CHAPTER XLIX.

CHECKS.

SECTION I.

WHAT IS A CHECK?

§ 1566. A check is (1) a draft or order (2) upon a bank or banking-house, (3) purporting to be drawn upon a deposit of funds (4) for the payment at all events of a certain sum of money, (5) to a certain person therein named, or to him or his order, or to bearer, and (6) payable instantly on demand. This definition has been approvingly quoted.1

Any instrument fulfilling the above description may, we think, be safely denominated a bank check, and the definition given is sustained by many authorities, though not in the language of the text. Writers upon negotiable instruments have differed in their definitions of this species of commercial paper, some falling short of giving all its distinguishing qualities, and some ascribing to it qualities which it is not absolutely necessary that it should possess. And there is none which can be safely relied on as a guide in answering the question: Is this paper a check?2

1. Blair & Hoge v. Wilson, 28 Gratt. 170 (1877), Burks, J.; Ridgely Bank v. Patton, 109 Ill. 484; Harrison v. Nicollet Nat. Bank, 41 Minn. 489, citing the text; Oyster & Fish Co. v. Bank, 51 Ohio St. 106, 36 N. E. 833, 46 Am. St. Rep. 560, quoting with approval the definition contained in the text: Exchange Bank v. Sutton Bank, 78 Md. 577, 28 Atl. 563, citing text; Kavanaugh v. Bank, 59 Mo. App. 540, citing text.

2. We cite the definitions and descriptions of checks which the text-writers give. Their insufficiency will be readily observed by the attentive professional reader: "A check is a brief draft or order on a bank or banking-house, directing it to pay a certain sum of money," says Parsons, vol. II, Notes and Bills, 57. "A check drawn on a bank is a bill of exchange payable on demand." Edwards on Bills, 396. "A check on a banker is, in legal effect, an inland bill of exchange drawn on a banker, payable to bearer on demand.” Byles on Bills (Sharswood's ed.) [*13], 84. "A check is a written order or request addressed to a bank, or to persons carrying on the business of bankers, by a party having money in their hands, requesting them to pay on presentment to another person, or to him or bearer, or to him or order, a certain

1567. In the first place, a check is a draft or order. A bill is also a draft or order; and it is often said that a check is, in legal effect, a bill of exchange drawn on a bank or banking-house, with some peculiarities.3 In some cases it is called a bill payable on demand, and in others an inland bill, or in the nature of an inland bill, payable on demand; and the expression that a check is "like a bill" has been criticised on the ground that "nihil simile est idem," whereas "checks are bills, or rather bill is the genus, and check is a species." In form a check is a bill on a bankinghouse (payable on demand, as we conceive); and it is perfectly correct to say that it is a bill with some peculiarities, or a species of a bill. Sir G. Jessel, Master of the Rolls, calls it "a bill of exchange payable at a banker's." But this is not a definition. It comes within the general designation of a bill so far that a statute authorizing the protest of inland bills would include inland checks; but it is erroneous to ascribe to a check a necessary inland character. A draft drawn in one State, on a bank in another, is nevertheless a check; and, in point of fact, checks are

sum of money specified in the instrument." Story on Promissory Notes, § 487. Chitty's definition is substantially the same as Story's. Chitty on Bills (13th Am. ed.) [*511], 578.

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as a bill

3. Billgerry v. Branch, 19 Gratt. 418; Matter of Brown, 2 Story, 502; Cruger v. Armstrong, 3 Johns. Cas. 5; Bohm v. Sterling, 7 T. R. 423; Keene v. Beard, 8 C. B. (N. S.) 372 (98 Eng. C. L.); Blair & Hoge v. Wilson, 28 Gratt. 170 (1877). "It is sometimes inaccurately described," says Burks, J., of exchange payable on demand," or "as in legal effect an inland bill of exchange drawn on a banker payable to bearer on demand. While it has many of the properties of bills, it has several peculiar characteristics.” Bull v. Bank of Kasson, 123 U. S. 105, in which case it was held that a bank check is a bill of exchange within the meaning of the act of March 3, 1875, and its amendments, defining the jurisdiction of the Federal courts in certain cases. For the purposes of the great technical accuracy required in criminal pleadings, a description of a check, or common order for money, in an indictment, as a bill of exchange," has been held sufficient. People v. Kemp (Mich.), 43 N. W. 439. Also, where described as an order for the payment of money." State v. Crawford, 13 La. Ann. 300; Garretson v. Bank, 47 Fed. 867. 4. Harker v. Anderson, 21 Wend. 372; Edwards on Bills, 396.

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5. Byles on Bills (Sharswood's ed.) [*13], 84; Keene v. Beard, 8 C. B. (N. S.) 373; Merchants' Bank v. Spicer, 6 Wend. 445; Cruger v. Armstrong, 3 Johns. Cas. 8; Purcell v. Allemong, 22 Gratt. 742, Anderson, J.

6. Matter of Brown, 2 Story, 502.

7. Hopkinson v. Forster, L. R., 18 Eq. Cas. 74 (1874).

8. Moses v. Franklin Bank, 34 Md. 574.

very much used in the United States in transmitting money from one State to another."

§ 1568. Secondly, it is absolutely necessary that the draft, in order to be a check, should be drawn upon a bank or banker.— Upon this point the authorities are agreed.10 A bill may also be drawn upon a banker;11 and, therefore, while it is necessary that a check should be so drawn, that alone does not distinguish it. It does not seem necessary that the drawee, when an individual, should be described as a banker; and an order addressed simply to "Messrs. A. & B.," has been held a check, it being proved that they were bankers.12 Between the original parties, the payee knowing them to be bankers, such an order might be regarded as a check with reason, although we think it would be better to require that the instrument should not be so considered, unless its face showed that it was drawn on a banking-house. But when transferred to a bona fide holder without notice, it is clear that it should be regarded as a bill, if it would operate any advantage to him to do so.

9. Planters' Bank v. Kesee, 7 Heisk. 200 (1871); Herring v. Kesee, Southern Law Rev., Oct., 1872, 613; Roberts v. Austin, 26 Iowa, 315; 2 Parsons on Notes and Bills, 59; Merchants' Nat. Bank v. Ritzinger, 118 Ill. 484; Hays v. Bank, 75 Mo. App. 211.

10. Hawley v. Jette, 10 Oreg. 31, 45 Am. Rep. 129; Northwestern Coal Co. v. Bowman, 69 Iowa, 152, citing the text. See Definitions, ante, § 1566, note; Espy v. Bank of Cincinnati, 18 Wall. 620; Bowen v. Newell, 8 N. Y. 195; Deener v. Brown, 1 McArth. 350. In Morrison v. Bailey, 5 Ohio St. 12, this point seems to have escaped notice.

11. In Georgia Nat. Bank v. Henderson, 46 Ga. 495 (1872), Warner, C. J., said: "A chartered bank is an artificial person, and a bill of exchange may as well be drawn upon and made payable to an artificial person as to a natural person; the three days of grace are allowed as well on bills drawn upon and payable to artificial persons as to natural persons. There is no distinction as to the time when a bill of exchange becomes due between one drawn upon and payable at a bank, and one payable to a natural person; both become due on the last day of grace, unless, under our Code, the bill is payable at a bank on sight or on demand. Why should there ever have been any difference as to the allowance of days of grace between a bill drawn upon and payable to a chartered bank and one drawn upon and payable to a natural person? The truth is, the same principles of commercial law apply to both, so far as the allowance of days of grace are concerned; and did, when this bill of exchange was placed in the defendant's hands for collection, except checks drawn on a bank payable at sight or on demand." See cases cited in notes.

12. Planters' Bank v. Kesee, 7 Heisk. 200 (1871); Herring v. Kesee, Southern Law Rev., Oct., 1872, p. 613.

§ 1569. Thirdly: A check purports to be drawn upon a deposit.— It is frequently said that a check is drawn upon a deposit in the banker's hands; 13 and the fact that it is so drawn has been held necessary to constitute the draft a check.14 But this cannot be the true criterion. It is not the fact that the order is actually drawn on a deposit, but the fact that it purports to be so drawn, which constitutes it a check; and it is more accurate to say that it is upon its face a draft upon a deposit.15 To hold otherwise would authorize the construction of a written contract by the light of an extraneous fact of which the holder had no notice. If there were no deposit, it would be a fraudulent check-but a check, nevertheless and we cannot conceive of a wider de parture from principle than to hold that the fraud varied the nature of the instrument itself.

§ 1570. Fourthly: A check must be for the payment at all events of a certain sum of money. In this respect it does not differ from other negotiable instruments; and though, perhaps, it might still be termed a check although not payable in money, by which is meant the legal tender currency of the country, it would certainly not be negotiable if expressed to be payable "in bank bills" or "in currency, " 16 or if it lacked words of negotiability," or were deficient in any of the characteristics in respect to certainty in fact and time of payment and party to whom payment is to be made.18

13. Morrison v. Bailey, 5 Ohio St. 13, where it is said: "A check is drawn on an existing fund." In Espy v. Bank of Cincinnati, 18 Wall. 620, Miller, J., said: "A check is drawn against funds on deposit with the banker."

14. In Planters' Bank v. Kesee, 7 Heisk. 200, Nicholson, J., said: "As it is drawn upon a deposit in bank, it falls directly within that class of bills of exchange known in the commercial world as checks." In Herring v. Kesee, McFarland, J., referring to Brown v. Lusk, 4 Yerg. 210, said in that case "the drawer had no funds in the bank upon which to draw, and this was probably the distinguishing feature." See Southern Law Rev., Oct., 1872, article on Checks; State v. McCormick, 57 Kan. 440, 46 Pac. 777, 57 Am. St. Rep. 341.

15. See Champion v. Gordon, 70 Pa. St. 476; Deener v. Brown, 1 McArth. 350; Newman v. Kaufman, 28 La. Ann. 865.

16. Bank of Mobile v. Brunn, 42 Ala. 108; Little v. Phoenix Bank, 2 Hill (N. Y.), 425.

17. Partridge v. Bank of England, 9 Q. B. 396.

18. In Bull v. Kasson, 123 U. S. 112, the check was payable in funds," and was held negotiable. See § 57.

VOL. II-38

current

The Supreme Court of the United States considers a check payable "in current funds" negotiable.19

§ 1571. Fifthly: A check may be made payable to a certain person therein named, or to him or his order, or to him or bearer, or simply to bearer, in like manner as a bill of exchange, and may be transferred by indorsement or assignment, as the case may be, in like manner and to the like effect as a bill of exchange. Certainty as to the payee is as requisite in a check as in a bill of exchange, and if no payee be named or indicated, it will be fatally defective.20 Therefore an order drawn "Pay to the order of on sight" is not a check, but would indicate that the drawer meant to draw a check, but left out the payee's name, and omitted any expression to show that it should be paid to bearer.21 But a blank space may be left for the payee's name, which would indi cate authority to any bona fide holder to insert his name as payee." And checks may be drawn payable to an impersonal payee, as "to the order of bills payable," or to the order of a certain number, or with some such phrase, to indicate the intention to express that negotiability which only exists in connection with the word "order," or "bearer." Such a check cannot be indorsed in the usual way by any party to it, and is construed to be payable to bearer.23 The bank, it is conceived, would be entitled to a reasonable time to ascertain the genuineness of the indorser's signature before paying a check drawn payable to a certain person or order. 24

§ 1571a. Check may be payable to bearer. There is no common-law obligation, according to the English authorities, upon a bank to pay checks other than those payable to bearer, it being

19. Woodruff v. Mississippi, 162 U. S. 302, 16 Sup. Ct. Rep. 820. 20. Billgerry v. Branch, 19 Gratt. 418; Matter of Brown, 2 Story, 502; Cruger v. Armstrong, 3 Johns. Cas. 5; Elting v. Brinkerhoff, 2 Hall, 459: Munn v. Burch, 25 Ill. 35; Story on Notes, § 488. In First Nat. Bank v. Harris, 108 Mass. 514, it was held that a national bank has authority to buy checks on other banks, whether they be payable to bearer or order.

21. McIntosh v. Lytle, 23 Minn. 336. See vol. I, § 99 et seq.

22. McIntosh v. Lytle, 23 Minn. 336.

23. McIntosh v. Lytle, 23 Minn. 336; Willets v. Phoenix Bank, 2 Duer, 121; Mechanics' Bank v. Stratton, 2 Keyes, 365.

24. Robarts v. Tucker, 4 Eng. L. & Eq. 236; § 1618; Eichner v. Bowery Bank, 24 App. Div. 63, 48 N. Y. Supp. 978, held, that in suit by drawer against bank for damages for refusing to pay a check, a failure to allege that payee had duly indorsed it, was fatal on demurrer.