the drawer has put the matter beyond recall; and being no longer debtor of the payee could not be garnished by his creditor.3

31

§ 1645. In England it is held that there are some cases in which equity would regard a check as an assignment of the fund, as in the case of the death of the drawer, and the consequent revocation of the banker's authority (which is there held to be its effect), the holder may have relief in equity against the banker.32 But, as a general rule, a check is not there regarded as an assignment.

33

SECTION XII.

CHECKS AS EVIDENCE.

§ 1646. In the hands of the payee, a simple check which is unpaid and has not been presented for payment, cannot be used as evidence of any indebtedness from the drawer to the payee, for the drawer has only contracted that the bank should pay the amount on demand, and until demanded the drawer is not bound. 34 But when this is done and shown, the check then imports a debt from the drawer to the payee, and it may be sued on without proving the consideration, value received being presumed.35

37

In the hands of an indorsee, the check, in like manner, is not sufficient evidence that the drawer owes the debt, unless a demand upon the bank and refusal to pay be shown;36 and as against the indorser, proof of notice of nonpayment must be superadded.3 The natural inference from the giving of a check is, that it was given in payment of a debt due the payee from the drawer, or that the payee gave cash for it when it was drawn, and in order to charge the payee as a debtor to the drawer, it must be shown

31. National Park Bank v. Levy Bros., 17 R. I. 746, 24 Atl. 777. 32. Rodick v. Gandelle, 12 Beav. 325, 1 De G., M. & G. 763.

33. Hopkinson v. Foster, L. R., 19 Eq. 74.

34. Flemming v. McClain, 13 Pa. St. 177; Pearce v. Davis, 1 Moody & R. 365; 2 Parsons on Notes and Bills, 83.

35. See infra, § 1652; Cloyes v. Cloyes, 43 N. Y. S. C. 145, citing the text. Mr. Morse states that there must be " proof of the consideration on which the check was given." Morse on Banking, 290, 312. This is incorrect. cases below, and see infra.

See

36. Ante, § 1586 et seq.; Ritchie v. Dep. & Tr. Co., 189 Pa. St. 410, 42 Atl. 20.

37. Ibid.

that the check was in fact loaned him. Where the drawer's executor sued the payee of a paid check for the amount, charging that it was a loan, Lord Kenyon, C. J., said: "There is no evidence to establish a debt. No evidence is offered of the circumstances under which the draft was given; it might be in payment of a debt due by the testator, or the defendant might have given cash for it at the time." 39 But when it is shown that cash was not given for the check, that it was not taken in payment of a debt, there is no presumption that it was intended as a gift; and unless it were proved to have been so intended, the payee would be chargeable with the amount as a loan.40 And whenever a loan from the drawer to the payee is proved, the check may be given in evidence of the amount."1

§ 1647. In the hands of the bank, a check drawn upon it imports that the bank held funds of the drawer upon deposit, and has paid, out of them, the amount of the check to the holder.42 And it does not import a loan from the bank to the drawer; but if it appears that the check was paid without funds, an implied promise is raised that the drawer will refund the amount to the bank. The presumption of payment arising from possession of the check by the bank is, however, one that may be rebutted by positive evidence that no such payment has been made.**

§ 1648. In the hands of the drawer, a check payable to a certain party or order, and bearing his indorsement, and which has been

38. Terry v. Ragsdale, 33 Gratt. 348; Huntzinger v. Jones, 60 Pa. St. 170; Connelly v. McKean, 64 Pa. St. 118; Patten v. Ash, 7 Serg. & R. 116; Graham v. Cox, 2 Car. & K. 702; Headley v. Reed, 2 Cal. 322; Thompson v. Pitman, 1 Fost. & F. N. P. 339; 2 Parsons on Notes and Bills, 84; Yates v. Shepardson, 39 Wis. 173; Poucher v. Scott, 40 N. Y. S. C. 223.

39. Cary, Executor of Greatorex v. Gerish, 4 Esp. 9.

40. Baker v. Williamson, 4 Pa. St. 456; Huntzinger v. Jones, 60 Pa. St. 170.

41. Healy v. Gilman, 1 Bosw. 235. A check is presumptively payment of a debt, and not a loan. See Mills v. McMullen, 4 App. Div. 27, 38 N. Y. Supp. 705; Levy v. Gillis (Del.), 1 Pennewell, 119, 39 Atl. 785; Ritchie v. Dep. & Tr. Co., 189 Pa. St. 410, 42 Atl. 20.

42. Lancaster Bank v. Woodward, 18 Pa. St. 361; Conway v. Case, 22 Ill. 127; Healy v. Gilman, 1 Bosw. 235; Fletcher v. Manning, 12 M. & W. 577; Pickle v. People's Nat. Bank, 12 S. W. 919, citing the text.

43. Fletcher v. Manning, 12 M. & W. 571; Thurman v. Van Brunt, 19 Barb. 409; Morse on Banking, 290, 291; Riverside Bank v. Land Co., 34 App. Div. 359, 54 N. Y. Supp. 266.

44. Pickle v. People's Nat. Bank, 12 S. W. 919.

46

paid by the bank, is as good a receipt for money paid to the payee as the drawer could desire. But if the check were drawn payable to A. or bearer, or to bearer, which is the same in legal effect, it is not, per se, evidence in the drawer's hands, of payment to A. It must be proved that the party alleged to have been paid by the check received the money." And if the check be payable simply to A., it seems that mere payment of the check is not evidence that A. received the money, unless the check bear A.'s indorsement. But it may be doubted if the bank can require his indorsement unless the check be payable to his order.48 And clearly, it cannot require the holder's indorsement when the check is payable to bearer. 49

Without proof of the particular consideration, a check is not evidence that it was paid upon a particular account.50

§ 1649. It is almost, and indeed we suppose quite, the universal custom of banks which have paid the checks of their depositors, to cancel them by some mark indicating that they have been paid, and to return them in the depositor's bank pass-book as vouchers for the amounts paid out from his funds on deposit. And, doubtless, an obligation to do this may be inferred in most cases from the usage of business, and the prior course of dealing between the bank and its depositor.51 When the bank pays the holder the amount of the check, it is clearly entitled to the possession of it as a voucher for the payment.52 But after debiting it against the drawer in account with the bank, it is the duty of the bank to return the check to its depositor, who has the better right to their permanent possession, as they are to him vouchers of payment of his debt to the payee named in them; and the bank, until it returns the checks, has been said to hold them only as agent of the drawer.53 In the case of over-checks, it would

45. Connelly v. McKean, 64 Pa. St. 113; Egg v. Barnett, 3 Esp. 196; Thompson v. Pitman, 1 Fost. & F. N. P. 339.

46. Patten v. Ash, 7 Serg. & R. 116; People v. Baker, 20 Wend. 602; People v. Howell, 4 Johns. 296; Mountford v. Harper, 16 M. & W. 825; Pearce v. Davis, 1 Moody & R. 365; Lloyd v. Sandilands, Gow. 13.

47. Flemming v. McClain, 13 Pa. St. 177.

48. 2 Parsons on Notes and Bills, 83.

49. Connelly v. McKean, 64 Pa. St. 113.

50. Aubert v. Walsh, 4 Taunt. 293.

51. Morse on Banking, 291. See Regina v. Watts, 2 Den. C. C. 14. 52. Matter of Brown, 2 Story, 512.

53. Burton v. Payne, 2 Car. & P. 520; Grant on Banking, 72, 75; Morse on Banking, 291.

doubtless be different, for they might be the only conclusive evidence that the bank possessed of the advance to the drawer, and this it would not be just to require it to part with.54

§ 1650. When a suit is brought for money lent by a check, it has been held that the Statute of Limitations runs from the time the money was paid by the drawee, and not from the time the check was drawn, as otherwise it would follow that if an action had been brought by the drawer for money lent, he would be able to recover the amount, although the check might be subsequently dishonored.55

SECTION XIII.

NEGOTIABILITY AND TRANSFER OF CHECKS.

1956

or

§ 1651. Negotiability of checks. A check, like a bill or note, in order to be negotiable, must be payable absolutely and at all events to a certain person or order, or to bearer, in money. If expressed to be payable "in bank bills," or "in currency,' if it lack words of negotiability,57 or be deficient in any of the characteristics which impart negotiability to bills and notes, it will not be a negotiable instrument. Checks are sometimes, although by no means usually, intended for temporary circulation; but their principal object and purpose is to enable the holder to demand and receive immediately the amount called for. Negotiability in its full sense is, therefore, not of their essence, but an optional quality.5

58

54. Grant on Banking, 73; Morse on Banking, 293.

55. Garden v. Bruce, L. R., 3 C. P. 300.

56. Bank of Mobile v. Brunn, 42 Ala. 108; Little v. Phoenix Bank, 2 Hill (N. Y.), 425; Famous Shoe Co. v. Crosswhite, 124 Mo. 34, 27 S. W. 397, 46 Am. St. Rep. 424, quoting text; Burns v. Kahn, 47 Mo. App. 215, citing text; The National Bank of America v. The National Bank of Illinois, 164 Ill. 503, 45 N. E. 968, citing text; Kavanaugh v. Bank, 59 Mo. App. 540, citing text. 57. Partridge v. Bank of England, 9 Q. B. 396. In Virginia checks are regulated by the statutory provisions which apply alike to bills and notes, even as respecting protest, and negotiable, if payable (1) at a bank, or (2) at a particular place thereof, for discount or deposit, at the place of business of a savings institution or savings bank, or (4) at the place of business of a licensed broker. Code 1873, chap. 144, § 7; Acts 1866, p. 149.

particular or (3)

58. Mohawk Bank v. Broderick, 10 Wend. 304; The Famous Shoe Co. V. Crosswhite, 51 Mo. App. 55.

§ 1652. Whenever a check is negotiable, it is undoubtedly subject to the same principles which govern ordinary bills of exchange in respect to the rights of the holder. In the first place, it is evidence of a valuable consideration as between the immediate parties thereto, and between the plaintiff and the drawer when payable to bearer.59 In the second place, it may be transferred by indorsement, or by delivery without indorsement when payable to bearer. In the third place, when sued upon, the possession is prima facie evidence of title, and the plaintiff is presumed to be a bona fide holder for value without notice of any defense existing between prior parties, and such defenses cannot be pleaded against him.61 In the fourth place, even when it is proved that the real owner parted with it, or that the drawer drew it without consideration, the burden of proving bona fide ownership for value without notice will not devolve upon the

59. In Morse on Banking, 312, it is said: "Possession is prima facie proof of title; but the plaintiff in a suit upon the check (payable to bearer) must show that he received it for value, and in the due course of business." The cases cited by the author do not sustain this proposition. On the contrary, they accord with the text, which states correctly the doctrine which prevails in respect to checks whether payable to bearer or to order, and in respect to all other negotiable instruments. In Conroy v. Warren, 3 Johns. Cas. 259, the check was payable to "No. 912 or bearer." It was declared on as given by defendant to plaintiff. Thompson, J., said, in answer to the objection that where a check is payable to bearer it is incumbent on the holder to prove a valuable consideration: "I take it to be well settled that with respect to bills of exchange and promissory notes, they in this respect stand on the same footing with specialties, and prima facie import a consideration. The reason of the rule is equally applicable whether the bill or note be made payable to bearer or order, and I can see no good reason why it should not apply to bank checks." In Hoyt v. Seeley, 18 Conn. 357, Waite, J., said: "Here the plaintiff has declared upon this check as payable to bearer, and has averred that he is the lawful bearer thereof, and entitled to the payment of the money therein specified. This is enough to show a right of action in the plaintiff. The circumstances under which he became bearer are immaterial." Mauran v. Lamb, 7 Cow. 176; Johnson v. Wright, 2 App. D. C. 216, quoting at length and with approval the text; Famous Shoe Co. v. Crosswhite, 124 Mo. 34, 72 S. W. 397, 46 Am. St. Rep. 424, quoting text; Kavanaugh v. Bank, 59 Mo. App. 540, citing text.

60. Conroy v. Warren, 3 Johns. Cas. 259; Merchants' Bank v. Spicer, 6 Wend. 445; Woods v. Schroeder, 4 Harr. & J. 276; Hoyt v. Seeley, 18 Conn. 353; Keene v. Beard, 8 C. B. (N. S.) 380 (98 Eng. C. L.).

61. Cruger v. Armstrong, 3 Johns. Cas. 7. The check was payable to W. & J. C. or bearer. Radcliff, J., said: "The holder must prima facie be deemed the rightful owner, and it has accordingly been held that he need not prove a