Court Opinion

ID: 3268757
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:37:11.097426+00
Date Added: 2024-06-11T07:41:17.582539
License: Public Domain

I cannot agree with the majority opinion in this case. The effect of it is to say to every bank in this state that when one of them credits a customer's account with a check (or checks) drawn on it, it does so at its peril. In other words, should the bank after having given its customer's account credit *Page 1067 
for the check drawn on it, find out, at the close of business, on the same day during which the deposit was made, that there were insufficient funds in the account on which the check was drawn to cover it, then the bank regardless of any custom, or agreement with the customer, would not be permitted to charge the amount of the check back to the account of the depositors, but must assume and pay the amount of this check itself. I do not think this is the law of this state. If it should be and the majority opinion allowed to stand, then Arkansas banks must, of necessity, add new employees and increase the expense of operation to an unprofitable and unjust degree.
The effect of this decision is that when customers, such as large department stores in the larger cities of this state, that accept literally hundreds of checks daily, go to make their deposits, the bank teller, before crediting the grand total of these checks on the passbook of this depositor, must leave his cage, go back to the bookkeeper and ascertain whether each one of these hundreds of checks is good. This might conceivably take hours while the line of customers waited. Such a rule would, in my opinion, paralyze banking and is not the law of this state.
The facts in the instant case disclose that appellee, a groceryman at Paris, Arkansas, had for a number of years on Saturday afternoon, after banking hours, cashed a large number of checks for coal miners in that neighborhood who held checks drawn on the Blue Ribbon Corporation's account in appellant bank. This practice of appellee was not only to accommodate these employees in cashing their checks, but naturally we must assume that it was good business on his part for the reason that a large number of these coal miners would spend the proceeds of these checks with appellee in the purchase of merchandise. I think the undisputed proof shows that twelve of the sixteen checks in question were cashed by appellee on a Saturday and deposited with appellant bank on the following Monday, March 2, and the great weight of the testimony shows that the other *Page 1068 
four checks were deposited on the same day. The evidence also shows that it was the custom of appellant bank to accept checks drawn on it, for deposit when offered by appellee, and at the close of business on the same day the deposit was made, to charge back to appellee's account any and all checks that were not good, and that appellee understood and agreed to this custom cannot be doubted.
The uncontradicted evidence also shows that within the passbook in which appellee's deposits were entered with appellant bank, and on the face of the deposit ticket used by appellant, was printed the following contract and agreement between appellant and appellee: "All checks and drafts are credited subject to payment under conditions stated on back of duplicate ticket." On the reverse side of the ticket the following appears: "In receiving items for deposit or collection, this bank acts only as depositor's collecting agent . . . All items are credited subject to final payment. (The Bank) may charge back any item at any time before final payment whether returned or not; also, any item drawn on this bank not good at close of business on day deposited (may be charged back)." Appellee had been doing business with appellant bank for more than ten years and as to the custom under which such business was done, referred to above, I think appellee's own testimony settles that issue. We quote from the record his own words, as follows: "A. I have got back several small ones, but not the day I deposited them. Q. When would you get them? A. Afterwards. Q. They would charge them back to you and deliver them back to you? A. One or two dollar checks. Q. You have had that to arise since this time on several little checks — when you deposit a bunch of checks don's they just look at your indorsement and if the check is not good they charge them back? A. That is the way they did these. Q. That is the ordinary way of handling checks on that bank, isn't it? A. I guess it is."
Not only does appellee admit the custom which had sprung up between him and appellant, but states further *Page 1069 
that he even permitted appellant to return checks afterwards and accept these charges against his account after the close of business on the day of deposit. The size of the checks in proving custom can be of no consequence. The fact remains that appellee did permit these checks to be charged back to his account. I think that we cannot, and should not, say that the day's business in any bank in this state ended at three o'clock in the afternoon or at any other hour when its doors were closed to the public on that day. Certainly there must be additional time given to the bank and its employees to check through its daily business and determine the status thereof. It may be said to be a matter of common knowledge that a large part of the bank's business is performed after its doors are closed.
Of course, if appellant bank intended unqualifiedly to accept these sixteen checks in question when deposited by appellee on March 2, then appellee would be entitled to recover; on the contrary if appellant intended to accept these checks only on condition of their payment, then appellant should not be held liable for their payment.
We think the rule of law governing the instant case to be as stated in Corpus Juris, Vol. 17, 24, titled "Customs and Usages", wherein the text-writer said:
"The better authority seems to support the rule that the established usage of a bank is binding on persons dealing with it whether they have actual knowledge thereof or not, particularly where it has been so long established that its customers may well be presumed to have known of it, where they have had previous dealings with the bank, or where it is a general custom among the banks of the place; but there are numerous decisions more in consonance with the general rules relating to usages which hold that the usage of a particular bank will not bind the party dealing with it, unless he has express knowledge of it. Other authorities hold that as in other cases a banking usage must either be known or so well established as to raise the presumption that it was known." *Page 1070 
In Townley v. Exchange National Bank of Tulsa,108 Okla. 144, 234 P. 574, under facts similar to the instant case, the rule is stated by the court as follows: "On accepting a deposit, that the law usually creates the relation of debtor and creditor is not in dispute in this case, and that, when such deposit is made in the form of a check drawn upon the bank by another depositor and there is no want of good faith on the part of the depositor, the giving of the depositor of credit to the amount of the check precludes the bank from recalling or repudiating the credit. 3 R.C.L. 153; 7 C.J. 635; (and other citations). On the strength of the same authorities, we think that it is equally well settled that such acceptance, to constitute this relation of debtor and creditor as set out above, must be an unconditional one, and that where a custom is known to a depositor, or so well established it should be known to him, such checks are accepted by the bank on condition that an examination of the drawee's account discloses sufficient credit to warrant the payment of the check by the bank, that such conditional acceptance, under said custom, does not create the relation of debtor and creditor until the custom has spent itself, and the bank has had the opportunity to determine whether the check should be honored or charged back against the deposit of the customer.
In the case of Pollack v. National Bank of Commerce,168 Mo. App. 368, 151 S.W. 774, it was said: `Where a depositor of a bank presented to it a check for deposit, with knowledge of the custom of the bank to take checks and defer payment for a reasonable time until the bank ascertained whether there were sufficient funds of the drawer to pay it, the depositor was estopped from asserting that the bank, giving him credit for the deposit could not, on finding insufficient funds to pay the checks, charge the depositor's account with the amount thereof.' That such custom and established usage on the part of the defendant bank, as well as other banks in the city of Tulsa, existed was known to the plaintiff or should have been known to him, was the defense pleaded by the bank. The defendant bank further pleaded that on *Page 1071 
the passbook of the plaintiff on which he received the credit was printed: `Checks on this bank will be credited conditionally. If not found good at the close of the day of deposit, they will be charged back to depositors, and the depositor notified, etc. . . .' That such custom or usage as to such checks obtained was shown by the evidence, not only in the conduct of the business of the defendant bank, but in the other banks of said city."
See, also, First Nat. Bank v. Burkhardt, 100 U.S. 686,25 L. Ed. 766, wherein the court said: "If the check were to be considered as received on deposit when it was left with the teller, and Cannamon was the debt or of the bank and the bank his creditor from the time, then the transaction was not within the guaranty, and Burkhardt was not liable. If, on the other hand, the bank had the right to hold the check until after banking hours, and then to make its election, and to credit the depositor and charge Cannamon with the amount, as was done, the check was covered by the guaranty, and the bank was entitled to recover."
On this same question of custom in the case of Bank of Charleston v. Hill, 177 Ark. 1138, 9 S.W.2d 1064, this court held, as is shown by the third headnote, as follows: "Where the banking custom, in the absence of a special agreement, was to receive checks for collection only, to be recharged in the event of collection not being made, though credit was given to the depositor at the time of the deposit, the presumption would be that the bank and depositor contracted with reference to this custom."
Since, therefore, the uncontradicted proof in this case shows the existence of, not only a custom between appellant and appellee to charge back the checks in question, but also a written agreement, clearly giving this right to appellant, it is my view that this case should be reversed, and, since it appears to have been fully developed, dismissed.
I am authorized to say that Justices Smith and McHaney concur in this dissent. *Page 1072