posit, and draws the check with this understanding. The bank receives the money with the like understanding, and so the holder receives the check. And the mutual understanding of the parties, although they have not individually concerted together, creates an implied privity, and completes the contract between them.

§ 1639. But it is again objected, that if the holder could sue the bank for the amount, it would be liable to a suit from two different persons for the same thing, as the depositor could sue it also.14 But while the depositor could sue the bank for the wrong done in refusing to pay his check, and recover any consequential damages, 15 he could not, we should say, sue it for the amount of the check after its presentment. For then the assignment is completed as against the bank its assent has been obtained by its reception of the deposit, the right of the depositor parted with, and of the holder perfected. And while both depositor and holder could sue the bank, their causes of action would be as distinct as a tort is from a contract.16

§ 1640. Check-holder's remedies. From these views our conclusion is, that the check-holder has two remedies:

First: He may sue the drawer of the check and the bank in one action the former as drawer, and the latter as an implied acceptor. For as an acceptance of a bill may be implied, so may the acceptance of a check. And as a promise to accept will operate as an acceptance to the holder who takes a bill on the faith thereof, so should it be as to a check. Now, by the very act of drawing a check, the drawer communicates to the payee the fact that the bank holds that amount to his credit, which it has agreed to pay on his check. By receiving the deposit, the bank has impliedly so agreed. And the holder receiving the check, in reliance on this condition of things, should be sustained,

"It is

contract between the bank and the depositor is, that the former will pay according to the checks of the latter." Gage Hotel Co. v. Union Nat. Bank, 171 Ill. 531, 49 N. E. 420, 63 Am. St. Rep. 270. 14. In Bank of Republic v. Millard, 10 Wall. 156, Davis, J., said: conceded that the depositor can bring assumpsit for the breach of the contract to honor his checks, and if the holder has a similar right, then the anomaly is presented of a right of action upon one promise for the same thing, existing in two distinct persons at the same time."

15. Morse on Banking, 234; 2 Parsons on Notes and Bills, 62; Hopkinson v. Forster, L. R., 18 Eq. Cas. 74; Fonner v. Smith, 31 Nebr. 107, 47 N. W. 632, 28 Am. St. Rep. 510.

16. See Roberts v. Austin, ante, p. 671.

provided the drawer has not deceived him by drawing without funds to meet the check, and allowed to proceed against both parties in the manner above indicated.

It is no answer to these views to say that the holder of a bill cannot sue the drawee unless it be accepted. The drawee of a bill does not receive money to be paid out on checks. And the distinction between the bank or banker on whom the check is drawn, and the ordinary drawee of a bill, is the very gist of the distinction between the rights of the holders of the different instruments.

§ 1641. Second: The check-holder may sue the drawer of the check on its dishonor, or sue the bank for money had and received to his use; for, as we have said, the bank receiving a deposit receives it for the use of the depositor, and for the use of such persons as he may order it to be paid to by his checks. Assumpsit is an equitable action, and ex æquo et bono, the checkholder should be entitled to recover from the bank the amount for which he holds the depositor's order.

§ 1642. Damages for improper dishonor of check. The depositor may always recover nominal damages from the bank improperly dishonoring his check, and a trader may recover substantial damages. If not a trader, the depositor would have to allege and prove special injury. An agent who has put to his private

17

17. In Rolin v. Stewart, 14 C. B. 607 (78 Eng. C. L.), Williams, J., said: "I think it cannot be denied that if one who is not a trader were to bring an action against a banker for dishonoring a check at a time when he had funds of the customer in his hands sufficient to meet it, and special damage were alleged and proved, the plaintiff would be entitled to recover substantial damages. And when it is alleged and proved that the plaintiff is a trader, I think it is equally clear that the jury, in estimating the damages, may take into their consideration the natural and necessary consequences which must result to the plaintiff from the defendant's breach of contract; just as in the case of an action for a slander of a person in the way of his trade, or in the case of an imputation of insolvency on a trader, the action lies without proof of special damage." The failure of a bank, which has on deposit funds sufficient for the purpose, to pay the check of a depositor, renders it liable either in tort or upon contract. If the depositor brings action against the bank as for a breach of contract, the failure of the bank to pay is not charged as willful, and no special damages are alleged or proved, and the check has finally been paid, the plaintiff is entitled to recover only nominal damages. See Burroughs v. Tradesmen's Nat. Bank, 87 Hun, 6, 33 N. Y. Supp. 864. In a complaint alleging general damages for improperly dishonoring plaintiff's check, held, that it is no part of the office

account funds of an undisclosed principal, may recover damages from the bank for refusal to honor his check upon them, although he had improperly obtained them."

18

SECTION XI.

HOW FAR A CHECK IS AN ASSIGNMENT OF THE FUND DRAWN UPON.

§ 1643. We have seen already that a check operates as an assignment of the fund on which it is drawn pro tanto, from the very time it is drawn and delivered, as between the drawer and the payee or holder. 19 And secondly, that the assignment binds the bank as soon as the check is presented.20 Thirdly, that as between the drawer and holder on the one part, and a party claiming under a subsequent assignment on the other, that if the latter holds a check also, and first presents it, he thereby acquires priority over the check not previously presented.21 And any subsequent assignee to whom the bank had assented to pay the amount would, in like manner, acquire priority, as the bank would be bound to pay him in preference to the prior check-holder who had not presented the check.22 But if the check were presented before any subsequent assignee had obtained the assent of the of a bill of particulars to state the elements which entered into and constituted the general damages. See Commercial Nat. Bank of Chicago г. Hand, 9 App. Div. 614, 41 N. Y. Supp. 823. The measure of damages for the unauthorized refusal of a bank to pay the note of a depositor who has funds on deposit sufficient for the purpose, is the amount of the actual loss sustained by the depositor, naturally resulting from the breach of contract arising from the relation of debtor and creditor existing between a bank and its depositor, according to the usual course of things, namely, the amount of the debt, with interest and costs. (Plaintiff in this suit was not a trader.) See Brooke, Recr. v. Tradesmen's Nat. Bank, 69 Hun, 202, 23 N. Y. Supp. 802; Schaffner v. Ehrman, 139 Ill. 109, 32 Am. St. Rep. 192.

18. Tassell v. Cooper, 9 C. B. 509.

19. Ante, § 1638. See Carroll Bank v. First Nat. Bank, 50 Mo. App. 93; Dowell v. Banking Assn., 62 Mo. App. 482; Hulings v. Hulings Lumber Co., 38 W. Va. 351, 18 S. E. 620; Niblock v. Park Nat. Bank, 169 Ill. 517, 48 N. E. 438; First Nat. Bank v. Keith, 183 Ill. 475, 56 N. E. 179.

20. Ante, § 1638; Bernard, Admr. v. Whitney Bank, 43 La. Ann. 50, 80 So. 702; Gage Hotel Co. v. Union Nat. Bank, 171 Ill. 531, 49 N. E. 420, 63 Am. St. Rep. 270; Bank v. National Union Trust Co., 149 Ill. 343, 36 N. E.

100.

21. Ante, §§ 1617, 1638; Wyman v. Fort Dearborn Nat. Bank, 181 Ill. 279, 54 N. E. 946, 72 Am. St. Rep. 259.

22. Ante, § 1617.

bank, and thus brought it in privity of contract with it, we should say that by such presentment the check-holder acquired priority for the reasons that have been heretofore considered.23 And, therefore, a general assignment for the benefit of creditors would not defeat the check-holder, although he had not presented the check,24 nor would the appointment of a receiver to take possession of the funds of the drawee.25 There may be assignment of a bank deposit by mere parol.26 And those cases which insist that a check does not per se import an assignment pro tanto seem to us to give less weight to written than to verbal testimony.27

23. Ante, § 1617. Contra, cases cited, § 1636.

24. German Sav. Inst. v. Adae, 8 Fed. 106; First Nat. Bank v. Coates, 8 Fed. 540, Miller, J., held that check is an “equitable assignment" pro tanto. In Roberts v. Austin, 26 Iowa, 327, Cole, J., said: "The controversy then is simply this: Markell having received full consideration therefor, draws his checks upon his banker, with whom he has funds on deposit for their payment. Afterward, and before their presentation, Markell (by his assignee) notifies the drawee to withhold payment. This is done without any claim of wrong on the part of the drawees, and without any pretense or suggestion against their just and equitable right to the money specified in the check. Now, as between Markell on the one hand, and the holders of these checks on the other, in whose favor are the equities? No person could hesitate for a single moment in declaring that the money (which in effect has been brought into court for the benefit of the party entitled thereto) should be paid to the holders of the checks, rather than to Markell, who has once received from them the money which the checks represent. If, as between Markell and the holders, the latter would be entitled to the money, then, since the assignee of Markell stands in his shoes and succeeds only to his rights, the holders of the checks would be entitled to the money as against the assignee, and this, too, regardless of whether the holder of a check can maintain his action against the drawee, or whether a check operates as an assignment pro tanto of the deposit, as hereinbefore discussed." Atlanta Nat. Bank v. George, 109 Ga. 682, 34 N. E. 998. The Supreme Court of the United States holds that a check does not operate as such assignment as to give the holder of it by its receipt priority over an assignment for creditors. Fourth St. Nat. Bank v. Yardley, 165 U. S. 634, 17 Sup. Ct. Rep. 439; Florence Mining Co. v. Brown, 124 U. S. 385, 8 Sup. Ct. Rep. 531; Laclede Bank v. Schuler, 120 U. S. 511, 17 Sup. Ct. Rep. 644. Contra, Lunt v. Bank of North

America, 49 Barb. 221.

25. Merrill v. Anderson, 10 Hun, 606 (1877). See Duncan v. Berlin, § 1644, note.

26. Risley v. Phoenix Bank, 11 Hun, 484; Oppenheimer v. First Nat. Bank of Butte, 20 Mont. 192, 50 Pac. 419.

27. See on this subject, ante, § 1636a.

VOL. II-43

§ 1644. Conflict between attachment and garnishment process and assignment. It is a principle of law that wherever there is a legal or equitable assignment of a debt or fund prior to service of attachment or garnishment process upon the debtor, the assignee is entitled to priority over the attachment or garnishment creditor, provided he makes it known to the court in time to intercept its judgment in favor of such creditor, even though the party owing the debt or holding the fund assigned should not have had notice of such assignment prior to the service of such process, 28 and a fortiori does the rule apply where there is notice.2

29

And as a check is an assignment of the fund pro tanto, it would, upon this principle, defeat an attachment or garnishment, although not presented until after process was served upon the debtor.30 This doctrine rests upon the ground that the attachment or garnishment creditor acquires no rights but those subsisting in his debtor at the time that process is served on the garnishee, and is in effect a mere suitor for whatever his debtor might then have a right to recover.

Where the payee of a check has indorsed it to a bank for deposit, and the amount has been put to his credit by the bank,

28. Anderson v. De Soer, 6 Gratt. 364; Maher v. Brown, 2 La. 492; Giddings v. Coleman, 12 N. H. 153; Oppenheimer v. First Nat. Bank of Butte, 20 Mont. 192, 50 Pac. 419.

29. Legro v. Staples, 16 Me. 252; United States v. Vaughan, 3 Binn. 394; Colt v. Ives, 31 Conn. 25; Nesmith v. Drum, 8 Watts & S. 9; Adams v. Robinson, 1 Pick. 461.

*

30. See chapter I, §§ 15, 16, et seq., vol. I; also Wheatly v. Strobe, 12 Cal. 98; Bank of America v. Indiana Banking Co., 111 Ill. 483. But contra, that a check is not an assignment, and will not defeat an attachment, see Tyler v. Gould, 48 N. Y. 682; Lord v. Caffrey, 46 Pa. St. 261; Imboden v. Perrie, 13 Lea, 504; Rice v. Dudley, 34 Mo. App. 392; Duncan v. Berlin, 60 N. Y. 151 (1875), Church, C. J.: "A check upon a bank does not operate as an assignment of the money deposited. A parol acceptance is not valid (1 R. S. 768). The promise did not bind the bank, and no action would lie upon it in favor of the holder. The case of Bullard v. Randall, 1 Gray, 605, was similar in its circumstances to this; and the court held, they would not avail against the lien of a trustee process served before the check actually reached the bank. When the attachment was served, the check had neither been accepted, certified, nor paid, nor had it, in fact, been presented for payment." Held, that the attaching creditor had priority. See also Lunt v. Bank of North America, 49 Barb. 221; Attorney-General v. Continental L. I. Co., 71 N. Y. 325; Risley v. Phoenix Bank, 11 Hun, 484.