Court Opinion

ID: 6673715
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:14:15.710098+00
Date Added: 2024-06-11T16:00:37.683085
License: Public Domain

*206On Application for Rehearing.
(Decided April 22, 1919.)
By the Court:
Counsel for defendant in error ■contend that the bank accepted the check in controversy merely as accommodation and that it assumed no additional responsibility.
The bank’s evidence upon which the case rests •was to the effect that it received said check and ■entered the same upon the holder’s pass book subject to a future deposit or subject to collection.
We can not escape the conclusion from the bank’s evidence that it acted in the dual capacity of drawee and collecting agent.
As a mere drawee the bank might have refused the check and paid out the depositor’s balance from time to time on smaller checks.
As collecting agent, however, the bank assumed a fiduciary relationship to the check holder. Jones et al. v. Kilbreth, 49 Ohio St., 401; Hilsinger et al. v. Trickett, 86 Ohio St., 286, and Kilsby v. Williams et al., cited in the original opinion, ante.
The scope of the agency is thus stated by Judge Spear in Hilsinger v. Trickett, at page 298:
“The delivery of the certificate in the manner shown by the admitted facts was a delivery for collection; of course to result in liability on the part of the bank in case of collection, and imposing the duty of reasonable diligence in efforts to collect.”
It is true that the bank in the discharge of its fiduciary obligation would be governed by the general custom of the banking business as to collections, but that limitation would not justify the bank *207in assuming an attitude inconsistent with the trust or in thwarting the execution of the trust by paying the funds otherwise applicable to the plaintiff’s check to the drawer or upon checks subsequently presented.
By the Ohio rule it is true that the payee of a check obtains no right or interest in the deposit unless the check is accepted. Nevertheless the drawee may by acceptance, absolute or conditional, fix an obligation in favor of the check holder to be discharged out of present or future unappropriated deposits.
The issuing of a check confers implied authority upon the drawee to accept and discharge the same out of the drawer’s funds.
Whatever valid obligation is assumed by the drawee in the acceptance of a check is binding upon the drawer.
The drawer obtains no superior right by the overissue of checks, nor does the issue of a subsequent check operate as a cancellation of a former one. The rule that a bank may refuse a check in excess of the deposit, and honor subsequent checks within the balance, applies only, where the bank acts exclusively as drawee, and assumes no obligation to the holder of the larger check. Counsel for defendant in error present a persuasive argument in favor of the contention that the bank was not under obligation to make a pro tanto payment upon the Paigé check without special authority. The cases of Lowenstein & Bros. v. Bresler, supra, and First Natl. Bank v. First Natl. Bank, 127 Tenn., 205, are cited. The case at bar differs somewhat from these cases because the collecting agency *208in the instant case was of a continuing character. The bank agreed to hold the Paige check for a future deposit. In both the Alabama and Tennessee cases the checks were returned before the deposit became sufficient to pay the checks. In neither of these cases did the bank undertake to hold the check for a future deposit. Here the bank, pursuant to the agreement, held the Paige check while deposits were made in excess of the amount of the check. There was evidence from which the ljury might have found that Collier’s unappropriated deposits amounted to more than the Paige check, and the jury should, therefore, have been instructed as to this feature of the case.
Counsel for defendant in error contend that there was no such acceptance of the Paige check as to create an obligation against the bank, citing Elyria Savings & Banking Co. v. Walker Bin Co., 92 Ohio St., 406. The check there had been accepted and paid by the drawee bank upon a forged endorsement, and the question was whether such acceptance operated in favor of the real' owner of the check. The court held that it did not. The decision was based upon the theory that the payment under the forged endorsement was void; that the check remained a living instrument under the law merchant and that a written acceptance was required to bind the drawee. It is evident, we think, that the court did not intend to cover the question of acceptance for payment, or of a constructive acceptance, under other sections of the negotiable instrument act.
Here the check was presented for payment and entered upon the depositor’s pass book. This would *209create a prima facie obligation in favor of the payee as depositor, and against the bank, and the burden would be upon the bank to defeat that obligation by showing the nonfulfillment of the condition upon which the check was accepted for payment. But independent of- that, if the bank assumed the fiduciary relation of collecting agent, it stepped outside the strict rules of the law merchant and became bound by the general rules of the law of agency, subject only to banking customs in making collections.
This is an important case and we have endeavored to give it the consideration which its importance demands, but, upon full consideration, are unable to escape the conclusion that the former decision should be adhered to.

Judgment adhered to on rehearing.

Richards, Allread and Ferneding, JJ., concur.