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$ 15. Certificates of deposit.
A certificate of deposit is a receipt given by a bank or banker or any other person for money deposited whereby it is agreed to pay the person named therein, or order, the amount of money specified, in the manner agreed upon between the parties. If negotiable the certificate is a promissory note.89 But a certificate which states that a certain sum is subject to the depositor's order, but contains no express promise to pay is not a promissory note. L. R. A. 392, citing Colo. Gen. Stat. Beardsley v. Webber, 104 Mich. 88, 62 (1883), chap. 9, § 3; Ill. Rev. Stat. N. W. 173. (1884), chap. 98, § 3; Ind. Rev. Stat. Minnesota.- Cassidy v. First Nat. (1881), § 5501; Iowa Code (1873), Bank, 30 Minn. 86, 14 N. W. 363; § 2085; Miss. Rev. Code (1880), Mitchell v. Eastman, 37 Minn. 335, 33 $8 1123, 1124.
N. W. 910. 89. Certificate as promissory note. New York.- Orleans Bank v. Mer- A certificate of deposit of a certain rill, 2 Hill (N. Y.), 295; Pardee v. sum of money, payable at a future Fish, 60 N. Y. 265, 19 Am. Rep. 176; day, with interest until due, for the Frank v. Wessels, 64 N. Y. 155; Baker use of a person named, and to his or- V. Adams, 9 App. Div. 365, 41 N. Y. der, upon the return of a certificate, is Supp. 399. & negotiable promissory note. Miller North Carolina. - Johnson v. Henv. Austen, 13 How. (U. S.) 218, 14 L. derson, 76 N. C. 227. Ed. 119. There are a number of other Ohio.- Howev. Hartness, 11 Ohio cases cited in the Century Digest St. 449, 78 Am. Dec. 312; Citizens' (Bills and Notes, $ 62), in support of Nat. Bank v. Brown, 45 Ohio St. 39, this proposition, among which are: 11 N. E. 799.
Alabama.- Renfro v. Merchants & Texas - First Nat. Bank v. GreenMechanics' Bank, 83 Ala. 425, 3 South. ville Nat. Bank, 84 Tex. 40. 776.
Wisconsin.- Ford V. Mitchell, 15 California.- Welton V. Adams, 4 Wis. 304; Lindsey V. McClelland, 18 Cal. 37, 60 Am. Dec. 579; McMillan v. Wis. 481, 86 Am. Dec. 786; Klauber Richards, 9 Cal. 365, 70 Am. Dec. 655; v. Biggerstaff, 47 Wis. 551, 3 N. W. Coye v. Palmer, 16 Cal. 158; Mills v. 357, 32 Am. Rep. 773; Curran v. WitBarney, 22 Cal. 240; Brummaghim v. ter, 68 Wis. 16, 31 N. W. 705, 60 Am. Tallant, 29 Cal. 503, 89 Am. Dec. 61. Rep. 827.
Connecticut.- Kilgore v. Bulkley, 14 90. Shute v. Pacific Nat. Bank, 136 Conn. 362.
Mass. 487. This case seems to stand Florida.- Maxwell v. Agnew, 21 somewhat alone among a great numFla. 154.
ber of cases which are all to the effect Georgia.- Carey v. McDougald, 7 that the ordinary certificate of deposit Ga. 84; Lynch v. Goldsmith, 64 Ga. 42. is a promissory note. But the case
Illinois.—Peru Bank v. Farnsworth, arose under a statute (Gen. Stat., 18 III, 563; Laughlin v. Marshall, 19 chap. 53, § 10; Pub. Stat., chap. 77, I'l. 390; Swift v. Whitney, 20 Ill. 144; § 14), providing that in an action on Hunt v. Divine, 37 Ill. 137.
a promissory note payable on demand, Indiana.- National State Bank v. brought by indorsee against the promRingel, 51 Ind. 563; Gregg v. Union isor, any matter shall be deemed a Co. Nat. Bank, 87 Ind. 238; Drake v. legal defense which would be a defense Market, 21 Ind. 433, 83 Am. Dec. 358. to a suit on such note brought by the
Iowa.— Bean v. Briggs, 1 Iowa, 488, promisee, except that no matter aris63 Am. Dec. 464.
ing after notice of the indorsement or Maryland.-Fells Point Sav. Inst. v. transfer of such note has been given to Weedon, 18 Md. 320, 81 Am. Dec. 603. the promisor shall constitute a de
Michigan.- Cate v. Patterson, 25 fense; and the court held that since Mich. 191; Tripp v. Curtenius, 36 certificates of deposit were not comMich. 494, 24 Am. Rep. 610; Birch v. monly known in the community as Fisher, 51 Mich. 36, 16 N. W. 220; promissory notes, to include them
And it has been held that where the certificate does not designate any time for payment, but is payable on the return of the certificate, it is not a promissory note payable on demand." The negotiability of a certificate of deposit depends upon the wording of the instrument, and is governed by the same rules that control promissory notes.
$ 16. Checks.
a. Definition.— A check is a bill of exchange drawn on a bank payable on demand. This is the definition contained in the English Bills of Exchange Act of 1882,83 and also in the Negotiable Instruments Law recently adopted in many of the States. 94 But in so far as these acts define a check as a bill of exchange, they are declaratory of the law as it existed at the time of their passage. within the statute above cited would On return of receipt.-A written indefeat entirely the purpose for which strument acknowledging the receipt of they are given. See also Hunt, Appel- a specified sum of money in paper curlant, 141 Mass. 515, 6 N. E. 554; rency for account of a person named, O'Neil v. Bradford, 1 Pinn. (Wis.) and promising to pay the same to such 390, 42 Am. Dec. 574; Patterson v. person or order “ on return of this rePoindexter, 6 Watts & S. (Pa.) 227, ceipt,” with interest, is a negotiable 40 Am. Dec. 554.
promissory note. The words 91. Shute v. Pacific Nat. Bank, 136 turn of this receipt” do not make it Mass. 487; Patterson v. Poindexter, 6 payable upon a contingency, or constiWatts & S. (Pa.) 227, 40 Am. Dec. tute a condition precedent; and its 554; Charnley v. Dulles, 8 Watts & S. being payable in paper currency will (Pa.) 353; Lebanon Bank v. Mangan, be taken as meaning legal tender paper 28 Pa. St. 452; London Sav. Fund currency. Frank v. Wessels, 64 N. Y. Soc. v. Hagerstown Sav. Bank, 36 Pa. 155. St. 498, 78 Am. Dec. 390.
Current funds.-A certificate pay. 92. Negotiability.-A certificate of able in “ current funds ” is not negodeposit may be made payable to A. B. tiable. Lafayette Nat. Bank v. Ringel, when it is not negotiable. It may be 51 Ind. 393. This case does not seem made payable to X. B. or order, when to be in accord with other cases init is negotiable by indorsement. It
volving certificates of deposit payable
in current funds. See Citizens' Nat. may be made payable to A. B. or bearer, when it is negotiable by simple N. E. 799, 4 Am. St. Rep. 526.
Bank v. Brown, 45 Ohio St. 526, 11 delivery. If it be expressed as payable in currency or in current funds, or
93. English Bills of Exchange Act, the like phraseology, it is not negotia. 1882, 73 (see Appendix) : Chalmers ble, because it is not made payable in on Bills of Exchange, p. 245.
94. Neg. Inst. L. (N. Y.), § 321. money. Morse on Banks and Banking, See Appendix.
95. M'Lean v. Clydesdale Bank, L. See also for particular instances of R., 9 App. Cas. 95, per Lord Blacknegotiable and nonnegotiable certifi- burn, who says that a check is an uncates for deposit, Welton v. Adams, 4 conditional order in writing addressed Cal. 37; Mills v. Carney, 22 Cal. 240; to a banker requiring him to pay a Poorman v. Mills, 35 Cal. 118; Carey sum certain in money at a fixed or dev. McDougald, 7 Ga. 84; Lynch v. terminable future time, that is to say, Goldsmith, 64 Ga. 42; Lafayette Bank on presentation; and coming within v. Ringel, 51 Ind. 393; Bellows Falls this definition it would clearly be a Bank v. Rutland, 40 Vt. 377.
bill of exchange.
In considering the above definition, which is now more authoritative than any of those used by the text-writers, the definition of a bill of exchange should also be borne in mind.96 With the definition of a bill of exchange in view, a check may be defined as an unconditional order in writing addressed by a person to a banko or banker, signed by the person giving it, requiring the bank or banker to whom it is addressed to pay on demand a sum certain in money to order or bearer. 98
The United States Supreme Court First Nat. Bank, 36 Neb. 744, 56 N. in discussing the similarity of checks W. 239. and bills of exchange used the follow- New Hampshire.- Barnet v. Smith, ing language: “Bank checks are not 30 N. H. 256. inland bills of exchange, but have New York.— Murray v. Judah, 6 many of the properties of such com- Cow. 484; Smith v. Jones, 20 Wend. mercial paper; and many of the rules 192; Risley v. Phenix Bank, 83 N. Y. of the law merchant are alike applica- 318, 38 Am. Rep. 421; Duncan v. Berble to both. Each is for a specific lin, 60 N. Y. 153. sum payable in money. In both cases South Carolina. - Sutcliffe v. Mcthere is a drawer, å drawee, and a Dowell, 2 Nott & McC. 251. payee. Without acceptance, no action Tennessee.- Planters' Bank v. Mercan be maintained by the holder upon ritt, 54 Tenn. 177. either against the drawer." Mer- Virginia.- Purcell v. Allemong, 22 chants' Nat. Bank of Boston v. State Gratt. 739. Bank, 10 Wall. (U. S.) 604, 19 L. Ed. Contra.— The following cases con1008. See Bull v. Kasson Nat. Bank, tain statements to the effect that 123 U. S. 105, 8 Sup. Ct. 62, 31 L. Ed. checks are not bills of exchange, al97.
though the similarity is not denied : A bank check is substantially the Indiana.— Griffin v. Kemp, 46 Ind. same as an inland bill of exchange. It 172; Harrison v. Wright, 100 Ind. passes by delivery, when payable to 515, 58 Am. Rep. 805. bearer, and the rules as to present- Iowa.- Roberts v. Austin, 26 Iowa, ment, diligence of the holder, etc., 315. which are applicable to the one, are Kentucky.— Lester v. Given, 71 Ky. generally applicable to the other. 357. Rogers v. Durant, 140 U. S. 298, il Maryland.- Exchange Bank v. SutSup. Ct. 754, 35 L. Ed. 481.
ton Bank, 78 Md. 577, 28 Atl. 563, 23 The following decisions of the State L. R. A. 173. courts are to the effect that checks are Massachusetts.—Bullard v. Randall, substantially the same as bills of ex- 67 Mass. 605, 61 Am. Dec. 433; Way change (see Century Digest, Bills and v. Towle, 155 Mass. 374, 29 N. E. 506. Votes, $ 20):
Missouri.— Hays v. Lathrop Bank, Alabama.— First Nat. Bank v. Nel- 75 Mo. App. 211. son, 105 Ala. 180, 16 South. 707.
96. Neg. Inst. L. (N. Y.), $ 210. Mlinois.— Bickford First Nat. See Appendix. Bank of Chicago, 42 Ill. 238; Rounds 97. A bank is defined by the Negov. Smith, 42 Ill. 245.
tiable Instruments Law ($ 2) as inIndiana.- Glenn v. Noble, 1 Blackf. cluding any person or association of (Ind.) 104; Henshaw v. Root, 60 Ind. persons carrying on the business of 220.
banking whether incorporated or not. Kentucky.— Shrieve v. Duckham, 11 See Wieland's Admr. v. State Nat. Ky. 194; Humphries v. Bicknell, 12 Bank, 23 Ky. L. Rep. 1517, 65 S. W. Ky. 296.
617; s. C., 66 S. W. 26. Maryland.-Moses v. Franklin Bank, 98. Daniel defines a check as 34 Md. 574; Hawthorn v. State, 56 “ draft or order upon a bank or bankMd. 530; Laird v. State, 61 Md. 309. “ ing-house, purporting to be drawn
Nebraska.- Wood River Bank v. upon a deposit of funds for the
b. Distinction between checks and bills of exchange.- Notwithstanding the statement contained in the Negotiable Instruments Law, that a check is a bill of exchange, there are differences between checks and bills which must be recognized. “ The chief points of difference are that a check is always drawn on a bank or banker. No days of grace are allowed. The drawer is not discharged by the laches of the holder in presentment for payment, unless he can show that he has sustained some injury by the default. It is not due until payment is demanded, and the Statute of Limitations runs only from that time. It is, by its face, the appropriation of so much money of the drawer in the hands of the drawee, to the payment of an admitted liability of the drawer. It is not necessary that the drawer of a bill should have funds in the hands of the drawee. A check in such a case would be a fraud.” 99 It is provided in the Negotiable Instru
payment at all events of a certain Chicago, B. & Q. R. R. Co. v. Burns, sum of money, to a certain per- 61 Neb. 793, 86 N. W. 483.
son therein named, or to him or An indorsement on an architect's “his order, or to bearer, and pay- certificate reciting that certain “able instantly on demand.” (Dan- amount is due to the contractor, viz.: iel on Neg. Inst., $ 1566.) In the note “P. H. & Co., pay to the order of E.” to this definition Mr. Daniel calls at (contractor), and signed by the owner tention to the insufficiency of the defi- of the building, P. H. & Co. having in nition employed by many of the text their hands funds of the owner to be writers. Among these are the follow- paid out as required for the construcing: Parsons on Notes and Bills (vol. tion of the building, is a check and 2), p. 57: “A check is a brief draft not a bill of exchange. Industrial or order on a bank or banking-house, Bank of Chicago v. Bowes, 165 Ill. directing it to pay a certain sum of 70, 46 N. E. 10. money." Edwards on Bills, 396: “A 99. Merchants' Nat. Bank of Boston check drawn on a bank is a bill of ex- v. State Bank, 10 Wall. (U. S.) 647, change payable on demand.” Story on 19 L. Ed. 1019; Re Brown, Fed. Cas. Promissory Notes, $ 487: “A check is No. 1,985 (2 Story, 502). a written order or request addressed Distinction between check and bill. to a bank, or to persons carrying on - Mr. Justice Story, in stating the the business of bankers, by a party distinction in point of law between having money in their hands, request- checks and bills of exchange, refers to ing them to pay on presentment to an- the rule that a bill of exchange taken other person, or to him or bearer, or after the day of payment subjects the to him or order, a certain sum of holder to all the equities attaching to money specified in the instrument.” it in the hands of the party from In view of the legislative declaration whom he receives it, and adds: “ This as to what constitutes a check, con- rule does not apply to a check, for it tained in the Negotiable Instruments is not treated as overdue, although it Law, in force in many of the States, is taken by the holder some days after as well as the decisions of the courts its date, and it is payable on demand. in most of the States, it would seem On the contrary, the holder, in such a that the definition in the text is accu- case, takes it, subject to no equities of rate and sufficiently comprehensive. which he has not, at the time, notice;
Pay check issued by the paymaster for a check is not treated as overdue of a railroad company, drawn on the merely because it has not been pretreasurer, payable at a bank named sented as early as it might be, or as a therein, is not a check on such bank. bill of exchange is required to be, to
ments Law and in the English Bills of Exchange Act that except as otherwise provided therein, the provisions thereof applicable to a bill of exchange payable on demand apply to a check."
c. Checks payable after date.- The great weight of authority in this country upholds the doctrine that a draft or order upon a
charge the drawer, or indorser, or presenting a check in due time for transferrer. One reason for this seems payment would not discharge the latto be, that, strictly speaking, a check ter, unless he had been injured thereis not due until payment is demanded. by, and then only to the extent of his Re Brown, Fed. Cas. 1,985; 2 Story, loss; but a different rule in this re502, 513; Story on Promissory Notes, spect prevails in case of a bill of ex§ 491.
change. (5) A check requires no acIn Massachusetts the distinction has ceptance, and when presented, the prebeen thus expressed: A check differs sentment is for payment. (6) It is from a bill of exchange in this, that it not protestable, or in other words, prois drawn upon a bank, or on the house test is not requisite to hold either the of a private banker, is payable on pre- drawer or an indorser.” Morrison v. sentment, and the bank or banker is Bailey, 5 Ohio St. 632, 64 Am. Dec. not entitled to days of grace upon it, 632. And see Andrews v. Blachly, 11 although payable on some other day Ohio St. 89. than its date. It may also be passed In England it has been held that “ from hand to hand, and a reasonable check is clearly not an assignment of time is allowed to each party receiv- money in the hands of a banker:- it ing the same to present it for payment. is a bill of exchange payable at a Taylor v. Wilson, 11 Mete. (Mass.) 44, banker's. The banker is bound by his 52. See also Daly v. New Jersey Steel contract with his customer to honor & Iron Co., 155 Mass. 374, 29 N. E. the check, when he has sufficient assets 506.
in his hands; if he does not fulfil his In New York it has been held that contract he is liable to an action by a bill of exchange is not necessarily the drawer, in which heavy damages payable on demand, but a check is. may be recovered if the drawer's credit Both may be drawn on a bank or has been injured. Hopkinson v. Forbanker. Bowen v. Newell, 8 N. Y. 190. ster, L. R., 19 Eq. 74, 76,
per Jessel, In Ohio it has been held in a lead- M. R. ing case that checks and bills of ex- Byles in his work on Bills (16th change are to be distinguished in the ed., p. 33), summarizes the chief following particulars: (1) “A check points of difference between checks and is drawn upon an existing fund, and bills as follows: “ Checks are not acis an absolute transfer or appropria- cepted, hence the holder cannot sue the tion to the holder, of so much money bank. The drawer is not discharged in the hands of the drawee; whereas a by the holder's failure to present in bill of exchange is not always or nec- due time, unless the bank fail. Notice essarily drawn upon actual funds in of dishonor to the drawer is rarely lethe hands of the drawee, but very fre- gally necessary, as absence of effects in quently drawn in anticipation of the drawee's hands, the almost unifunds, or upon a previously arranged versal cause of dishonor, excuses it, as credit. (2) The drawer of a check is does countermand of payment. They always the principal; whereas the must be drawn on a banker, and paydrawer of a bill frequently stands in able on demand, and are generally, the position of a mere surety. (3) As though not necessarily, inland.
And between the holder of a check and an finally the banker is protected against indorser, demand of payment within a foreign or unauthorized indorsement due time is essential to the liability of of a draft on him to order on dethe letter. But days of grace being al- mand.” lowed to bills of exchange, the time for 1. Neg. Inst. Law (N. Y.), § 321. demanding payment of a bill is dif- See Appendix; English Bills of Exferent. (4) As between the holder change Act, 1882, $ 73. See Chalmers and drawer, however, mere delay in on Bills of Exchange, p. 245.