The majority opinion says this case comes squarely within the provisions of chapter 92 of the Session Laws of 1927, set forth in the opinion. I do not think this statute is applicable. Defendant's check was sent to the plaintiff at Seattle, Washington, and by the plaintiff deposited in the Old National Bank of *Page 552 Spokane. The Spokane bank is not "The Bank of North Dakota, or any national bank doing business in this state, or any state banking association as defined in § 5191A12 Supplement to the 1913 Compiled Laws." It was the bank in Spokane that received the check "for collection or deposit and credit" and not any of the banking institutions mentioned in this chapter 92 of the Session Laws of 1927.
But assuming, as the majority opinion does, that chapter 92 is intended to apply to banks outside of this state the statute is not applicable to the case at bar. The check was drawn on the Citizens National Bank of Streeter of this state and when presented to that bank there were ample funds on hand to pay it. The bank gave plaintiff's agent just what plaintiff through its agent wanted — a draft, stamped the check paid and charged it to the account of the defendant.
The provisions of chapter 92 are intended to apply to the relations between the receiver of the check, the plaintiff in this case, and the bank which the receiver selects. They are "the parties" referred to in the statute. As between the plaintiff and the bank in which it deposited its check it was agreed that "such method of collection shall, in the absence of a special agreement to the contrary, be deemed to be agreed to by the parties (that is the plaintiff and the Spokane bank) and the forwarding bank (the Spokane bank) and successive agencies shall not be liable to the owner or depositor (that is to the plaintiff in this case) until actual final payment is received, etc." This does not apply to the defendant. It states a rule of conduct between the plaintiff and the bank in which it deposits the check — the Spokane bank — and for the protection of the depositary. If the Spokane bank followed the rule laid down in chapter 92 of the Session Laws of 1927 then the plaintiff has no cause of action against the Spokane bank because it through its agents, accepted a draft instead of cash; but plaintiff would have a claim against the Citizens National Bank of Streeter on the draft it issued.
In the last analysis it resolves itself into the question of who is the creditor of the bank at Streeter on account of this check — the drawer of the check who had ample funds to pay the check when it was presented and who received the check marked paid with the amount thereof charged to its account, or the payee of the check who deposited it with the Spokane bank under a statutory agreement with the Spokane *Page 553 bank that if the latter took the chance of accepting a draft plaintiff would not hold it liable.
All that the defendant agreed to do with his check is as set forth in the negotiable instruments law, to wit: that if a check be presented to the bank on which it is drawn it will "be accepted and paid — according to its tenor, and that if it be dishonored, he will pay the amount thereof to the holder, etc." Not a syllable of chapter 92 adds to the liability of the drawer, nor refers to him. Why read into the law a theory not forecast by it? The check was presented and plaintiff's agent decided to take a draft instead of cash. Had the money been paid out to the agent and then given back to the bank for a draft the situation would be quite clear. The defendant did not agree that the plaintiff could deposit the check in any bank which it saw fit, so that any action of that bank with reference to the proceeds would be chargeable to it. Defendant proclaimed to the world that the check was good, that it had the money in the bank to pay it, if presented, and the holder could get the money.
In 1923 the Colorado legislature enacted chapter 64, as follows: "Any bank or trust company doing business in this state receiving for collection or deposit any check, draft or note drawn upon or payable at any other bank or trust company may forward such instrument for collection directly to the bank or trust company on which it is drawn or at which it is made payable, and such method of forwarding such check, draft, or note for collection or payment shall not be deemed negligence, nor shall it be deemed negligence for such collecting bank to accept from the bank or trust company upon which such check or draft is drawn or at which such note is payable, its draft upon any other bank or trust company as a means toward making such collection, unless instructed otherwise by the holder or depositor of such check, draft or note."
In Peterson v. First State Bank, 79 Colo. 494, 246 P. 784, the Colorado court construed this law and held that action thereunder by a bank did not constitute negligence on the part of the bank; that by it the bank was absolved from liability as between the drawee of a check and the bank in which he deposited it; that the taking of a draft in payment of the check was not negligence on the part of the bank even though the draft was not paid because the bank on which the check was *Page 554 drawn and that issued the draft failed before the draft was paid. The court held that this law was for the benefit of the bank as between the drawee of the check and the bank in which it deposited it for collection.
Shortly thereafter the court was confronted with the situation of whether this law applied to the drawer of the check when the check was presented to the bank on which it was drawn, and draft issued for the amount of the check. In McAloon v. Erickson,84 Colo. 467, 271 P. 192, we have a case where Erickson bought a tax sale certificate from McAloon giving a check on the Cheyenne State Bank of Cheyenne for the same, under a specific statement from McAloon "that the certificate would be held `until the money was received in payment of the check.'" McAloon deposited the check in the First National Bank of Akron; but got no credit on the deposit, the bank taking the check for collection. The Akron bank sent the check to the Cheyenne Bank with instructions to "please remit by draft." The draft was sent, but dishonored because of the failure of the Cheyenne Bank, and McAloon took back his certificate. The Colorado court held however that because the Cheyenne bank received the check Erickson was entitled to the certificate as the Akron bank was McAloon's agent, and that chapter 64 of the Session Laws of 1923 giving to a bank a right to take a draft in lieu of cash, altered "the common law rule on that point only as to banks." Here we have a case quite similar to our own. Erickson purchased goods, gave his check which was honored, and paid by draft; but the bank on which it was drawn and that issued the draft failed before the draft was cashed. The court held that a law similar to the one upon which the majority bases its decision applied only to relations between the drawee and the bank in which it deposited it. The law did not increase the liability of the drawer of the check.
In State ex rel. Sorenson v. Nebraska State Bank, 120 Neb. 539,234 N.W. 82, it seems to be conceded that where a draft is issued by a bank upon which it is drawn the check is paid and that a subsequent controversy arising over the fact that the bank on which the check is drawn issued a draft and failed before the draft was paid is a controversy between the drawee of the check and the various banks through which the draft passed. The court holds that the drawee bank — that is the bank which failed — held the amount of the check as a trust fund *Page 555 for the owner of the draft, that the drawer of the check having sufficient funds in the bank to pay it, had paid the check though a draft was issued, and that the issuing of the draft had the effect of segregating so much of the drawer's funds as were necessary to pay the check from the other funds, and created a trust fund. The court said: "Where there is transmitted to a drawee bank for collection and remittance the check of its depositor for an amount covered by such deposit and such bank then possesses cash in an amount sufficient to pay the sum and proceeds to complete the transaction by cancelling such check and charging the account of such depositor, in the absence of a special agreement it is required to allocate a sufficient amount of its cash on hand to the payment of such check, which moneys thereupon and thereafter constitutes a trust fund."
In 1925 the legislature of Nebraska enacted chapter 29 which said the collecting bank "May forward such instrument for collection directly to the bank on which it is drawn: . . . Provided, however, such forwarding bank shall have used due diligence in other respects in connection with the collection of such instrument."
This statute of Nebraska is similar to ours. But while in the Nebraska case the liability of the drawer of the check is not specifically discussed it is clearly the purpose of the court to concede the drawer of the check is absolved from liability when the check was presented to the bank on which it was drawn and marked paid. The controversy between the bank receiving the draft and the intervening banks back to the bank which received the check for collection resolves itself into a question as to which one of these banks, if any, was negligent. In other words this statute governs the relations between the drawee of the check, the bank in which he deposited it and the banks selected by this depositary as agencies; but this does not affect the drawer of the check when the check is received by his bank and paid, even though paid by draft. In this Nebraska case the court said: "True, in the instant case there is no evidence that the cash was actually counted out or otherwise physically appropriated to the payment of the oil company's check. The record is silent on this subject. But it affirmatively appears that when the check was presented the drawee's cash was there, and the duties in reference to the same are such as are enjoined by law." Page 86 of 234 N.W. *Page 556
Such legislation as chapter 92 of the Session Laws of 1927 of this state is not intended to add to the liability of the drawer of the check. It governs merely the relations between the receiver of the check and the bank in which it deposits it, together with the receiver's relation to intervening agencies. As between the receiver of the check and these banks he cannot hold the bank except for specific negligence. On the other hand the drawer of the check has discharged his liability when his check is presented to his bank and charged to his account, when he has money there to pay it. If the bank in which the drawee deposited the check requests payment by draft it is a matter between the drawee and the depositary — a matter with which the drawer of the check is not concerned.
Much reliance is had on the case of Holdingford Mill. Co. v. Hillman Farmers' Co-op. Creamery, 181 Minn. 212, 231 N.W. 928. This decision sets forth the Minnesota law and a casual examination shows the difference between the two laws. Further, in my opinion, and with all due respect to the eminent court rendering the opinion, the Minnesota law is not applicable to the facts in the case as set forth in the decision for the Minnesota law makes expressly the receiving bank merely the agent for the depositor and not for the drawer of the check. The decision says the goods purchased were not paid for, but that begs the question because the issue is in that case as in this case whether the presentation of the check to the bank upon which it was drawn was not in itself payment when there was money to pay the check and when the "depositor's collecting agent" decided to take a draft instead of cash.
The drawer of the check was not concerned with what the plaintiff did with the proceeds of the check. Assuming that plaintiff's acceptance of the check was not a payment of the lumber until it was collected but therefore as between the plaintiff and defendant was received by the plaintiff for credit upon collection that did not alter the agreement of the defendant that the check would be honored upon presentation. The defendant did not say that it guaranteed to the plaintiff success in any method which the plaintiff might see fit to adopt in disposing of the proceeds nor did the honoring of the check imply that the defendant would be bound by any agreement actual or statutory which *Page 557 the plaintiff would make with the bank in which he deposited the check.
I believe the judgment should be reversed.