validate a good check (unless the limitation has applied), and the fact that it was dishonored when transferred, and that presentment was delayed, does not lessen the drawer's liability,66 unless he has suffered loss, yet the lapse of a long period from its date before its payment, is a circumstance so out of the ordinary course of business that it ought to arouse suspicions and excite inquiry. And the bank paying, or the party receiving such a check, acts at his peril.

67

§ 1633. When check is deemed stale. No precise period of time can be specified at which a check would be deemed so stale as to subject the receiver to equitable defenses, or a bank to loss, in the event that such defenses arose, or the liability of the drawer ceased. In Pennsylvania, where at the time the check was drawn, the drawer had no effects in the bank, nor provided any afterward, and a year and a day after the day named for payment it was presented to and paid by the bank, and it appeared that the debt was discharged by the drawer after the check was drawn, it was held that the circumstance of its age was sufficient "to put the bank on inquiry," and its negligence precluded it from relief against the drawer.68 So the lapse of two and a half years, especially when the check contained a mark indicating that it was a memorandum check, has been held to open the check to equities. And in another case, the lapse of five months." In an English case, where the owner lost a check, and it was paid five days after its date to a shopkeeper by the bank, it was held that the shopkeeper should refund to the true owner, having taken the check overdue, unless, indeed, he were protected by the title of his assignor, and the burden of proof to that effect lay on him. Holroyd, J., said: "A check is payable immediately, the holder of it takes it at his peril, and a person taking it after it is due takes it also at his peril." " In New York, where the check was transferred fourteen months after its date, the lapse of time was

69

66. Cowing v. Altman, 79 N. Y. 168.

67. See § 1590.

68. Lancaster Bank v. Woodward, 18 Pa. St. 357.

69. Skillman v. Titus, 32 N. J. L. 96.

70. First Nat. Bank v. Needham, 29 Iowa, 249 (1870).

71. Down v. Halling, 4 B. & C. 330 (17 Eng. C. L.), 6 Dowl. & R. 445, 2 Car. & P. 11. But this case is explained in London, etc., Bank v. Groome, cited in note, § 1634, and distinguished from Rothschild v. Corney (below), in London Banking Co. v. Groome, 36 Eng. Rep. 322.

held sufficient to put the transferrer on inquiry; but it being proved that the check was delivered long after its date, and was on the same day transferred to the holder, it was decided to be valid in his hands, notwithstanding there was a good defense as between the drawer and payee.72

74

75

§ 1634. On the other hand, the fact that the holder received the check one day,73 four days, six days, eight days,76 or ten days," or nearly a month78 after date has been considered insufficient to subject him to equitable defenses, though taken in connection with other circumstances, its being somewhat stale might be evidence of bad faith.79 Where six months elapsed between the date and presentment of the check the United States Supreme Court held that it was not open as against the holder to the equities of the drawer against the payee, the drawer's funds remaining in the bank and he being in no wise prejudiced by delay in presentment.80 And if by the drawer's fault the bank pays an altered, forged, or otherwise invalid check, the bank will not be liable to him.81 And where the drawer himself delayed nine

72. Cowing v. Altman, 71 N. Y. 436, overruling 5 Hun, 556. 73. Himmelman v. Hotaling, 40 Cal. 111.

66

74. First Nat. Bank v. Harris, 108 Mass. 514. In this case, a check on a bank in Boston was sent from Boston by mail to Rochester, in New York, and there bought four days after its date, and was presented for payment two days afterward. Held, that the buyer was not subject to equities existing between the original parties, of which he had no notice, either on the ground that the lapse of time between the date of the check and his purchase of it should have put him upon inquiry, or on the ground of unreasonable delay in making presentment."

75. Rothschild v. Corney, 9 B. & C. 388.

76. London & County Bank v. Groome, English High Court, Q. B. D., Dec. 19, 1881, Cent. L. J., April 28, 1882, vol. XIV, No. 17, explaining Down v. Halling, supra.

77. Ames v. Meriam, 98 Mass. 294, the court saying: "A holder who takes a check in good faith and for value several days after it is drawn, receives it without being subject to defenses of which he has no notice before or at the time his title accrues."

78. Lester v. Given, 8 Bush, 357.

79. Bank of Bengal v. Fagan, 7 Moore P. C. 72; London, etc., Bank v. Groome, supra. Retaining successive cashier's checks, under circumstances which disprove bad faith in omitting to present any of them for payment until after all have been issued, the principal is to be deemed a bona fide holder of the checks, and, as such, entitled to recover the amount thereof from the banker. Henry v. Allen, 151 N. Y. 1, 45 N. E. 355.

80. Bull v. Bank of Kasson, 123 U. S. 105.

81. Lickbarrow v. Mason, 2 T. R. 63.

months to issue the check, he could not object against the holder who received it from him the circumstances of its staleness.82 Without any circumstances of this kind arising, the certain age at which a check may be said to be stale is as uncertain as the fixing of the day on which a young lady becomes an old maid. Mr. Morse says that its age must be something so extraordinary as to be inconsistent with the ordinary course of business in order to give the bank the right to demand delay." 83 Another writer regards a check as "never overdue," 84 but this is going too far.

§ 1634a. Excuses for want of presentment and notice.— A declaration by the drawer of a check before maturity that it would not be paid, would excuse want of presentment or notice, and a part payment before maturity would waive the necessity of presentment and notice, as it would be the presumed intention of the parties that it should not be presented.86

SECTION X.

RIGHT OF HOLDER OF UNCERTIFIED CHECKS TO SUE THE BANK.

§ 1635. The question whether or not the holder of a check may sue the bank holding funds of the drawer, upon its refusal to pay it, has divided the opinions of courts and jurists, and no little perplexed the legal profession. And it has been observed by a discriminating writer that "when one comes to examine the authorities which range themselves on either side, and to investigate the chains of reasoning by which these authorities respectively seek to support themselves, the tale of the two honorable knights who fought about the question of whether the shield between them was golden or silvern, is forcibly brought to mind. Each line or argument in its turn seems the more correct and the more satisfactorily backed by respectable vouchers." 87 But this writer concludes that the weight of authority is in favor of the check-holder's right of action, and expresses his own judgment to

82. Boehm v. Sterling, 7 T. R. 423.

83. Morse on Banking, 264; Scroggin v. McCleland, 37 Nebr. 644, 56 N. W. 208, 40 Am. St. Rep. 520; Farmers' Nat. Bank v. Dreyfus, 82 Mo. App. 399, quoting text.

84. Thompson on Bills, 118.

85. Minturn v. Fisher, 7 Cal. 573. See ante, §§ 1596, 1598.

86. Levy v. Peters, 9 Serg. & R. 125.

87. Morse on Banking, 459.

the like effect.88 We shall first review the authorities, and then state our own conclusions.

§ 1636. The doctrine that check-holder cannot sue the bank.There are a series of cases in which it is declared that the checkholder cannot sue the bank unless the check has been certified, or otherwise accepted; cases, however, in which no question respecting checks was presented, the instrument in suit being either an order or a bill of exchange. These cases are often cited in support of the proposition that the check-holder cannot sue the bank without acceptance; but really they are not authority for that doctrine, as a check is necessarily drawn upon a bank, and differs from an order or a bill of exchange, which need not be, 89 There are also a number of cases in which the opinion has been expressed, or the decision has been pertinently made to the like effect, that the check-holder cannot sue the bank. They proceed upon the ground that there is no privity of contract between the holder of the check and the bank, unless the latter does some aet by which it is created; that while it may be an appropriation of the fund, in whole or in part, as between the drawer and the holder, until the bank consents to it, it is in nowise bound to pay the amount to the holder; that especially is this the case when the check is for part of a deposit, as one cause of action might thus be split up into many; and that the only remedy which exists for a wrongful refusal of the bank to pay the amount deposited to meet the check, is a suit by the drawer, or the holder in tort, for the wrong done; or suit by the drawer for damages for breach of the implied contract to pay it.90

90

88. Morse on Banking, 473; Fonner v. Smith, 31 Nebr. 107, 47 N. W. 632, 28 Am. St. Rep. 510.

89. Mandeville v. Welch, 5 Wheat. 277 (case of a bill of exchange); Cowperthwaite v. Sheffield, 3 N. Y. 243 (1850), (bill of exchange); New York Bank v. Gibson, 5 Duer, 574 (1856), (bill of exchange); Grinnell v. Suydam, 3 Sandf. 133 (bill of exchange); Luff v. Pope, 5 Hill, 413 (order on individual — not a bank); Dana v. Third Nat. Bank, 13 Allen, 445 (bill of exchange); First Nat. Bank of Union Mills v. Clark, 134 N. Y. 368, 32 N. E. 38; St. Amand v. Bank of Commerce, 49 La. Ann. 1060, 22 So. 207.

90. Bank of Republic v. Millard, 10 Wall. 152 (1869); St. Louis R. Co. v. Johnston, 133 U. S. 574; First Nat. Bank v. Whitman, 94 U. S. 343; Laclede Bank v. Schuler, 120 U. S. 511; Florence Mining Co. v. Brown, 124 U. S. 385; Fourth Street Bank v. Yardley, 165 U. S. 634, 17 Sup. Ct. Rep. 439; Northumberland Bank v. McMichael, 106 Pa. St. 460; Creveling v. Bloomsbury Nat. Bank, 46 N. J. L. 255; Dickinson v. Coates, 79 Mo. 251; National Commercial Bank v. Miller, 77 Ala. 172; Brennan v. Merchants' Nat. Bank, 62 Mich. 343;

§ 1636a. Views of United States Supreme Court; exception to general rule. The Supreme Court of the United States has unanimously adopted the view, that ordinarily a check-holder cannot sue the bank; but it has qualified its opinion by remarking: "It may be, if it could be shown that the bank had charged the check on its books against the drawer, and settled with him on that basis, that the plaintiff could recover on the count for money had and received, on the ground that the rule ex æquo et bono

Colorado Nat. Bank v. Boettcher, 5 Colo. 190; Citizens' Nat. Bank v. Imp. & Traders' Nat. Bank, 51 N. Y. S. C. 389; Viets v. National Bank, 38 N. Y. S. C. 485; Pickle v. People's Nat. Bank, 12 S. W. 919; Hawes v. Blackwell (N. C.), 12 S. E. 245; Satterwhite v. Melczer, 24 Pac. 184; Chapman v. White, 6 N. Y. 412 (1852). The instrument in suit was called a bill, but was really a regular check drawn by one bank upon another. Carr v. National Security Bank, 107 Mass. 45 (1871); Etna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82 (1871); Van Alen v. American Nat. Bank, 52 N. Y. 4 (1873); Duncan v. Berlin, 60 N. Y. 151 (1875); Tyler v. Gould, 48 N. Y. 682; Planters' Bank v. Merritt, 7 Heisk. 117; Planters' Bank v. Kesee, 7 Heisk. 200; National Bank v. Second National Bank, 69 Ind. 579; Rosenthal v. Martin Bank, U. S. C. C., South. Dist. of N. Y., Nov., 1879, 34 Am. Rep. 238; Essex Bank v. Bank of Montreal, 7 Biss. 193; Bullard v. Randall, 1 Gray, 605. In Moses v. Franklin Bank, 34 Md. 580 (1871), Alvey, J., said: "It is certainly a general rule that the drawee who refuses to accept a bill of exchange cannot be held liable on the bill itself; nor to the holder for the refusal, except it be upon the ground of fraud and loss to the latter. A bank upon which a check is drawn occupies in this respect a similar position to that of a drawee of a bill of exchange. It is but the agent of the depositor, holding his funds upon an implied contract to honor and to take up his checks to the extent of the funds deposited. The obligation of the bank to accept and pay is not to the holder, but to the drawer." Bellamy v. Majoribanks, 8 Eng. L. & Eq. 523 (1851), Parke, B.; Purcell v. Allemong, 22 Gratt. 742 (1872), Anderson, J., obiter; 2 Parsons on Notes and Bills, 61, 62. See post, §§ 1644, 1645; Gregory v. Merchants' Nat. Bank, 171 Mass. 67, 50 N. E. 520. Following the principles announced in the class of cases referred to in the text, it has been decided in New York that an ordinary uncertified check upon a general account is never a legal or equitable assignment of any part of the same standing to the credit of the depositor and confers no right upon the payee that he can enforce against the bank. See People v. St. Nicholas Bank, 77 Hun, 159, 28 N. Y. Supp. 407; Railroad Co. v. Bank, 54 Ohio St. 60, 42 N. E. 700, 56 Am. St. Rep. 700 (reference is made in the opinion of the court to the review in the text of the arguments pro and con on this subject); House v. Kountz, 17 Tex. Civ. App. 402, 43 S. W. 561; Grocer Co. v. Bank, 71 Mo. App. 132.

91. Bank of Republic v. Millard, 10 Wall. 152; First Nat. Bank v. Whitman, 94 U. S. (4 Otto) 343; Commercial Nat. Bank of Charlotte v. First Nat. Bank, 118 N. C. 783, 24 S. E. 524, 54 Am. St. Rep. 753; Grocer Co. v. Bank, 71 Mo. App. 132.