Moses v. President of the Franklin Bank

Alvey, J., delivered the opinion of the Court. Whether the check declared on in this case is in any proper sense an inland bill of exchange, and therefore protestable, within the meaning and object of sections 6 and 7 of Article 14 of the Code, is the first question presented; and we think the Court below was right in ruling in the affirmative. According to all the text writers on bills and notes, as well as in numerous decisions, a check is denominated a species of inland bill of exchange; not with all the incidents of an ordinary bill of exchange, it is true, but still it belongs to that class and character of commercial paper. Ryles on Rills, 10; 2 Parsons on Notes and Bills, 58; Cruger vs. Armstrong, 3 John.

Cases, 5; Merchants’ Bank vs. Spicer, 6 Wend., 443 ; Harker vs. Anderson, 21 Wend., 372 . The same reason, therefore, that would authorize the protest of an inland bill of' exchange for non-payment, would authorize the protest of a ⁵⁸⁰ check, the payment of which had been refused on presentment. Neither instrument was required by the general law merchant to be protested on dishonor; foreign bills alone being required to be protested by that law. But provision has been made by statute for protesting both inland bills of exchange and promissory notes, and we think a check drawn in the ordinary form, such as the one in question here, is embraced within the description of paper denominated inland bills of exchange by our statute.

The protest, therefore, was properly admitted in evidence. The next question, whether, because the check was debited to the Cecil Bank by the Franklin Bank while holding sufficient funds of the Cecil Bank to pay the check, and that the latter bank, upon which the check was drawn, held sufficient funds of the drawers to pay the check at the time of presentment for payment, the check is, therefore, as between the Franklin Bank and the defendant, to be regarded as paid, we think was also rightly decided by the Court below. A check does not, as contended by the appellant, operate • as an assignment pro tanto of the fund upon which it is drawn, until it is accepted, or certified to be good, by the bank holding the funds. It is true, a bank, if in funds of the drawer, is ordinarily bound to take up his cheeks; but it ean only be held liable to the holder for its refusal to do so, upon the ground of fraud, whereby he loses the money or some part of it, for which the check is drawn.

It is certainly a general rule, that a drawee who refuses to accept a bill of exchange cannot be held liable on the bill itself; nor to the holder for the refusal to accept, 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 the drawee of a bill of exchange. It is but the agent of the depositor, holding his funds upon' an implied contract to honor and take up his checks to the extent of the funds deposited. _ The obligation to accept and pay is not to the holder of the check, but to the drawer. If, therefore, the ⁵⁸¹ depositor should direct that a check should not be paid, the bank would be bound to observe the direction, unless it had previously