Court Opinion

ID: 9825963
Source: CourtListenerOpinion
Date Created: 2023-09-01 15:05:50.045855+00
Date Added: 2024-06-11T07:41:43.924529
License: Public Domain

Mr. Justice Jones.
I concur in affirming the judgment of the Circuit Court.
Whatever may be the rule in other jurisdictions, it is settled in this State that a check on a bank operates as an assignment pro tanto of the drawer’s deposit account or fund in bank, and that there is privity between the bank having the necessary fund on hand and the check-holder, certainly upon presentation of the check for payment, so as to give the holder a right of action against the bank wrongfully refusing payment. Fogarties & Stillman v. Bank, 12 Rich., 518; Simmons v. Bank, 41 S. C., 177, 19 S. E., 502; Leaphart v. Bank, 45 S. C., 569, 23 S. E., 939. Under this view it is not essential that the drawee bank shall accept or assent to the check in order to fix upon it liability to pay the check-holder. The bank’s liability is fixed by its contract with the *220depositor, the due presentation of the check, and the possession of sufficient funds of the depositor to pay.
It must follow that the drawer of a check cannot countermand its payment if the check has passed into the hands of a bom fide holder. Such is the ruling in Illinois and doubtless in other States which hold the doctrine established in this State that a check is an assignment pro tanto of the depositor’s account. Union Nat. Bank v. Oceana County, 80 Ill., 212, 22 Am. Rep., 185; National Bank v. Indiana Bank, 114 Ill., 483, 2 N. E. Rep., 405; Gage Hotel Co. v. Union National Bank, 171 Ill., 531, 63 Am. St. Rep., 270, and note in 30 L. R. A., 846. Such being the liability of the bank to a bona ñde holder presenting the check for payment, it is not all incumbent on the bank to' refuse payment, to suffer suit and seek to have the drawer made a party merely because the drawer has given notice of countermand, but on the contrary it is the duty of the drawer, contesting the payment of the check, not only to give notice to the bank but to take timely proceedings in Court, by injunction or otherwise, to arrest payment of the check. - To this end it would doubtless be fair to allow the drawee bank a reasonable time after such notice to await the prompt action in Court of the drawer before being compelled to decide whether it wll risk a suit by the holder for refusing to pay, or a suit by the depositor for paying after notice. The check in question was dated Dtecember 12, 1903, was presented to defendant bank for payment between that date and December 30, 1903, and suit thereon was brought February 9, 1905, a long indulgence by plaintiff, but the drawer in all that time took no proper steps ’ to arrest payment of the check. The correct attitude of the drawee bank is to- stand indifferent between the parties, except to perform its obligation to pay checks of depositors in bona ñde hands when in funds. The bank cannot occupy the position of a mere stakeholder because of the said privity of contract between it and tire holder of the presented check. If the bank chooses to' stand by and suffer suit at the hands of a check holder it cannot shift the *221contest onto the shoulders of the drawer (who may not be able to respond in damages and costs) by a deposit of the money in Court with the request to have the drawer inter-plead as a substitute, but must stand or fall by whatever defense it may have to plaintiff’s cause of action. Ordinary prudence would suggest that the drawee bank either pay the check, or, if it chooses to risk refusal to pay, require of the drawer indemnity against loss in the event of a suit by the holder.
All that is now claimed in behalf of the defendant bank is that the drawer should be substituted to defend the action inasmuch as the drawer, before the check was presented, gave the defendant notice to refuse payment of the check on the ground that there was an entire failure of consideration and that the procurement of the same by the payee amounted to a fraud on the drawer’s rights. The payee was W. G. Stephenson, who' indorsed to R. T. Stephenson, secretary and treasurer, who in turn for value indorsed to plaintiff. The complaint alleges that plaintiff is a bona fide indorsee and owner of the check and there is no suggestion to the contrary by any one. The defendant is defenseless and the Circuit Court could not have done otherwise than to render judgment for plaintiff.
Mr. Justice Woods concurs in this opinion