Foster v. Peoples Bank

Sutton, J.

1. As “a general rule, when a hank receives a cheek from a depositor for collection, it must return to him either the cheek or the money. If the collecting bank surrenders the check to the bank on which it is drawn, and accepts a cashier’s check or other obligation in lieu thereof, its liability to its depositor is fixed, as if it had received the cash. It has no right, unless specially authorized to do so, to accept anything in lieu of money.” Empire Cotton-Oil Co. v. Sellars, 18 Ga. App. 377, 379 (89 S. E. 454). While it has been held that custom *448or usage may justify a collecting bank in receiving as payment the check or draft of the debtor drawn on another bank, the more general and better view is that if a cheek drawn on another bank, or any kind of paper payable outside of the collecting bank, is accepted, this is only conditional payment, and the collecting bank is responsible until the money is collected thereon. 7 O. J. 614, §§ 276, 277.

2. The fact that the pass-book given to the depositor contained a printed stipulation that the plaintiff bank reserved the right “to send items direct to institutions where payable and to accept their exchange drafts in lieu of money” does not show that the bank had special authority from the depositor to receive anything from the drawee bank except cash in payment of the check, where the attention of such depositor is not particularly called thereto, or ho does not assent thereto expressly or impliedly. It is not sufficient that such stipulation appears in the front of the pass-book. The case is not one in which the party must know that he is accepting a contract, as where he is accepting an insurance policy, but is more analogous to the case of special conditions and limitations printed on the back of a railroad-ticket. Highfield v. First National Bank, 45 Ga. App. 431 (6), 437 (165 S. E. 135).

3. A usage or custom among banks, in collecting a check or draft for a depositor, to surrender it to the drawee and receive in lieu of the cash a check or draft drawn by the drawee on a bank in a distant city, has no application as between the depositor and the collecting bank, and such a custom or usage can not be invoked by the collecting bank as a justification for receiving the check or draft of the drawee in lieu of cash, at least in the absence of knowledge on the part of the depositor of such custom or usage at the time he turns the check over to the collecting bank. National Bank of Commerce v. American Exchange Bank, 151 Mo. 320, 331, 332 (52 S. W. 265, 74 Am. St. R. 527, 534) ; Hall v. Storrs, 7 Wis. 253; Whitney v. Esson, 99 Mass. 308 (96 Am. D. 762); Chicago First National Bank v. Citizens Savings Bank, 123 Mich. 336 (82 N. W. 66, 48 L. R. A. 583); Wagner v. Crook, 167 Pa. 259 (31 Atl. 576, 46 Am. St. R. 672).

4. Where a cashier’s check of a bank in a certain city was deposited with another bank in that city after ten o’clock a. m., and where the custom of such banks was to present cheeks so deposited the next day for payment, and the bank receiving such cashier’s check for deposit presented it to the drawee bank for payment and accepted in lieu of cash an exchange check drawn in its favor by the drawee bank on a bank in a distant city, instead of the cash called for by such cashier’s check, no reason appearing why it was unable to obtain the cash from the drawee bank, and the drawee bank failed, and the cheek on the distant bank was protested for nonpayment, this constituted payment of the cashier’s check by the drawee bank as between such collecting bank and the depositor, even though it was customary for the banks to transact business in this manner. Comer v. DuFour, 95 Ga. 376, 379 (22 S. E. 543, 30 L. R. A. 300, 51 Am. St. R. 89) ; Empire Cotton-Oil Co. v. Sellars, supra; Pollak v. Niall-Herin Co., 137 Ga. 23 (72 S. E. 415, 35 L. R. A. (N.S.) 13); Farley National Bank v. Pollock, 145 Ala. 321 (39 So. 612, 117 Am. St. R. 44, 2 L. R. A. (N. S.) 194, 8 Ann. Cas. 370, and note) ; National Bank *449of Commerce v. American Exchange Bank, supra; 1 Morse on Banks (3d ed.), § 252; Bank of Antigo v. Union Trust Co., 149 Ill. 343; Midland National Bank v. Brightwell, 148 Mo. 358, 71 Am. St. R. 608.

Decided August 18, 1933. Rehearing denied September 2, 1933.

5. The depositor, who indorsed the cashier’s check in blank when he deposited it, is not liable to the collecting bank as an indorser, the cashier’s cheek having been paid as between the depositor and the collecting bank when the latter accepted the exchange cheek of the drawee bank in lieu of the cash called for by the cashier’s cheek.

6. Accordingly, under the pleadings and evidence in this case, the court should have given in charge to the jury the instruction requested by the defendant, “that if the plaintiff carried the cashier’s check issued to J. T. Foster by the Citizens Bank to the Citizens Bank and accepted exchange on some other bank in lieu of the cashier’s check, without the knowledge and consent of J. T. Foster, the plaintiff did so at its own risk; and if the plaintiff sustained a loss thereby, they can not hold J. T. Foster liable for the same.” It follows that the court erred in overruling the motion for a new trial. The other special grounds of that motion do not show error.

Judgment reversed.

Stephens, J., concurs. Jenhims, P. J., dissents. Willis Smith, Smith <& Millican, for plaintiff in error. Boykin & Boykin, contra.