Court Opinion

ID: 3581269
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:32:20.095907+00
Date Added: 2024-06-11T13:53:31.156579
License: Public Domain

It is no doubt truly settled by this court, that a check upon a bank, certified as good by a proper officer of the bank, is, in some respects, like a bill of exchange, accepted. Precisely in what respects, however, is not accurately ascertained; as the decisions were limited to the points then before the court.
Strictly speaking, the certificate, "good," is an admission by the drawee of a sight bill that he is in funds to pay; and the law imposes the obligation to pay, from that fact, and without any express promise by him; and, in favor of the holder of *Page 300 
the check, that liability is fixed; and no subsequent disposition of the funds to other purposes can release the obligation.
Yet, upon a sight bill, there is strictly no such thing as an acceptance. It is to be paid on presentation. And the whole custom of certifying bank checks has arisen to meet the convenience of merchants and banks, by putting mere checks in a condition to be passed from hand to hand, and deposited in other banks than those on which they are drawn, as cash, to save the trouble of counting over bank notes or coin, and to avoid the danger of mistakes in such countings; and also to answer the purpose of bank drafts, in remittances.
All these purposes, however, are substitutes for, and intended to be equivalent to, present payment. And the bank officer, who does his duty, notes the fact that he has certified such a person's check for such amount, and virtually deducts from that person's credit balance on deposit the amount of the check; thus saving the amount, in the hands of the bank, to pay the check as soon as it comes in for payment (either from another bank, in exchanges, or from any holder), such return of the check being usually and regularly either the next day, or within a short period. Such a check has no time to run; credit, in the light of time given, is no element of it. It represents cash, and is no more to be pledged as security, than the same amount of coin would be. Using it as collateral security is a misuser; and such a use would call for clear proof of very peculiar circumstances, to warrant the holding that the taker of the check took it bonafide.
In the case before us, the claim is that these plaintiffs paid the full face of these checks to the drawers, at the date of the checks, the checks being then certified. That they held them as security for the money so paid, for nearly a year, and then demanded payment, not of the drawer from whom the security was taken, but from the bank. That is to say, for about a year the bank had held, tied up, to answer to the demand on these checks, $20,000 of the drawer's money, on which such drawer was losing interest; and the holder of the security, having paid his $20,000 at the date of the checks, was, at the *Page 301 
end of the year, entitled to draw his $20,000, without interest; so that he too had lost a year's interest on $20,000.
On the face of it, that claim is not true. No number of witnesses could prove it. It is utterly incredible. Such a holding, barely that, is not a bona fide transaction, and cannot be made to appear so. Where the fraud upon the bank was perpetrated, is sufficiently apparent. But, in the absence of any explanations of this protracted holding of these checks, it is not apparent what knowledge the plaintiffs had of the fraud, or when they acquired their knowledge. That this delay was not opened for explanation, is the fault of the defendant, the objection to inquiring into it, coming first from that side. Still, the nature of the checks is such, that the holding, which the plaintiffs claim, cannot be bona fide, and the referee's finding, to the effect that it is so, is not supported by the evidence.
There should be a new trial, to find out whether there can be any possible explanation of the facts, consistent with good faith in the plaintiffs. And this is needed, irrespective of any of the facts as to the authority of the president to certify checks, or the knowledge of the directors that he did so. He and they may have so conducted as to bind the bank in some cases, but there are no acts of the directors before us which do away with the difficulties on the part of the plaintiffs themselves.
DAVIES and SUTHERLAND, Js., dissented.
Judgment reversed, and new trial ordered. *Page 302