Court Opinion

ID: 9656230
Source: CourtListenerOpinion
Date Created: 2023-08-23 19:43:53.237735+00
Date Added: 2024-06-11T18:13:30.524999
License: Public Domain

HENDERSON, Justice
(specially concurring).
Although the inscription on the check does not, under these circumstances, via the majority opinion, defeat the Bank’s holder in due course status, certainly — as between the Carpet Center and RaDEC— the “memo” is of great significance. Most people in the business world pay by check. A denomination on the check can create an account stated, compromise, accord and satisfaction, or payment in full status. As between the Carpet Center and RaDEC, this is simply not a self-serving declaration or for recordkeeping or for informational purposes. It is a common practice to use a check for a transfer of funds and the payment of bills. Most families do so and banks widely advertise that checks are excellent receipts and proof of payment. I am not trying to impugn the language of the majority opinion but wish to restrict my vote so that I am not, in futuro, married to any language which would preclude me from recognizing binding commercial practices which transpire by the thousands in banks, each day, all over the nation. Nor do I wish to estop businesses or individuals from asserting the validity of memos on their checks.
It is fully appreciated by this author that the wheels of commerce could grind to a quick halt if a bank had the onerous burden of “looking behind” the circulation of all commercial paper and the negotiation of each check. Banks cannot be investigators or mini-tribunals. Holders in due course of a negotiable instrument were historically developed for the avowed purpose of promoting commercial transactions. See generally, Western State Bank of South Bend, Indiana v. First Union Bank & *412Trust Co. of Winamac, Indiana, 172 Ind. App. 321, 360 N.E.2d 254 (1977); and Bowling Green, Inc. v. State Street Bank & Trust Co., 425 F.2d 81 (1st Cir.1970). However, there are notes and checks bearing conditional characteristics which can destroy negotiability. This is built into the Uniform Commercial Code. See SDCL 57A-3-104(l)(b); Booker v. Everhart, 294 N.C. 146, 240 S.E.2d 360 (1978) (suit on installment note; terms incorporated by reference). In Booker, the North Carolina Supreme Court held that this particular note was not a negotiable note, making reference to the substantive provision which I have just cited.
[T]he conditional or unconditional character of the promise or order is to be determined by what is expressed in the instrument itself. When the instrument itself makes express reference to an outside agreement, transaction or document, the effect on the negotiability of the instrument will depend on the nature of the reference.
Booker, 294 N.C. at 151, 240 S.E.2d at 363. The present case is very difficult for me. Appellate decisions are not always set in jurisprudential cement. We are not visited with simple cases in the Supreme Court very often. Appellate justice is many-sided and multifaceted. All, in academic pursuit, is not black and white. When areas of gray surface, gnawing doubt sets in, and it is nettlesome to a would-be scholar. The case at bar is, perhaps, closer than the majority opinion suggests. Competing values are delicately balanced; we have the “wheels of commerce must go” concept equated against the fact that this particular check contained language which might arouse a great circumspection by the Bank. It is doubtful that the inscription is “highly irregular,” a plateau of certitude which was required by Federal District Judge Bogue in First Nat’l Bank of Linton, 394 F.Supp. 1284. In Bank of America, 88 N.W.2d 909, we had the words “Subject to Approval of Title” immediately preceding the words “Pay to the Order of”; here, we have “Payee must prove clear title to material.” Both involve “title.” Both have reference to an outside matter. One ponders as to the distinction of these two phrases. The language appears stronger in Bank of America to set up a condition; in Bank of America, as the majority opinion points out, it is very significant that the phrase immediately preceded “Pay to the Order of.” Divergent authority to the majority’s stance is found at 10 Am.Jur.2d Banks § 554, at 527 (1963).
Where a check is presented for payment bearing a condition upon its face, it is the duty of the bank before paying it to make inquiry of the drawer to ascertain whether or not the condition has been performed; payment without such inquiry is at the peril of the bank, so that it will not be protected in charging the payment to the account of the drawer where the condition has not been performed. If the condition has in fact been performed, the absence of inquiry by the bank as to performance does not prejudice it, but in any event, a bank must be circumspect when a conditional check is presented for payment, since the condition renders the instrument nonnegotiable, thereby precluding the presumption of delivery to a holder in due course which prevails as to negotiable paper. (Emphasis supplied mine.)
This American Jurisprudence citation begs, of course, the legal conclusion that the check is a conditional check. And this Court’s holding is, of course, that the check at bar is not conditional. It is academically irksome to further note that the Bank admits that it had a choice of either handling the check as a cash item or as a collection item but independently chose, of its own volition, to handle it as a cash item. Another layer of exasperation on academic certainty is tiered when one reads in the transcript that a Bank officer testified that the language could be construed as being conditional and that the language could be construed as a condition.
Thus, I concur specially to elaborate on my vote and, hopefully, to save the integrity of that little note, often written in the lower left-hand corner of a check, which *413affixes a legal relationship between the parties when the check is tendered and cashed. To an umpire, sometimes it’s a strike and sometimes it’s a ball. Sometimes it just shaves the plate. You call ’em, as “you see’s ’em.” This is a plate shaver for me. Although Professor Rosenberg, in Judicial Discretion of the Trial Court, Viewed from Above, 22 Syracuse L.Rev. 635, 640 (1971), was referring to the review of the executed discretionary powers of a trial judge, there are appellate umpires, also. He observed:
An episode of that kind gives special point to the well-known fable that has three baseball umpires arguing about how they distinguish balls from strikes during the game. The first one says: “It’s simple. I call ’em as I see ’em.” The second one snorts: “Huh! I call ’em as they are!” And the third one ends the debate with: “They ain’t nothin’ ’til I call ’em!”