Edmisten v. Henry Herpolsheimer Co.

Albert, C.

On Friday, May 28, 1897, J. H. Edmisten executed and delivered to Henry Herpolsbeimer and another, doing business under tbe name of H. Herpolsbeimer Company, bis check, drawn on tbe Merchants’ Bank of Lincoln, for $200.62, in payment of an account, at their place of business in said city. On tbe following day the defendants in error deposited tbe check, with others, in tbe American Exchange National Bank, with which they transacted their banking business. Tbe Merchants’ Bank was open for tbe transaction of business at tbe date of tbe delivery of tbe check and the day following. Tbe following Monday was a legal holiday, and tbe next, morning tbe Merchants’ Bank failed, to open, and has never since opened for tbe transaction of business, and passed into.tbe bands of tbe state banking board. It was wholly insolvent, and nothing was realized from its assets. Tbe check was never presented. This action was brought by tbe payees against tbe maker of tbe check to recover tbe amount due thereon. A trial was. bad to tbe court, which resulted in a finding and judgment for tbe plaintiffs. Tbe defendant brings tbe case here on error.

Tbe only disputed fact in tbe case is whether tbe check was delivered during banking hours oh tbe date of its delivery. This-question was submitted to tbe court on conflicting evidence, and the court having found that it was delivered after banking hours, under the well known rule of this court its finding on that point will not he disturbed. Therefore, for the purpose of this case, we shall assume as one of the facts in the case that the check was delivered to the payees after banking hours on May 28, 1897.

This leaves but one question in the case, and that is whether the failure to present the check for payment on the day after its receipt relieves the defendant from liability thereon. It will be observed that the payees were doing business and received the check in the city where the bank on which it was drawn was located. The rule is that in the absence of special circumstances, in order to hold the drawer liable on his check, it must be presented not later than the day following its receipt, where the payee receives it in the same place in which the bank on which it is drawn is situated. Tiedeman, Commercial Paper, sec. 443, and the cases there cited; Norton, Bills & Notes [3d ed.], 388 et seq; Anderson v. Rodgers, 53 Kan., 542, 27 L. R. A., 248; 2 Daniel, Negotiable Instruments [4th ed], sec. 1590; 2 Randolph, Commercial Paper [2d ed.], sec. 1105; Holmes v. Roe, 28 N. W. Rep. [Mich.], 864; Grange v. Reigh, 67 N. W. Rep. [Wis.] 1130; Murphy v. Levy, 50 N. Y. Supp., 682. Counsel concede this to be the rule, but urge that under the special circumstances in this case the plaintiffs were not required to present the check on the day following its receipt. The special circumstances relied on are that the collection of such paper in the city of Lincoln is made through the agency of a clearing-house, and' that the check, having been received after banking hours, could not, in the usual course of business, pass through the clearing-house and be presented for payment on the day following its receipt by them. This position is sustained by two opinions, both from the same court, and delivered by the same judge. Loux v. Fox, 33 Atl. Rep. [Pa.], 190; Willis v. Finley, 34 Atl. Rep. [Pa.], 213. In the opinions referred to a departure from the settled rules of the law merchant is impliedly admitted. An attempt to justify such departure is made on the grounds of a custom among banks, and the impossibility, owing io the great volume of business, of conforming to the established rule. The reasoning does not commend itself to our judgment. We do not believe a party should be permitted to excuse a lack of diligence by showing that such lack is customary among those engaged in. like business in the same city, nor to plead the magnitude of his business as an excuse for a failure to prosecute it with diligence. The special circumstances that will excuse delay in presentment have generally been held to be such as are beyond the holder’s control, or arise from some agreement or understanding between the drawer and some one or more of the other parties to the paper.

In Holmes v. Roe,* 28 N. W. Rep. [Mich.], 864, the court says: “The clearing-house, and the method of conducting business through it, has no bearing upon the liability of the drawer of a check which is alleged not to have been presented for payment within the time allowed by law.”

In First Nat. Bank of Wymore v. Miller,† 37 Nebr., 500, this court says: “No custom or usage among bankers as to the manner of presenting ordinary checks for payment, will relieve them from the legal duty of presenting such checks for payment within a reasonable time.”

The cases just cited, to our minds, state the correct rule. It follows that the failure of the plaintiffs to present the check for payment on the day following its receipt by them relieves the defendant from liability thereon, and that the judgment of the district court is wrong and should be reversed.

It is. recommended that the judgment of the district court be reversed, and the cause remanded for further proceedings according to law.

Duffie and Ames, CC., concur.

By the Court: For the reasons stated in the foregoing opinion, the judgment of the district court is reversed, and the cause remanded for further proceedings according to law.

Cheek: Holdeb: Banking Hours: Location op Bank: Eoewaeding by Mail. It is the duty of the holder of a check, if he receives it after banking hours, to present it during banking hours .of the next day, if the bank is located in the same town; if not, ' then to forward it by mail the next day.

Reversed and remanded.

The following opinion on rehearing was filed October 22,1902. Reversal adhered to. Sedgwick, J., dissents:

Commissioner's opinion, Department No. 2.

Oldham, 0.

The issues involved in this case are properly stated in the original opinion. There was only one disputed question of fact betiveen the parties to the controversy and that was as to whether the check of defendant, Edmisten, was presented to plaintiffs during banking hours on Friday, May 28, 1897; defendant contending that it was, and the plaintiffs that it was not, delivered until hanking hours had closed. This dispute was determined by the trial court in favor of plaintiffs’ contention. The finding of the trial court on this disputed question of fact was and should have been treated as binding on this court in the former opinion. All other questions of fact were stipulated in the record, and Avere briefly stated as follows: 'That the Merchants’ Bank of Lincoln was open all day Saturday following the day the check was drawn, from 10 o’clock A. M. until 8 o’clock P. M.; that all checks presented on that day were paid by this bank; that defendant, Edmisten, had funds to his credit in this bank more than sufficient to pay the check in controversy; that plaintiffs’ place of business and the Merchants’ Bank were each located in the city of Lincoln, Nebraska, and were situated within a distance of two blocks of each other; that a subsequent check drawn by the defendant, Edmisten, and delivered to one F. L. Rose on the 29th day of May, was presented at the bank on that day by said Rose, and was paid in full. It was further stipulated that the 30th day of May was Sunday ; that the 31st* day of May was Decoration Day, and a legal holiday, on which none of the banks of Lincoln were open for transaction of business; and that on the following day, June 1, the Merchants’ Bank suspended business, and was and is wholly insolvent. It is also stipulated that plaintiffs proceeded with the collection of the check in the manner set forth in the original opinion, and that the check never was presented to the Merchants’ Bank on account of the suspension of that institution, but that it was presented to defendant, Edmisten, and payment demanded of him, and payment refused, before this action was instituted.

In the face of this record, we can see no escape from the conclusion reached by the learned commissioner on the former hearing of this case. We háve carefully re-examined the numerous authorities cited in support of his decision, and are satisfied that he has followed a well-beaten track that has been trodden by many judicial feet, and we do not feel disposed to recommend this court to depart from this broad highway of well-reasoned cases to follow the dimly marked by-path pointed out by counsel for defendants in error. There is every reason why a strict rule of diligence in presenting a check by the holder should be exacted in this case, and no reason why it should be relaxed. Here, plaintiffs’ place of business was but two blocks from the bank on which the check was drawn, and the bank remained open, paying all checks presented, a whole day after the check was received, and it would have required very slight physical exertion for plaintiffs or some of their employees to have taken this check to the bank Saturday, and received the money oh it; bút, instead of this, plaintiffs chose a leisurely, labyrinthine journey for this check, by depositing it in another bank and having it thread its way from this bank to the clearing-house, and from the clearing-house to the banking-house of the drawee. And while this check was pursuing this circuitous route tbe drawee departed its business life with enough of defendant’s money in its possession to have satisfied tbe check bad it reached its destination before tbe demise of tbe bank.

In tbe case of Grange v. Reigh, 67 N. W. Rep. [Wis.], 1130, it is said: “Where tbe payee of a check resides and receives tbe check at tbe place where tbe bank is located, a reasonable time for presentation to tbe drawee reaches, at tbe latest, only to tbe close of banking hours on tbe succeeding day, excluding Sundays and holidays.”

In Kirkpatrick & Co. v. Puryear, 22 L. R. A. [Tenn.], 785, 788, tbe court says: “It is the duty of tbe holder of a check, if be receives it after banking hours, to present it during banking hours of tbe next day, if tbe bank is located in tbe same town, as was this one; if not, then to forward it tbe next day by mail. If be fails to do this, and tbe check is afterwards not paid, bis right, as against the in-dorser, is extinguished,” citing, in support of this conclusion, Morse, Banks and Banking, sec. 422; Planters' Bank v. Merritt, 7 Heisk. [Tenn.], 193; Schoolfield v. Moon, 9 Heisk. [Tenn.], 171, 173.

We are therefore satisfied that tbe former opinion was right, and should be adhered to; and we so recommend.

Barnes and Pound, CC., concur.

By tbe Court: For tbe reasons stated in tbe foregoing opinion,, it is ordered that tbe former judgment of this court be adhered to.

Judgment of reversal adhered to.

* 4 Am. St. Rep., 844.

† 40 Am. St. Rep., 499.

* Wheeler, ch. 41, sec. 8; Cobbey, sec. 8907.