Case Name: FRIENDS IN NEED SOCIETY OF BELL COUNTY v. PETERSON
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1928-09-19
Citations: 9 S.W.2d 1110
Docket Number: No. 7273
Parties: FRIENDS IN NEED SOCIETY OF BELL COUNTY v. PETERSON.
Judges: BLAIR, J., not sitting.
Reporter: South Western Reporter Second Series
Volume: 9
Pages: 1110–1111

Head Matter:
FRIENDS IN NEED SOCIETY OF BELL COUNTY v. PETERSON.
(No. 7273.)
Court of Civil Appeals of Texas. Austin.
Sept. 19, 1928.
Rehearing Denied Oct. 10, 1928.
Walter Miller, of Belton, for appellant.
J. W. Thomas, of Belton, for appellee Peterson.

Opinion:
BAUGH, J.
This case arose out of the following facts: F. J. Peterson was named as beneficiary in a life insurance policy issued by appellant to his brother, Charlie Peterson, •who died in November, 1926. The latter part of December, 1926, the appellant society drew its check on the First State Bank of Belton, Tex., payable to the appellee, in the sum of $740, the amount of the policy, and mailed it to appellee at Carlsbad, Tex. Appellee received said cheek on December 30th and presented it to the First National Bank of San Angelo for collection on January 3d. The San Angelo bank sent it direct to the Belton bank for payment. The Belton bank stamped it "paid" on January 6, 1927, charged it to the account of the appellant, delivered the canceled check to the appellant, issued its own draft for said sum, and sent it back to the San Angelo bank. Upon receipt of said draft the San Angelo bank issued a deposit slip to appellee for the amount of the draft, subject to its final payment, and sent the draft to its correspondent bank at Dallas, Tex., for collection. The Belton bank was placed in the hands of the state banking commissioner at the dose of its business on the afternoon of January 7, 1927. The draft was never paid.
The appellant at all times after it drew its check had on deposit in the Belton bank sufficient funds to pay it, and either the draft or the cheek would have been paid in cash by the Belton bank upon personal presentation and demand made to it therefor prior to the closing of its doors on January 7 th.
Appellee sued the appellant, the San Angelo bank, and the banking commissioner, for the amount of the policy. The appellant defended in the court below and insists here that under the undisputed facts above recited its check was paid and that it was discharged. The banking commissioner admitted liability in the amount of $740 either to Peterson or to the appellant company. The trial court rendered judgment in favor of appellee against appellant for the full amount of the policy and in favor of appellant over against the banking commissioner for a like amount.
The action of the Belton State Bank, when the San Angelo bank sent said check to it, in canceling same, returning it to the drawer marked "paid," charging the amount thereof against appellant's account, issuing in its stead its own draft, which was returned to and accepted by the San Angelo bank for collection, whose conduct in the matter was authorized, ratified, and confirmed by appellee, constituted a payment of said check and released appellant from further liability under the circumstances, though said draft was never paid. This question seems not to have been passed on directly in this state, though a some what similar question was involved in City of El Paso v. Ins. Co. (Tex. Civ. App.) 278 S. W. 231. Identical transactions either in fact or in principle in other states have, however, been held to constitute payment of a cheek and to release the drawer thereof from further liability, gee O'Leary v. Abeles, 68 Ark. 259, 57 S. W. 791, 82 Am. St. Rep. 291; Winchester Milling Co. v. Bank, 120 Tenn. 225, 111 S. W. 248, 18 L. R. A. (N. S.) 441; Pollak Bros. v. Niall-Herin Co., 137 Ga. 23, 72 S. E. 415, 35 L. R. A. (N. S.) 13; 21 R. C. L. § 66, p. 68. The same rule has also been laid down by the United States Supreme Court in City of Douglas v. Federal Reserve Bank, 271 U. S. 489, 46 S. Ct. 554, 70 L. Ed. 1051; Federal Reserve Bank v. Malloy, 264 U. S. 160, 44 S. Ct. 296, 68 L. Ed. 617, 31 A. L. R. 1261.
The judgment of the trial court is therefore reversed and judgment here rendered that appellee take nothing against the appellant, but that he have judgment against James Shaw, state banking commissioner, for the sum of $740, with interest thereon at the rate of 6 per cent, per annum, from January 7, 1927.
BLAIR, J., not sitting.