was then doing a banking business in Portland. At the time said check was delivered to them, plaintiff's said representatives delivered to said defendants Jenning the said note and mortgage, an abstract of the title to the mortgaged premises, and an insurance policy, covering the residence thereon, and agreed to, and did file a release of said mortgage with the county clerk of Multnomah county, Oregon, which release was there after delivered to said defendants. On the 29th day of November, 1926, said representatives of plaintiff endorsed and deposited said check with the Northwestern National Bank of Portland. The Northwestern National Bank endorsed said check and transmitted same to the Portland branch of the Federal Reserve Bank in Portland, Oregon, with directions to collect and remit the proceeds. The Federal Reserve Bank, Portland branch, transmitted said cheek with others to the Bank of Kenton for payment. On December 1, 1926, said Bank of Kenton received said checks from the Federal Reserve Bank, charged the amount of the check in suit against the account of J. D. Jenning, and stamped the said check "Paid." When the check in suit was drawn and at all other times involved herein, said defendant J. D. Jenning had a deposit with said Bank of Kenton in excess of $2,000. The said Bank of Kenton transmitted to the Portland branch of the Federal Reserve Bank a draft upon the Bank of California in the aggregate sum of the cheeks mentioned, namely, $19,809.67, which draft was thereafter dishonored. On the 3d day of December, 1926, the Bank of Kenton failed to open and the Superintendent of Banks took charge thereof.
The mistake, alleged in plaintiff's amended complaint, is that defendants Jenning represented to plaintiff that said check was a good and valid check and when presented to said bank the same would be paid; that plaintiff, relying upon said representations and believing that said check would be honored and paid when presented to the said bank, executed and delivered said release of mortgage; and, that, before plaintiff could present said check to the said Bank of Kenton for payment, the said bank closed its doors for business.
. The-, testimony not only wholly fails to' support plaintiff's allegation, to the effect that the Bank of Kenton failed before plaintiff could present said cheek; but, instead, it affirmatively discloses that the Bank of Kenton actually received the check while said bank had on hand $13,276.17, was still open and transacting business, and actually charged the amount of said check against Mr. Jenning's account.
The only representations- appearing in the record to the effect that said check would be paid are those which are implied by law. The maker of a check, in uttering it, impliedly represents that it will be paid upon demand, if presented within the time prescribed by law. While the- statute declares that a check must be presented within a reasonable time after its issue (Section 57-1003, Oregon Code 1930), it is the general rule that where, as in the case at bar, the drawee and the payee are in the same place, a check to be presented in a reasonable time should be presented at some time before the close of banking hours on the day after the day on which it is received by the payee: Matlock v. Scheuerman, 51 Or. 49 (93 P. 823, 17 L. R. A. (N. S.) 747); Gordon v. Levine, 194 Mass. 418, (80 N. E. 505, 10 L. R. A. (N. S.) 1153, 120 Am. St. Rep. 565); 10 Ann Cas. 1119, and note at page 1121, and cases there cited. No circumstances appear of record herein which tend to justify a modification of this general rule.
When the check was issued, the Bank of Kenton was a going concern. On the 30th day of November, 1926, it was still open and transacting business. From the records before us, we can come to no other conclusion than that, if the check in suit had been presented to the Bank of Kenton, either upon the day of its issuance, November 29, 1926, or upon the following day, November 30, 1926, it would have been paid.
It. follows .that defendants Jenning must prevail upon the question of whether at the time the check in suit- was issued there were funds on deposit to the credit of Mr. Jenning sufficient to pay it, and likewise with respect to the question of whether the check would have been paid if it had been presented for payment within the time provided by law.
This being so, and it affirmatively appearing that said check was actually presented to said bank before it closed its doors, we are constrained to hold that no element of mistake, upon which plaintiff's case rests, has been established.
The acceptance by the Federal Reserve Bank, Portland branch, of a draft upon the Bank of California, instead of demanding and collecting the money due on said check, was in no sense the act of defendants Jenning, nor should they be chargeable therewith.
During the trial in the circuit court, counsel for defendants Jenning addressed the court thus:
"If the court please, we have worked out a mode of operation here by agreement, which is substantially this: We will put on one witness on behalf of the defendant out of order, and show what happened with this particular check; then we will develop, and I think the evidence already develops that there was no negligence on the part of Joseph, Haney & Littlefield. They put the check in the Northwestern Bank promptly. There may be some question as to whether or not the Northwestern Bank was negligent; but, in any event, the parties now before the court are all innocent."
Later, while conferring with the court and opposing counsel with reference to the advisability of a continuance for the purpose of making the Northwestern National Bank and the Superintendent of Banks parties defendant, counsel for defendants Jenning said, concerning insurance upon the mortgage property:
"It is in force until it has been paid. It has not been paid, and it is the fault of either the Northwestern or the bank superintendent we don't know which."
Plaintiff cites the case of Rorvik v. Astoria Box & Paper Co., 136 Or. 381 (299 P. 333), to the effect that a deliberate statement by an attorney of one of the parties is binding upon the client. In the case cited, there was a statement by counsel for defendants that plaintiff was entitled to a verdict in the sum of $5,000. The amount of the recovery, whether it should be $5,000, or more, then became the only issue for the jury. In the case at bar, there is no admission that there was a mutual mistake, as alleged in the amended complaint, or that the plaintiff did not have an opportunity to present the check to the Bank of Kenton before the bank had closed its doors.
We are unable to give a construction to the above quoted statements of counsel for defendants Jenning which would obviate proof either that before plaintiff could present said check to the Bank of Kenton, said bank had closed its doors, or at the time when said check was drawn there was not sufficient funds on deposit with the Bank of Kenton to the credit of Mr. Jenning to meet it; or that said Bank of Kenton would not have paid said check if it had been presented within the time prescribed by law.
This is not an action for damages, but a suit in equity based upon an alleged mistake. In attempting to make a final disposition of the matter by bringing in new parties, as defendants, the nature of plaintiff's cause of suit was not changed.
In the absence of special authority, well established custom, or statutes to the contrary, a bank with which paper is deposited for collection has no authority to accept anything but money as payment: 6 Michie on Banks and Banking (Permanent Edition), p. 33, § 24, and cases there cited in footnote 74.
One witness testifies that he thinks that there is a custom among banks to accept drafts instead of money in payment of checks presented for collection. This does not establish that fact. Usage must be proved by the testimony of at least two witnesses: Section 9-902, Oregon Code 1930.
It appears from the record before us that the Portland branch of the Federal Reserve Bank exceeded its authority in taking the draft as payment of the check in suit. This record fails to disclose what, if any, diligence was employed by the Federal Reserve Bank in attempting to collect such substituted draft.
"As to local items, the duty of the bank receiving them for collection is to collect them." Blackfeet Livestock Co. v. Northwestern National Bank, 138 Or. 530 (5 P. (2d) 702), citing Morse on Banks and Banking, (6th Ed.), § 227 and 243.
At the time of the transactions here involved, this rule had not been changed by statute, and it seems from the record before us that the Northwestern National Bank failed to observe it.
These banks, however, are not parties to this suit and their liability, if any, cannot be adjudicated herein.
For the reasons herein stated, the decree of the circuit court is reversed and this suit is dismissed without prejudice to any right of suit or action by plaintiff herein against said banks or either of them.
Reversed and dismissed.
Bean, C. J., and Rand, J., concur.
Rossman, J., dissents.