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Show f ? POPULAR TALKS ON LAW ' When the Banker Cashes Your Check I By Waller K. Towers, A. B., J. D., of the Michigan Bar. k John Sommors was kcopur or the gen- tjp " oral storo at Elmwood. Allon McPliorson U was owner and licad or tlto Elmwood Sav- " lngs Dank. Tlio rolatlons liotweon the two i men wore far Trom rrlondly, uut as thoro it was no otlior bank near at hand Som- tt.' mors malntalnod a commercial account In ft McPhorson's institution. Ono Tuosday fM ' morning ho purchased a load or potatoes from Clyde Webb, a promlnont rartnor or H i tlio vicinity. Sommcrs paid Webb ltnmo- H dlatcly, giving: him a check for twenty H i'f dollars properly drawn on ills account In H i- tlio Elmwood Savings Bank. Wobb took m ; tlio check to tlio bank and prosontod It to H ," McPhorson, who was in the tollor's cago. H "What did you do, go and soil that load H j or potatoes to Sommcrs?" inquired Mc- B Phorson. B "Yes; why not?" ropliod Wobb. B "Well, you might havo given mo a B chanco at thorn. You know I'm buying H i produce, as woll as banking." B ' "That's no reason why I shouldn't soil H ' to John Sommors." H 1 "Woll, I'll show you you're a fool to Bj sell to blm," angrily assorted tlio bankor. H "Ho paid you with a chock, didn't ho? H And you took It; and it ain't no good at H all, H . "What's tlio matter?" asked Wobb. H "Why, he's no good financially, and bis H chock's no good, and you can't got any Hj money on It." H Wobb returned to Sommors, and Som- H mors bastonod to tlio bank, knowing that B his balance stood closo to four hundred H dollars. Arter a heated discussion at tlio H bank Sommors travollcd to tlio ofllco or m his logal counsellor. As a result action B was bogun against tlio bankor because or fl his rnlluro to cash tlio depositor's proper H ck, and substantial damages wero ro- B i i I'orod becauso McPhorson's action had H lnjurod Sommor's standing and credit In V tlio community. B This caso lllustratos what Is porhaps m the primary duty or tlio bankor to his do- H post tor to pay all propor chocks drawn H on him against adequate doposlts. ir the H bankor Tails to do this, oltlior wilirully or H through mistake, ho must nnswor to bis H depositor, ir tlio depositor whoso chock H was wrongrully dishonored sufTorod any H damages ho muy recover tlio amount H against tlio bankor. Injury to credit and H business standing aro tlio damages usually H complalnod or In such cases. Tlio bankor jH Is entitled to a roasonablo time arter pro- H sentment in order that ho may oxamlno H into tlio stato or tlio account against which flB the check Is drawn. Good bankors havo H their alTalrs so arranged that this Is a H matter ,pr seconds rathor than mlnutos. fl When Sommors suod McPhorson, Mc- B Phorson derendod his action on tlio ground B that whllo Sommcrs did havo a balanco H or about rour hundred dollars tlio bank B held Sommor's noto Tor llvo hundred dol- B lars, which was to rail duo within n wook. B Tht bankor lnslstod that ho had a right H io retain Sommor's deposits to lnsuro pny- B iiicnt or the note when It should rail duo. B His position was not Justlflod In law and H furnished him with no elToctlvo doronso. H A bankor may set-orr an Indebtedness that H is duo by the depositor to tlio bank H against tlio deposit, but ho may not sot-on HH1 ne not yet duo. Sommors could not bo iB required to pay tlio noto until Its ma- BH turlty, and until then it was not an oiToc- H tlvc obligation against him. B It not infrequently happons that tlio H holder or a check for say ten dollars, will H present It at the bank ror payment and H dist-oier that the depositor has a balance B or but sovon. orten the bolder or the Hi check would be glad onough to got the HjB proportion that the doposlt would cover H then and there Out tlio bank need not 1 make part payment. This is becauso It is IH entitled to the check Tor uso as a voucher B in settling with tlio depositor. NH When the bank pays a propor check It has a right to chargo payment against tlio dopositor. It may bo that tlio bank will cliooso not to dishonor tlio check ror ton dollars whon a balance or but soven ro mains and will accommodato Its depositor by paying the check In full. This Is what Is known as an "ovordrart," and while contrary to the printed rules or most banks Is still frequontly dono In ordinary commercial practice. If tlio bank allows an ovordrart, In oiTcct advancing money lor Its dopositor, it may recover the amount Trom him. Dankors do not tako time to investigate a depositor's account ror cvory check that is prosontod to tlio bank ror payment. They dopend upon momory, and confidence In tlio depositor, in many lnstancos. So It sometimes happens that a bank will pay a ock under tlio bellor that the signer lino an adequato balanco on deposit, when such is not tho case. On discovering its mistake banks havo sometimes endeavored to recovor, the monev paid tlio person who prosontod tho cheer-, but thoy have not boon successful. In ono senso of the word tho bank paid under mistake, and mistake is sometimes ground ror recovery or monoy paid, but not by a bank under thoso circumstances. Somotimos aftor a porson has signed and delivered a chock bo wishes to recall his action. Ho Immediately gets In touch with his bank on which tho check was drawn and Instructs it not to pay that chock when it Is presented. This Is known as "stopping payment." Stopping payment onds tho bank's duty also its right to pay tho check when presented. It not only need not pay tho check, but It must not pay It. ir It disregards Its depositor's de-positor's Instructions and pays tho check on which payment has been stopped It Is tho losor as it may not chargo that payment pay-ment against tho depositors account. A. L. Sullivan, owed James P. Long 917.00, but my inlstako ho flllod out tho chock tit Jnmns A. I.ntiL- nnd m.illnd It in an onvolopo addressed to Jamos A. Long, and a James A. Long rocolvod It and cashed cash-ed It at a bank. Tho bank lost the monoy it paid out on tho check. This was bo-cause bo-cause a bank is bound to tnako certain that It is paying tho chock to the propor purty. In law tho mlddlo initial is not part or a man's namo and so tho chock was payable to Jamos Long. ir thoro arc two persons or the same namo it bocomos tho duty or tho bank to pay It to tho porson or that namo who rlghtrully may rocolvo It. Sb It Js that bankors will cash checks only ror responsible respon-sible parties known to thorn. Thus wo havo Illustrated an extreme caso under the general proposition that a bank paying a chock must da so only to tho propor party, ir anyono stools or finds a check, or rorgos an l'ndojsomont, and so securos paymont from tho bank, tho bank must stand tho loss, ir a chock has boon Indorsed in blank, or; was drawn In such rorm that it Is payablo to boaror, any boaror may rocolvo paymont on It and a bank Is Justlflod in paying It to any boaror, unloss thoro aro somo spoclal circumstances cir-cumstances to causo it to bellovo that tho boaror i& not tho rlghtrul owner or the chock and not ontitlod to rocolvo paymont or It. Whon you draw a cUock payablo to "tho ordor or John Smith" you aro entltlod to tho assuranco that tho bank will pay It to ono.othor than John Smith or parties to whom ho may transror It by valid Indorsomont Paul Oreor, in Chicago, slgnod s chock ror "$000.00, directing his local bank to "Pay to tho ordor or Loon Young." Loon Young rocolved tho chock in St. Louis and ondorsod it as rollows, "Pay to tho ordor or Tho Coppor Fxchango Bank, Loon Young." Ho handed it to his clork, together to-gether with a deposit slip, and told blm to take It to tho bunk and doposit It. Tho clerk tore up tho deposit slip and told tho MHflBMHHHHHHHHH bank toller that Mr. Young wanted tlio cash. The check was given to him and that was tho last that was neara or tho clerk or tho 000.00. Again tho bank was the losor 1 the check was endorsed to the bank uiJ not to tho clerk, nor In blank by Leon Young so that tho bearer might receive the monoy. ir Young had simply written "Leon Young" on the back or tho check ho would havo been the losor. So ir you aro to send a check to a bank Tor deposit, and do not trust your mossongor absolutely, indorse it to tho ordor or tho bank and not In blank then tlio bank will not deliver it to tho bearer oxcopt on your written order. In tho caso or rorgcrlcs tho bankor also bears a heavy responsibility. No other checks may bo charged against tho account ac-count of a dopositor than thoso bo actually actual-ly slgnod, and which havo been paid to the propor party, ir tho bank pays a forged check it is tho loser, unless tho depositor In somo way contributed to tho rraud practiced on tho bank and so is not in tho position or an innocent party. In the caso or raised checks the banker also must bear tho loss, again with tho proviso pro-viso that tho depositor who signed the check In no way contributed to tho rraud. ir ho drew tho check so carolessly as to make tho rraud possible, or In any way conspired with those who raised tho check, his position is not so ravorablc. Wo have be", ro noticed that the bank loses If it pays a check to a party not entitled to rocolvo paymont of It and that this Is true though tho rraud bo accomplished by a forged indorsement. Or courso a bank paying monoy to a party claiming his rights through a Torgcd Indorsement may recover Trom that person always provided provid-ed it can catch him. Such aro tho rights or tho depositor against his banker. Remember that the bankor bears theso heavy responsibilities and ir In dealing with him ho Insists that you comply with rormalltlcs that to you seem useless remember tho strict requirements require-ments mado or him. Handle all your checks in a business-like manner. (Copyright, 1013, by Walter K. Towers.) |