WARREN MILLER v. FARMERS STATE BANK OF ARCO

Minnesota Supreme Court1925-12-24No. No. 24,879

165 Minn. 339

Summary · law.co

Holding. The court affirmed the judgment, holding that the bank's retention of the check beyond 24 hours constituted an acceptance under the Negotiable Instruments Act, and that the subsequent promissory note was not payment of the debt as a matter of law.

Miller sued Farmers State Bank to recover on a check for $3,400 drawn by Howe, the bank's president, and mailed to Miller in October 1920. The check reached the bank on October 20 but was not paid. On October 25, the bank returned it stating that Howe requested its return without protest, and Howe subsequently sent Miller a promissory note for the same amount payable on demand. Miller argued that the bank's retention of the check beyond the statutory 24-hour period constituted an acceptance of it, creating liability on the bank. The bank countered that retention did not equal acceptance and that in any event, Howe's note constituted payment of the debt.

The court held that under the Negotiable Instruments Act, a check is a bill of exchange, and a drawee bank that fails to return a check within 24 hours of presentment is deemed to have accepted it. The court adopted the Pennsylvania construction of this rule as the fairest interpretation. The court also held that a promissory note given for a prior debt does not constitute payment unless the parties intended it as such. The jury's finding that Howe's note was not given and received as payment was supported by the evidence, and the bank had no basis to complain about the submission of this issue to the jury.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether retention of a check by a bank beyond 24 hours constitutes acceptance under the Negotiable Instruments Act
Whether a promissory note given for an antecedent debt constitutes payment of that debt
Bank's liability on a check drawn by its own president

Procedural posture

The plaintiff prevailed at trial on a verdict, and the defendant appealed from the denial of its motion for judgment notwithstanding the verdict or alternatively for a new trial.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Dibell, J.

Action to recover upon a check drawn by one Howe in favor of the plaintiff upon the defendant hank. The basis of the action is an acceptance of the check through the failure of the defendant to return it within the time fixed by) the statute. There was a verdict for the plaintiff. The defendant appeals from the order denying its alternative motion for judgment or a new trial.

On October 15, 1920, one Howe, then president of the defendant bank, mailed from Tyler to the plaintiff at South St. Paul his check on the defendant bank for §3,400. It was received by the plaintiff on October 17 or 18 and was deposited by him in the Drovers’ State Bank of South St. Paul. It reached the defendant bank on October 20. It was not paid. On October 25 the defendant returned it with the statement that Howe requested its return without protest. On the same day Howe sent the plaintiff his note for §3,400, payable on demand.

The claim of the plaintiff is that the defendant by not returning Howe’s check accepted it. The defendant claims that such was not the effect of the retention of the check; and, in any event, that the §3,400 note was payment.

The provisions of the Negotiable Instruments Act, important here, are:

G. S. 1923, § 7169 (Neg. Inst. Act. § 126): “A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer.”

G. S. 1923, § 7175 (Neg. Inst. Act. § 132): “The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer. The acceptance must be in writing and signed by the drawee. It must not express that the drawee will perform his promise by any other means than the payment of money.”

G. S. 1923, § 7179 (Neg. Inst. Act. § 136): “The drawee is allowed twenty-four hours after presentment, in which to decide whether or not he will accept the bill; but the acceptance if given, dates as of the day of presentation.”

G. S. 1923, § 7180 (Neg. Inst. Act. § 137): “Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within twenty-four hours after such delivery, or within such other period as the holder may allow, to return the bill accepted or non-accepted to the holder he will be deemed to have accepted the same.”

G. S. 1923, § 7228 (Neg. Inst. Act. § 185): “A check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on demand apply to a check.”

In Wisner v. First Nat. Bank, 220 Pa. 21, 68 Atl. 955, 17 L. R. A. (N. S.) 1266, it is held that a check is a bill of exchange within the definition of the Negotiable Instruments Act (§§ 126, 185), and that the retention of a check by the bank to which it is sent beyond the 24 hours fixed by § 137 is an acceptance. Other cases support wholly or in part the views stated. Bull v. Novice State Bank (Tex. Civ. App.) 250 S. W. 232; Commercial State Bank v. Harkrider-Keith-Cooke Co. (Tex. Civ. App.) 250 S. W. 1069; State Bank v. Weiss, 91 N. Y. Supp. 276; Citizens Trust Co. v. Abston, Wynne & Co. 242 F. 392, 155 C. C. A. 168; Murfreesboro v. Nashville, 127 Tenn. 205, 154 S. W. 965, 45 L. R. A. (N. S.) 240, 46 Misc. 93.

There are cases opposed. We do not minimize the arguments in their support. Section 137 states a definite rule. We follow the Pennsylvania construction which appeals to us as the fair and natural one.

The defendant claims that the acceptance of the note of $3,400 by the plaintiff was payment. The jury found that it was not. The rule is that a note given for an antecedent debt is not payment of it unless given and received as such. Geib v. Reynolds, 35 Minn. 331, 28 N. W. 923; State Bank v. Mut. Tel. Co. 123 Minn. 314, 143 N. W. 912, Ann. Cas. 1915A, 1082; Way v. Mooers, 135 Minn. 339, 160 N. W. 1014, L. R. A. 1918B, 559; Mikolas v. Val Blatz Brewing Co. 147 Minn. 230, 180 N. W. 109. The note of Howe was not payment as a matter of law. The defendant cannot complain of the submission of the issue of payment to the jury, and its finding is sustained.

Some other points are made by the defendant, and have been considered, but they do not call for discussion.

Order affirmed.