scribed hour, did not constitute payment thereof, the filing and entry of the check being a mere conditional acceptance, subject to the right of the bank to annul the entry, and return the check within the prescribed time.34

SECTION VII.

PAYMENTS BY CHECKS.

§ 1623. In respect to payment by checks, a creditor may, if he pleases, accept a check in absolute discharge of the debt; but where a check is received by the creditor, there is no presumption that he takes it in payment, but, on the contrary, the implication is that it is only to be regarded as payment if cashed.35 And so

34. German Nat. Bank v. Farmers' D. Nat. Bank, 118 Pa. St. 309. See also Merchants' Bank v. Bank of the Commonwealth, 139 Mass. 517; Merchants' Bank v. Eagle Bank, 101 Mass. 281; Bank of North America v. Bangs, 106 Mass. 401; Manufacturers' Bank v. Thomson, 129 Mass. 438; Exchange Bank v. Bank of North America, 132 Mass. 147. See also Blaffer v. Louisiana Nat. Bank, 35 La. Ann. 254; Preston v. Canadian Bank of Commerce, 23 Fed. 179.

35. Currie v. Misa, L. R., 10 Exch. 153 (1875), 12 Moak's Eng. Rep. 592; The People v. Baker, 20 Wend. 602; Small v. Franklin Mining Co., 99 Mass. 277; Ocean Tow Boat Co. v. Ship Ophelia, 11 La. Ann. 28; Smith v. Miller, 43 N. Y. 171 (1870), 52 N. Y. 546 (1873); Bradford v. Fox, 38 N. Y. 289; Sweet v. Titus, 4 Hun, 639; Davison v. City Bank, 57 N. Y. 82; Phillips v. Bullard, 58 Ga. 256; Everett v. Collins, 2 Campb. 515; Tapley v. Ma rstens, 8 T. R. 451; Heartt v. Rhodes, 66 Ill. 351. So of an order. Rice v. Dudley, 34 Mo. App. 383; Mullins v. Brown, 32 Kan. 317; Larsen v. Breene, 12 Colo. 484, citing the text. See Briggs v. Holmes, 118 Pa. St. 283, as to rebuttal of presumption of conditional payment by a long course of dealing. Check may by agreement be taken as absolute payment, and whether so taken or not is question of fact for the jury. Blair & Hoge v. Wilson, 28 Gratt. 165; Wisner v. Schopp, 34 App. Div. 199, 54 N. Y. Supp. 543, citing Nassoiy v. Tomlinson, 148 N. Y. 326, 42 N. E. 715, 51 Am. St. Rep. 695. In New York held, that a check, if not objected to, is, for the purpose of a legal tender, the equivalent of money. See Wright v. Robinson & Co., 84 Hun, 172, 32 N. Y. Supp. 463; Sage v. Burton, 84 Hun, 267, 32 N. Y. Supp. 1122; Burrows v. The State, 137 Ind. 477, 37 N. E. 271, 45 Am. St. Rep. 210, while the decision of the court in this case sustains the doctrine announced in the text, it is also held that a check, while not payment, is presumptively of some value in the hands of the person in whose favor it is drawn. In this case Burrows was prosecuted for larceny of a check, and in order to determine the grade of the offense, it was necessary to ascertain the value of the thing stolen. The court saying, “In all jurisdictions where the value of notes, bills of exchange, drafts, and checks is not prima facie fixed by statute, the question of their value is solely for the jury and courts should not invade its

strong is this implication, the check being presumptively drawn upon a fund deposited to meet it, that more evidence is required to prove that a check given to take up a note is received in satisfaction and discharge than is demanded when one note is given for another.36 Certainly the holder of a bill or note is not bound to give it up on receipt of a check until the latter is paid.37 In Massachusetts, the law on this subject has been well expressed, the court saying: "A check is merely evidence of a debt due from the drawer. Whether it shall operate as payment or not depends upon two facts: first, that the drawer has funds to his credit in the bank on which it is drawn; and second, that the bank is solvent, or, province;" and further, that the fact that the drawer of the checks has funds in the bank, does not give rise to any presumption affecting its value. Bowen v. Van Gundy, 133 Ind. 670, 33 N. E. 687; Sutton v. Baldwin, 146 Ind. 361, 45 N. E. 518, citing the text; Drum v. Benton, 13 App. D. C. 246; Orner v. Sattley Mfg. Co., 18 Ind. App. 122, 47 N. E. 644; Cox v. Hayes, 18 Ind. App. 220, 47 N. E. 844; Greer v. Laws, 56 Ark. 37, 18 S. W. 1038; Williams v. Costello, 95 Ala. 592, 11 So. 9; Lowenstein & Bros. v. Bresler, 109 Ala. 326, 19 So. 860; Western Bros. Mfg. Co. v. Maverick, 4 Tex. Civ. App. 535, 23 S. W. 728; Johnson-Brinkman Commission Co. v. Bank, 116 Mo. 558, 22 S. W. 818, 38 Am. St. Rep. 615; Hall v. Railway Co., 50 Mo. App. 179. But see Carroll Bank v. First Nat. Bank, 50 Mo. App. 17. But see McElwee v. Metropolitan Lumber Co., 16 C. C. A. 232, 69 Fed. 302; Bailey v. Pardridge, 134 III. 188, 27 N. E. 89. See Angus v. The Chicago Trust & Sav. Bank, 170 Ill. 298, 48 N. E. 946.

36. Olcott v. Rathbone, 5 Wend. 590; 2 Parsons on Notes and Bills, 86; Allen v. Tarrant & Co., 7 App. Div. 172, 40 N. Y. Supp. 114; Kendall v. Equitable Life Assurance Society, 171 Mass. 568, 51 N. E. 464, the court saying: "It cannot be said, as matter of law, that a promissory note given for the amount of a debt has been paid by the giving of a second note, but whether the latter operates as such payment, is a question of fact depending upon the intention of the parties and the other circumstances attending the transaction." See also Agawam Nat. Bank v. Downing, 169 Mass. 297, 47 N. E. 1016. Checks given in payment of taxes not to be taken technically as payment absolute, but only as conditional payment, and if check is not paid the claim for taxes remains unsatisfied the law contemplates the payment of taxes in money. See Houghton v. City of Boston, 159 Mass. 138, 34 N. E. 93; Bush v. Abraham, 25 Oreg. 337, 35 Pac. 1066; Megrath v. Gilmore, 10 Wash. 339, 39 Pac. 131; Campbell v. Hanney, 19 R. I. 300, 33 Atl. 444; Matter of Callister, 88 Hun, 88, 34 N. Y. Supp. 628; Greenwich Ins. Co. v. Oregon Improvement Co., 76 Hun, 194, 27 N. Y. Supp. 794; Equitable Nat. Bank v. G. & S. Co., 113 Cal. 692, 45 Pac. 985.

37. The People v. Baker, 20 Wend. 602; Barnet v. Smith, 10 Fost. 256; Hansard v. Robinson, 7 B. & C. 90; Moore v. Barthrop, 1 B. & C. 5; Pearce v. Davis, 1 Moody & R. 365; Ward v. Evans, 12 Mod. 521; Wentworth v. Woods Machine Co., 163 Mass. 28, 39 N. E. 414.

in other words, pays its bills and the checks duly drawn upon it, on demand. The receipt of a check, therefore, before presentment, if there is no laches on the part of the holder, is not payment of the debt for which it is delivered. But if the party receiving it is guilty of laches in presenting it, and the bank in the meantime suspends payment, he thereby makes it his own, and it shall operate as payment of his debt, the drawer having funds in the bank at the time of drawing the check, and not having withdrawn them." 38 Or if he enter into any composition with the bank by which the payment is extended, or if he consent to a qualified or conditional acceptance, fixing some other time or mode of payment than is implied in the language or terms of the check.* In Virginia, the Supreme Court of Appeals says, Burks, J., giving the opinion: "The giving of a check for an antecedent debt is not an absolute payment and extinguishment of the debt in the absence of an agreement giving it that effect. Ordinarily, it is only a means of payment, and the debt will not be extinguished unless and until the check be paid, or unless loss be sustained by the drawer in consequence of the laches of the holder, in which case the debt will be discharged in proportion to the loss sustained." 40 When checks deposited with a bank, and credited in the depositor's pass-book, are taken, in the absence of any special agreement, they are deemed to be taken for collection, and not as cash. They may be afterward returned and the credit annulled if there are no funds to meet them; and this is so whether the check is drawn on the same bank or another."

38. Taylor v. Wilson, 11 Metc. (Mass.) 44; Sweet v. Titus, 4 Hun, 639; Thomas v. Supervisors, etc., 115 N. Y. 50; Merchants' Nat. Bank v. Samuel, 20 Fed. 664; Tarbox v. Childs, 165 Mass. 408, 43 N. E. 124, court said that "By the law of Massachusetts, a negotiable note taken for an antecedent debt is deemed to be a payment unless there is something to show a contrary intention." This is in contravention of the usual rule, and attention is called to the judicial construction of this act in this and other Massachusetts cases. See also Davis v. Parsons, 157 Mass. 584, 32 N. E. 1117; Bank v. Union Trust Co., 149 Ill. 343, 36 N. E. 1029.

39. Warrensburg Co-op. Assn. v. Zoll, 83 Mo. 97.

40. Blair & Hoge v. Wilson, 28 Gratt. 171 (1877); Kilpatrick v. Home B. & L. Assn., 119 Pa. St. 30; Woodburn v. Woodburn, 115 Ill. 427; Railroad Co. v. Buckley, 114 Ill. 241; Comptoir D'Escompte v. Duesbach, 78 Cal. 15; McIntosh v. Tyler, 54 N. Y. S. C. 99; Bernheimer v. Herrmann, 51 N. Y. S. C. 110; Cox v. Hayes, 18 Ind. App. 220, 47 N. E. 844; People's Sav. Bank v. Gifford, 108 Iowa, 277, 79 N. W. 63.

41. National Gold Bank, etc. v. McDonald, 51 Cal. 64 (1875); Morse on Banks, 320, 321. It would be otherwise if the depositor has an arrangement

§ 1624. Whether agent for collection may receive check in payment. It is frequently the case that a bank or other agent for collection of a bill or note receives the check of a debtor and surrenders up the bill or note to him. This practice was sustained in an English case, where it was held that a banker in London, to whom bills of exchange had been sent for collection, was not guilty of negligence toward his correspondent in surrendering them up on receipt of checks drawn upon a banker in London, though the checks were dishonored for want of funds. This decision was based upon the ordinary course of trade and business of bankers. But Mr. Chitty observes: "That doctrine may now be questionable, and most of the London bankers, on presenting a bill for payment in the morning, leave a ticket where it lies due, and declaring that in consequence of great injury having arisen from the nonpayment of drafts taken for bills, no drafts can in future be received for bills, but that the parties may address them for payment to their bankers, or attach a draft to the bill when presented.' " 43 And Mr. Byles considers that the practice is no longer usual in London, and doubts if it would be protected."

1625. In United States agent for collection should not receive check in payment.— In the United States it is quite certain that a banker or other agent, holding a bill or note for collection, would act at his peril in delivering it up on receipt of a check for the amount; and that if the debtor did not pay the amount in money, and the drawer or indorsers were not duly notified, they would be discharged, and the loss would fall upon the collecting agent. If, indeed, on the same day that the bill or note was

45

with his bank that out of town checks were deposited as cash, credited on his pass-book and allowed to draw against such credit. The Nat. Park Bank v. Levy Bros., 17 R. I. 746, 24 Atl. 777; Bailie v. Augusta Sav. Bank, 95 Ga. 277, 21 S. E. 717, 51 Am. St. Rep. 74; Cox v. Hayes, 18 Ind. App. 220, 47 N. E. 844.

42. Russell v. Hankey, 6 T. R. 12 (1794).

43. Chitty on Bills (13th Am. ed.) [*369], 415.

44. Byles on Bills (Sharswood's ed.) [*24], 100; Bank v. Cummings, 89 Tenn. 609, 18 S. W. 115, 24 Am. St. Rep. 118, citing and approving text.

45. Whitney v. Esson, 99 Mass. 110; Turner v. Bank of Fox Lake, 3 Keyes, 425; Smith v. Miller, 43 N. Y. 171, 52 N. Y. 546; Rathbun v. Citizens' Steamboat Co., 76 N. Y. 376; Fifth Nat. Bank v. Ashworth, 123 Pa. St. 212; ante. § 334. But a custom of the bank to receive checks in payment has been held to be binding upon the customer, whether he has knowledge of the existence

due the agent received a check for the amount and delivered up the bill or note, but on presentment of the check at the bank, and refusal of payment that very day, it had been returned, the bill or note reclaimed and protested, and the drawer or indorsers duly notified, then no right would be forfeited, but the liability of all preserved.46 But if the agent neglected to present the check until the next day, it would then be too late to preserve recourse against the drawer, if a foreign bill, by making protest; and if in the meantime the bank had failed, the loss would fall upon the agent. And in New York, the Court of Appeals would seem to have gone further than this, and to hold that in all cases the agent must present the check on the very day he receives it, or he would be liable for any resulting loss. This seems to us the correct doctrine, for the agent exceeds authority in taking the check, and, therefore, acts at his peril. And while it may

47

of such custom or not. See Farmers' Bank & Trust Co. v. Newland, 97 Ky. 464, 31 S. W. 38; Scott v. Gilkey, 153 Ill. 168, 39 N. E. 265; Foster, Recr. r. Rincker, 4 Wyo. 484, 35 Pac. 470.

46. Turner v. Bank of Fox Lake, 3 Keyes, 425; Smith v. Miller, 43 N. Y. 171; First Nat. Bank v. Buckhannon Bank, 80 Md. 475, 31 Atl. 302.

*

47. In Smith v. Miller, 43 N. Y. 171 (1870), Allen, J., said: "If the check were worthless when given, or became worthless before it could have been, with reasonable diligence, presented for payment, the loss would have fallen upon the defendants, and they would not have been discharged from their liability, unless the plaintiffs had omitted to notify them in due time of the nonpayment of the bill. There would, in such case, be no loss resulting from negligence. When a check is taken instead of money, by one acting for others, as was done by the plaintiffs, a delay of presentment for a day, or for any time beyond that within which, with proper and reasonable diligence, it can be presented, is at the peril of the party thus retaining the check and postponing presentment. If a custom can exist in law, and does exist in fact, authorizing such delay at the risk of the absent principal, it must be shown; it cannot be presumed to exist without evidence. The undisputed evidence in this case shows a practice, if not inconsistent with the existence of any such custom, at least more in harmony with the relative rights and obligations of the parties as recognized by law; and which, had it been adopted by the plaintiffs, would have prevented all loss. The proof is, that the account of the drawers of the check was good at the bank during all business hours of the day on which it was drawn; that the amount to their credit, and subject to their draft, was more than sufficient to pay all outstanding checks; and if this check had been presented it would have been paid, or certified as good, which would have been equivalent to payment. The plaintiffs had two full hours for presenting the check. *It was the

duty of the plaintiffs to present the check at the bank at least during the day on which they received it, and obtain either the money or a certificate, or cause