Court Opinion

ID: 7994566
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:35:18.486463+00
Date Added: 2024-06-11T16:35:29.855959
License: Public Domain

Sykes, P. J.,
delivered the opinion of the court.
Suit was brought by the appellant, Bank of Gulfport, against the appellee, Smith, upon a check signed by appellee drawn on the Bank of Commerce of Poplarville, Miss., for two hundred fifty dollars payable to the order of the W. EL Daniel Auto Company, and indorsed in blank by this company. The declaration alleges that the bank became the owner of the check for a valuable consideration without notice of any defenses thereto. The pleas of the defendant, Smith, set up a failure of consideration and deny that the bank is a holder or owner of the check for valuable consideration- and without notice of this infirmity.
*77The question was submitted to the jury and verdict rendered in favor of the defendant, Smith, and judgment entered thereon. From which judgment this appeal is here prosecuted.
The testimony for the plaintiff (appellant) is to the effect that this check was indorsed by the auto company and along with another check presented to the bank for deposit. This deposit slip is as follows:
“Items not payable in Gulfport are taken at depositor’s risk and credited, subject to actual final payment. This bank as agent for depositor will forward such items, either direct to drawee, or another bank in the same city, or indirectly through correspondents in other cities.
“Please List Each Check Separately.
Dollars. Cents.
Currency ..................................
Silver ......................................
Gold ......................................
Poplarville........................¡....... 250 00
........................................... 230 00
“Ex. C,” W. W. Newsom. -
Total ................................... 480 00”
At the time these two deposits were made, the auto company had practically no money on deposit in the bank. That same day the bank permitted the company to withdraw the entire amount of these two deposits from the bank. There was no agreement entered into between the bank and the auto company either at the time of these deposits nor at the time of their withdrawal the same, day,
. The check was dishonored by the defendant. The plaintiff bank had no notice or knowledge of any infirmity or defect in the check. There was no testimony to show that the bank received the check, for collection as the agent of the auto company except the deposit slip above quoted.
The court gave the following two instructions at the request of the defendant:
“The court instructs the jury for the defendant that if you believe from the evidence that the plaintiff, Bank of *78Gulfport, received the check introduced in evidence, as the agent of the W. H. Daniel Auto Company, for collection, then the said bank is not a holder in due course, and cannot recover in this case.
“The court further instructs the jury for the defendant that if you believe from the evidence that the check introduced in evidence was delivered to the Bank of Gulfport, on a condition, and for the purpose of collection, then you are further instructed that the said bank is hot a holder in due course, and you will find for the defendant.”
For the plaintiff the court refused to instruct the jury as follows:
“The court instructs the. jury for the plaintiff that if you believe from the evidence that at the time the W. H. Daniel Auto Company deposited the check in question with the plaintiff, it was permitted by the plaintiff to withdraw the amount thereof from its deposit, then you must find for the plaintiff, regardless of how the deposit slip might have read, and regardless of any defense the defendant might have had as against the W. H. Daniel Auto Company.
“The court instructs the jury for the plaintiff that if you believe from the evidence that the defendant, Smith, executed the check in question and delivered it to the W. IT. Daniel Auto Company, and the W. H. Daniel Auto Company deposited the same with the plaintiff, and that the plaintiff thereupon credited the account of the W. H. Daniel Auto Company with the amount of the check and permitted it to withdraw the amount thereof, then the plaintiff was an innocent purchaser for value and in this case would be entitled to recover the full amount sued for, even though the defendant had not authorized the W. H. Daniel Auto Company to use said check.
“The court instructs the jury for the plaintiff that if you believe from the evidence that the plaintiff, without notice of any infirmity in said check, permitted the W. H. Daniel Auto Company to deposit it to its checking account, and on the same day to withdraw from said account; the full *79amount thereof, then you must find for the plaintiff, regardless of how the deposit slip might have read, and regardless of whether thereafter it might have charged the amount of said check back to the account of the said W. H. Daniel Auto Company.”
A cheek is, of course, a negotiable instrument, made so by section 2763, Hemingway’s Code.
Under the Negotiable Instrument Act, section 2604, Hemingway’s Code, the holder for value is one who has given value for the instrument.
.. In this case under the deposit slip the bank originally received the check for collection under the terms as therein stated. By the issuance of this slip it did not become a holder for value. Subsequent thereto that same day, however, it permitted this exact amount to be withdrawn by the auto company. By this act it waived the right to hold the check only for collection and became a holder for value of the check. A case practically identical with this is. that of Jefferson Bank v. Merchants’ Refrigerating Co., 236 Mo. 407, 139 S. W. 545. In that case the deposit was entered on the deposit book of the depositor, which book contained this provision:
“This bank in receiving out of town checks and other collections, acts only as your agent.”
The court in responding to this question said:
“We are not able to see how defendant could be entitled to submit to the jury the issue of whether or not the cheek was indorsed to the plaintiff for collection,.because the evidence is uncontroverted that plaintiff allowed the produce company to draw out the whole amount of the check so deposited, on the very day of said deposit; and this constituted the plaintiff a purchaser of said check for value.”
In the case of National Bank v. Gibson, 105 Wash. 578, 179 Pac. 117, 6 A. L. R. 247, a deposit was originally made for collection, and upon the same day the bank allowed the depositor to withdraw the amount of the check. The *80issues in that case were identical with these. The court thus disposes of this question:
“After the deposit of a check and the giving to the depositor of conditional credit therefor, the depositor, by presenting his own check for the amount of his balance, including such conditional credit, thus established beyond argument his desire and request that the theretofore existing condition in the credit be waived or modified. Upon the presentation by a depositor of a check against such conditional credit, the bank may do any one of a number of things: (1) It' may refuse to pay the depositor’s check until assured that the conditional credit shown in the account of the depositor has become absolute by the payment of the deposited check at the bank on which it is drawn. Such a course would be a refusal to waive or contract away the previously agreed upon condition involved in the depositor’s credit. (2) The bank may cash the depositor’s check solely upon his individual credit, looking to him solely to pay the overdraft if one shall result, which would constitute a new contract independent of and distinct from the previous conditional-credit contract, and the bank could sue its depositor thereon. (3) The bank might, under the situation which we are now considering, waive the condition created for its own protection, make the conditional credit absolute, and pay the depositor’s check upon the credit of the check theretofore deposited by him, but not yet collected. This would constitute an acceptance of the depositor’s .offer made by presenting his check, and would create a new contract wholly superseding the previous conditional-credit contract. (4) Or the bank may, without inconsistency,- combine the last two courses suggested, and pay the depositor’s check on the combined credit of the depositor and of the deposited check; just as in making a loan to a customer upon a note secured by collateral, the bank would grant the credit upon the combined worth of the borrower and of the collateral pledged. This also would be an acceptance of the depositor’s offer to supersede the contract for conditional credit.”
*81This is a clear and correct enunciation of the true rule.
It -will be noted by consideration of the very exhaustive note to this case that this is in accord with the overwhelming weight of authority.
From these views it follows that the court erred in giving the two instructions above quoted for the defendant and in refusing those requested by the plaintiff.

Reversed and remanded.