CHAPTER X. CHECKS ON BANKS AND BANKERS. A CHECK is a written order or request addressed to a bank or a private banker, by a person having money in their hands, requesting to pay to another person, on presentment, or to him or bearer, or to him or order, a certain sum of money specified in the instrument. For instance : $200.00. Boston, 20th November, 1852. To the Cashier of the New England Bank. 1. Pay to John White or bearer, 2. Or, Pay to Bearer, 3. Or, Pay to John White or order, (Signed), 4. Or, Pay to John White, two hundred dollars. HENRY BROWN. it In cases No. 1 and 2, the instrument may be transferred to any third person without any indorsement, and the holder of it may demand pay. ment. In case No. 3, where it is payable to the order of a person, must be indorsed by the payee in order to transfer it, and in the fourth case, where it is made payable to a particular person only, it is not ne gotiable. With large sums it is advisable to make checks payable to order, because, in case the check should be lost, it would not be paid without the indorsement of the payee, and the finder could not succeed in getting payment without forging the name. Moreover, the drawer of the check will then have the name of the payee on the back of the check as proof of his having received the money, as it is the custom of banks to require the indorsement of the person's name upon receiving the money, if the check is made payable to order. Checks have often been compared to bills of exchange, and Mr. Justice Cowen, in Harker v. Anderson, 21 Wend. R. 372, went so far as to say, that they were to all intents and purposes bills of exchange payable on demand. But this has been doubted and denied both by Chancellor Kent and Mr. Justice Story. (See Story on Promissory Notes, § 489 and note 5.) Mr. Justice Story there says: "The circumstances in which they principally differ from bills of exchange are,- 1. They are always drawn on a bank, or on bankers, and are payable immediately on presentment, without any days of grace. 2. They require no acceptance as distinct from prompt payment. 3. They are always supposed to be drawn upon a previous deposit of funds, and are an absolute appropriation of so much money in the hands of the bank or bankers to the holder of the check, to remain there until called for, and cannot, therefore, be afterwards withdrawn by the drawer." Although checks, generally speaking, do not say in express terms that they are payable on demand, yet they are still payable on demand in Contemplation of law. Checks are frequently ante-dated, or post-dated, but still they are payable on presentment, at any time after the date. For instance, if I draw a check on the 1st of January, but date it the 14th of January, it is payable on presentment on the 14th of January, or any day after it. This is frequently done when the drawer has no funds or not sufficient funds at the bank on the day he draws the check, but expects to have some against the day whose date it bears. When the check is made payable on a specified day, for instance, if it is dated the 1st of January, 1852, and made payable on the 10th of January, 1852, the general understanding among banks is, that such a check is payable on the day specified, as, in the above case, on the 10th of January, without days of grace. It was so held by Justice Story in the matter of Brown, 2 Story's R. 502, where the checks were drawn on the Granite Bank of Boston, dated on a particular day, and were payable on another specified day. In the case of Brown v. Lusk, 4 Yerger's R. 210, it was held, that a check drawn in Nashville, on the Branch Bank of the United States at Nashville, on the 13th of December, 1827, payable to A. B. or bearer, on the 14th of January following, was an inland bill of exchange, and entitled to grace. But Judge Story does not approve of this decision in the above-cited case of Brown. And Chancellor Kent, in his Commentaries (4 Kent's Comm. p. 549, note, 4th edit.) says: "A check differs from a bill of exchange in this, that it has no days of grace, and requires no acceptance distinct from prompt payment. The drawer of a check is not a surety, but the principal debtor, as much as the maker of a promissory note. The check is the acknowledgment of a certain sum due. It is an absolute appropriation of so much money in the hands of his banker to the holder of the check, and there it ought to remain until called for, and unless the drawer actually suffers by delay, as by the intermediate failure of his banker, he has no reason to complain of delay not unreasonably protracted. If the holder does so unreasonably delay, he assumes the risk of the drawee's failure, and he may, under circumstances, be deemed to have made the check his own, to the discharge of the drawer. But this is quite distinct from the strict rule of diligence applicable to a surety, in which light stood the indorser who has a right to require diligence on the part of the holder, to relieve him from responsibility. It is true, however, that there is so much analogy between checks and bills of exchange and negotiable notes, that they are frequently spoken of without discrimination." But in the case of Bowen and others against Newell, decided in the Court of Appeals of New York on the 12th of April, 1853, and cited before, it was held that such a check is like a bill of exchange, and entitled to grace. We have seen before, that a bill of exchange or a promissory note, taken after the day of payment, or when it is overdue, subjects the holder to all the equities attaching to it in the hands of the party from whom he receives it. But this rule does not apply to a check; for a check is not treated as overdue, merely because it has not been presented as early as it might be, and the holder has taken it some days after its date, unless he has notice of such equities at the time he takes it. Hence, a bonâ fide holder, purchasing a check several days after its date, for a valuable consideration, is entitled to claim payment from the banker, and can hold the drawer responsible in case it is not paid, notwithstanding it has been obtained by fraud from the drawer. And if the drawer, or indorser, or transferrer of a check, has issued or passed it long after its date, he will be held liable to a subsequent bonâ fide holder thereof for a valuable consideration, without notice, notwithstanding the consideration upon which he has so issued or passed it has, as between himself and the person to whom he originally delivered it, entirely failed. (Story on Promissory Notes, § 491.) The drawer of a check is treated almost like the principal debtor, and is not discharged by any neglect or laches of the holder, in not making due presentment thereof, or in not giving him notice of the dishonor, unless he has suffered some loss or injury thereby, and then only in so far as he has suffered injury; as, for instance, if the bank should have failed in the mean time. The Rights and Duties of the Holder of a Check. The general rule is, that the holder of a check, if he will not lose his claims upon the drawer in case the check should be dishonored, is bound to present the same for payment within a reasonable time, and to give notice of the dishonor to the drawer within a reasonable time; otherwise the delay is at his peril. What is a reasonable time will depend upon circumstances, and will, in many cases, depend upon the time and the place of receiving the check, and upon the relations of the parties between whom the question arises. If the payee or holder receives it in the same town or city where it is payable, he is bound to present it for payment, at farthest, on the next secular day after it is received, before the close of the usual banking hours. When he receives it at a place distant from the place of payment, it will be sufficient for him to forward it by post to the latter place on the next secular day after it is received; and the person to whom it is thus sent will not be bound to present it for payment until the day after it has reached him. If payment is not thus regularly demanded, and the bank or bankers should fail before the check is presented, the loss will be the loss of the holder, who will have made the check his own by his delay. (Story on Promissory Notes, § 493.) If the check should have been passed to several holders, the drawer will not be bound beyond the time for which he would be bound to the first holder, namely, the next day after its issue. If, therefore, in the intermediate time, the bank or bankers should fail, and would have paid the check if it had been presented in due season, the loss must be borne by the holder, and not by the drawer. Where a check is negotiable, and passes by indorsement or mere delivery, the same rule applies between the parties to the transfer, that applies between the drawer and the original payee of the check. (Mohawk Bank v. Broderick, 10 Wend. R. 304, and 13 Wend. 133.) The drawer and every holder is liable to every subsequent holder only upon due presentment and dishonor of the check, within the time for which he would be liable if the check had been presented by the party immediately claiming from or under him. (Story on Promissory Notes, 496.) That is to say, the original drawer is answerable to his payee, and this one is liable to the person to whom he delivers it, and so on, if the time of presentment is observed as above stated. If, therefore, the check is dated the 1st of January, and delivered by A on that day to B, and B delivers it on the 2d of January to C, and C delivers it on the 3d of January to D, who presents it for payment on the 4th of January, all parties living at the place of payment, and the check be dishonored, the bank having failed on the 3d of January, A, the original drawer, would not be liable to make good that check to D, nor to B or C, provided he had suffered the loss of the whole amount of money for which the check was drawn in consequence of this delay. But C would be answerable to D, because D presented the check within a reasonable time as to C; but B would not be answerable to C, because C ought to have presented the check on the 3d at farthest. But it must be borne in mind, that this rule applies only where, in the intermediate time between the drawing of the check and the presentment thereof for payment, there has been a change of circumstances materially affecting the rights and interests of the drawer in respect to the bank or bankers on whom the check is drawn; for instance, if the bank has failed after the time allowed for presentment, and the drawer has lost all his funds deposited with the bank. But the drawer is in no case discharged from paying the check drawn where his interests have not been impaired at all by the delay; if, for instance, the bank still remains in good credit and is able to pay the check, but the drawer has in the mean time withdrawn his funds, or if the drawer had no funds at the bank at the time the check was drawn. In these cases the drawer would be liable, although months had elapsed between the date of the check and its presentment for payment. The same rule applies to an indorser or transferrer of a check, in respect to subsequent holders. But if the drawer can show that, by the omission to make due presentment and give due notice of dishonor, he has sustained loss or injury, he will be exonerated in proportion to such loss. We will add a few decisions which have been made in regard to checks, which may bring out points not apparent in the general rules laid down above. A check made in New York, payable out of the State, in current banknotes, is not negotiable. (Little v. Phoenix Bank, 2 Hill, 425, and 7 Hill, 359.) The drawing of a check upon a bank is not a specific appropriation of the funds of the drawer to its payment, in preference to other checks subsequently drawn; that is to say, if A draws a check in favor of B, and afterwards draws several other checks in favor of different persons, who present their checks before B does his, and all the funds are thus drawn out, and the drawer fails, B, the first drawee, cannot claim on the ground of priority an appropriation of the funds in the bank at the time his check was drawn. (Dykens v. The Leather Manufacturers' Bank, 11 Paige, 612.) The drawer of a check may countermand its payment at any time before its payment or acceptance by the bank. (Ibid.) A post-dated check is payable on the day of its date, but if that day be Sunday, it is payable on Monday. (Salter v. Burt, 20 Wend. 205.) Notice of the presentment and refusal to pay is necessary to charge the drawer. (Harker v. Anderson, 21 Wend. 372.) The indorser of a check was held to be discharged when the holder delayed presentment for twenty-three days, the bank being about sixteen miles from him. (Mohawk Bank v. Broderick, 13 Wend. 133.) So, where presentment was delayed for six days, the holder living in the place where the bank was. (Gough v. Staats, 13 Wend. 549.) Where seven or eight days elapsed after the plaintiff received the check before presentment, the course of mail to the bank being only three days, it was held that, if he had not put it in circulation, the payee would have been discharged; but as he parted with it to another on the day he received it, and there was no proof of negligence in any subsequent holder, he recovered, the burden of proof in such case being upon the payee. (Smith v. Janes, 20 Wend. 192.) On the CHAPTER XI. FORMS OF PROTEST. No. 1.-Protest of a Bill on Non-acceptance. day of. one thousand eight hundred and "the I, R. B., Notary Public, duly admitted and sworn, dwelling in L., in the county of L., and State of one of the United States of North America, at the request of C. D. of L., [or of "the holder," or bearer," as the case may be,] did exhibit the original bill of exchange, whereof a true copy is on the other side written, [or did cause due and customary presentment to be made of the original bill of exchange, whereof a true copy is on the other side (or above) written,] unto a clerk in the counting-house of E. F., the person upon whom the same is drawn, and demanded acceptance thereof, [or acceptance being thereupon demanded,] and he answered that it would not be accepted at present. Wherefore, I, the said notary, at the request aforesaid, have protested, and by these presents do protest against the drawer of the said bill, and all other parties thereto, and all others concerned, for all exchange, reexchange, and all costs, damages, and interest, present and to come, for want of acceptance of the said bill. (Seal.) Which I attest, |