Pullen v. Placer County Bank

This question has frequently arisen in cases where a gift causa mortis is claimed by reason of a check given for that purpose, but it is invariably held that unless the cheek is presented in the lifetime of the donor it is ineffective. (Harris v. Clark, 3 N. Y. 93 ;^[13] In re Beak’s Estate, L. R. 13 Eq. 489.) Under a state of facts similar to those in the present case presented in Simmons v. Cin. Savings Society, 31 Ohio St. 457 ,^[5] the court held that the gift was incomplete, saying: “Until the cheek was either paid or accepted the gift was incomplete; and in the absence of such payment or acceptance the death of the drawer operated as a revocation of the check. It is well settled that, in order to constitute a valid gift, there must be a complete delivery of the subject of the gift, either actual or constructive. The check in the present instance was a mere order or authority to the payee to draw the money; and being without consideration, it was subject to be countermanded or revoked while it remained unacted on in the hands of the payee.” The same rule is declared in Hewitt v. Kaye, L. R. 6 Eq. 198; Second Nat. Bank v. Williams, 13 Mich. 282 ; Thresher v. Dyer, 69 Conn. 404 ;

The relation between a bank and its depositors is that of debtor and creditor respectively, and the money deposited with the bank becomes its property, and is no longer under the control of the depositor. A check is only a direction to the bank to pay a certain sum of money to the person therein named. The money does not thereby become the property of the payee, nor is it placed beyond the control of the depositor. Until it is' presented to the bank, the drawer may countermand its payment, or he may direct a different disposition of the moneys to his credit in the bank.

Neither does a check of itself before presentation operate as an assignment to the payee of the money for which it was drawn. “An ordinary uncertified check upon a general account is neither a legal nor an equitable assignment of any part of the sum standing to the credit of the depositor, and confers no right upon the payee that he can enforce against the bank.” (O’Connor v. Mechanic’s Bank, 124 N. Y. 324 .) “A check upon a bank in the usual form, not accepted or certified by its cashier to be good, does not constitute a transfer of any money to the credit of the holder; it is simply an order which may be countermanded and payment forbidden by the drawer at any time before it is actually cashed. It creates no lien upon the money which the holder can enforce against the bank. It does not of itself operate as an equitable assignment.” (Florence Mining Co. v. Brown, 124 U. S. 385 .) In Hopkinson v. Forster, L. R. 19 Eq. 74, the Master of the Rolls, Sir George Jessel, said: “A check is clearly not an assignment of money in the hands of a banker; it is a bill of exchange payable at a banker’s. The banker is bound by his contract with his customer to honor the check when he has sufficient assets in his hands. If he does not fulfill his contract he is liable to an action .by the drawer in which heavy damages may be recovered if the drawer’s credit has been injured;” and referring to some expression of Mr. Justice Byles, said: “I am quite sure that learned judge never meant to lay down that a banker who. dishonors a check is liable to a suit in equity by the holder.” (See, also, Chap

If it could be held that by drawing a check the drawer thereby assigned that amount of money to the payee, it would follow that the money represented by the cheekbecame thereby the property of the payee, and that he could maintain an action against the bank for its recovery, subject to any defense that the bank might have against the depositor; but the almost universal line of authority is, that such action cannot be maintained. The bank upon which a check is drawn has no contract with the payee, and is under no legal obligation to him, and its refusal to pay the check does not give to the payee a right of action against it. “The holder takes the check on the credit of the drawer, in the belief that he has funds to meet it, but in no sense can the bank be said to be connected with the transaction. If it were true that there was a privity.of contract between the banker and holder when the check was given, the bank «would be obliged to pay the check, although the drawer before it was presented had countermanded it, and although other checks drawn after it was issued, but before payment of it was demanded, had exhausted the funds of the depositor. If such a result should follow the giving of checks, it is easy to see that bankers would be compelled to abandon altogether the business of keeping deposit accounts for their customers.” (Bank of the Republic v. Millard, 10 Wall. 152 .) The same rule is declared in First Nat. Bank of Washington v. Whitman, 94 U. S. 343 ; Carr v. National etc. Bank, 107 Mass. 45 ;^[10] Boettcher v. Colorado Nat. Bank, 15 Colo. 16 ; Grammel v. Carmer, 55 Mich. 201 ;^[11] Brennan v. Merchants etc. Bank, 62 Mich. 343 ; Creveling v. Bloomsbury Nat. Bank, 46 N. J. L. 255 .^[12] The authorities upon this subject are reviewed in Fourth St. Bank v. Yardley, 165 U. S. 634 , and the rule stated to be: “As between a check-holder and the bank upon which such cheek is drawn, it is

In Illinois (Munn v. Birch, 25 Ill. 35 ) and in Iowa (May v. Jones, 87 Iowa, 188 ) it is held, contrary to the great weight of authority, that the drawing of a check upon his bank by the depositor has the effect to assign that amount of money to the payee of the check. Of course, under this rule a right of action would be thereby created in favor of the payee of the check, and accordingly it is held in these states that the payee may maintain an action against the bank for the amount of the check. The doctrine is, however, somewhat modified in Illinois, in Bank of Antigo v. Union Trust Co., 149 Ill. 343 , where it is held that the check operates as such assignment only as between the drawer and the payee, and that the bank cannot be held liable until notified of the assignment by a presentation of the check for payment. It seems illogical, however, to hold that by drawing a check the money is assigned to the payee, and also that the owner may after-wards by drawing other checks take from the bank the money which he has once assigned. In Kentucky, different from any other jurisdiction, it is held that the bank holds the money of its depositor as bailee, and agrees as a part of its business to pay this money out as the depositor may draw his checks for it. (See Weinstock v. Bellwood, 12 Bush, 139 .) In a note by Professor Ames to Hopkinson v. Forster, L. R. 19 Eq. 74, in Ames’s Cases on Bills and Notes (vol. 2, p. 735) he says: “It is perfectly clear that the holder of an uncertified check has no claim either at law or in equity against the bank upon which it is drawn”—citing a large number of authorities in support of the proposition.

Wheatley v. Strobe, 12 Cal. 92 ,^[13] and Pope v. Huth, 14 Cal. 403 , cited by the respondent, were neither of them the case of a check, but were cases in which a bill of exchange was drawn for the full amount of a debt owing by the drawee to the maker of the bill, and it was held that an equitable assignment

It is said that Clark, Sr., might have countermanded the check before it was paid, or have drawn out the money on other checks. But he did not do so; neither did any other person representing him. A power of revocation is of no consequence unless exercised in the lifetime of the party holding it. This is so even in trusts. In Stone v. Hackett, 12 Gray, 232 , the court say: “A power of revocation is perfectly consistent with the creation of a valid trust. It does not in any degree affect the legal title to the property. That passes to the donee, and remains vested for the purposes of the trust, notwithstanding the existence of a right to revoke it. If this right is never exercised according to the terms in which it is reserved, as in the case at bar, until after the death of the donor, it can have no effect on the validity of the trust or the right of the trustee to hold the property.” The same principle applies in the case at bar. In nearly all the cases relied on for appellants the party on whom the check was drawn had received some notice of countermand or objection to the validity of the check, and had refused to pay it; and in most of them the action was by the drawee against the payor, which kind of action, according to some of the authorities, can never be maintained. For instance, in Simmons v. Savings Society, 31 Ohio St. 457 ,^[3] much relied on in support of appellants’ position, the administrator of the deceased drawer had notified the defendant not to pay the cheek, and had undertaken to revoke it, and defendant had refused to pay it. In

In my opinion, the true rule is stated in McGregor v. Loomis, 1 Disn. 247, where the subject of the legal significance of checks is fully discussed and the authorities cited. The court there says that a banker, following the ordinary business of his calling, “gives the community to understand that those who have funds in his hands have not only the right to draw upon the deposit, but that all drafts will be paid on presentation; he opens virtually a letter of credit to his depositor which is a guaranty to him, as well as to til who make advances upon the faith of it. For all practical purposes, it assimilates itself to a parol promise to accept any check that the owner of the deposit may draw; and thus the rule which binds the drawee of a bill of exchange as an acceptor, when he has promised in advance to honor it, furnishes a strong analogy,” citing cases. The opinion contains a quotation from Harris v. Clark, 3 N. Y. 120 ,^[3] as fol

But, as hereinbefore stated, the question involved here relates to the rights of parties to a negotiable instrument, and not to the validity of a gift.

Henshaw, J., concurred.