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that presentation was not in law ex-
cused, in which case the date of exe-
The
cution and delivery is taken.
holding, to the extent that it does not
fix a later date, is supported by the
implication contained in the well-es-
tablished rule that delay, short of the
period prescribed by the Statute of
Limitations for an action on the check
or on the original consideration, in
presenting the check to the drawee
for payment, does not release the
drawer from liability, unless he is
damaged or prejudiced by such delay.
It is also supported, to the same ex-
tent, by several cases cited herein in
which it is directly held that where
presentation is not made within a rea-
sonable time, the date of actual pres-
entation cannot be taken, leaving the
question of a specific date open. And
it is supported as to the specific date
by the Nebraska cases cited infra.

There are, however, a few cases in which a statement that the statute begins to run against the holder at the time the check is presented is made either by way of argument or as dictum. Not one of these cases, however, is authority for the proposition that the date of presentation would be taken where presentation had been delayed beyond a reasonable time by the holder. The English case cited to this proposition involved a bill of exchange, and is therefore not within the scope of the note.

And it is quite well established that if the check is drawn when the drawee does not have funds of the drawer with which to pay it, the statute commences to run in favor of the drawer at the date and delivery of the check, for the reason that a cause of action arises at that time, presentation being in law excused.

Where drawee has drawer's funds.

The Statute of Limitations begins to run in favor of the drawer of a check, to bar an action thereon, not later than the time when the check should have been presented for payment at the bank upon which it is drawn (in the Nebraska cases here cited it was directly held that this means at the expiration of a reasonable time after the delivery of the check). Harman

v. Claiborne (1846) 1 La. Ann. 342
(see explanation of this case infra);
Scroggin v. McCelland (1893) 37 Neb.
644, 32 L.R.A. 110, 40 Am. St. Rep. 520,
56 N. W. 208; Wrigley v. Farmers &
M. State Bank (1906) 76 Neb. 862, 108
N. W. 132 (a bank draft); Brust v.
Barrett (1879) 16 Hun (N. Y.) 409,
affirmed on other grounds in (1880)
82 N. Y. 400, 37 Am. Rep. 569; Dolon
v. Davidson (1896) 16 Misc. 316, 39
N. Y. Supp. 394, affirmed in (1896) 7
App. Div. 461, 39 N. Y. Supp. 1020 (see
discussion, infra); COLWELL v. COL-
WELL (reported herewith) ante, 876.

In Harman v. Claiborne (La.) supra, it was held that "the right of action of the holder against the drawer of a check payable to order, drawn by a bank here on a bank in another state, is prescribed by five years from the time when the check was payable." The holding is somewhat confused with the principle of laches in the presentation of a check for payment, yet the statute is referred to as a distinct ground for the holding.

As indicated, the case of Brust v. Barrett (1879) 16 Hun (N. Y.) 409, supra, was affirmed in (1880) 82 N. Y. 400, 37 Am. Rep. 569. However, the court of appeals found it unnecessary to decide the question here discussed, basing its decision upon the fact that there were no funds in the bank with which to pay the check when it was drawn (see quotation from the decision under the appropriate heading infra). Since the inferior court merely decided that an action upon a check not presented for payment until ten years after its delivery to the payee is barred by the Statute of Limitations of six years, whether there were any funds in the bank or not at the time it was delivered, and the court of appeals affirmed the decision on the no funds, ground that there were neither decision is authority on the question of limitations as between the date of the check and a reasonable time for presentment. The inferior court's decision is clear on the point that the date of actual presentation cannot be taken as the date when the statute commences to run, where the presentation is not made in a reason

able time, whether or not there were funds in bank; but the decision of the higher court limits its holding to cases in which there were no funds.

In Dolon v. Davidson (N. Y.) supra, a section of the statute provided that "where a right exists, but a demand is necessary to entitle a person to maintain an action, the time within which the action must be commenced must be computed from the time when the right to make the demand is complete;" but this section was held, at least by the trial court, to be merely declaratory of the law as it applied to checks before its enactment. The court said: "Prior to the enactment of § 410 of the Code, the general term of this department, in the case of Brust v. Barrett (N. Y.) supra (an action by the payee against the drawer of a check), had held that the Statute of Limitations had run against a check which was not presented for payment within six years after its delivery, and an opinion to the same effect was written by Judge Barker at special term. The court of appeals affirmed that judgment upon a different ground in (1880) 82 N. Y. 400, 37 Am. Rep. 569, and observed that it was unnecessary to pass upon the point decided by the general and special terms. This was the latest exposition of the law at the time of the enactment of § 410 of the New Code. It is evident from the language of that section, as well as from Throop's note thereto, that it was not intended to change the law, but merely to clear away doubt and compile it as it then existed, reducing it to a precise and accurate statement. Bronson v. Munson (1883) 29 Hun (N. Y.) 60. The check in question is presumed to represent an ordinary indebtedness on the part of the defendant to the plaintiff's intestate, then due and payable; but, under the rules of the law merchant, an action could not be brought against the drawer until after presentation of the check to the bank and refusal by the latter to pay. The check did not constitute an assignment of any funds in the bank if there were any at that time, as to which there is no evidence (Atty. Gen. v. Continental L. Ins. Co. (1877) 71

N. Y. 330, 27 Am. Rep. 55), and the bank owed the payee of the check no obligation. The right existed in favor of the plaintiff's intestate to the payment, by the maker, of the $50 and interest immediately; but the demand of the payee and notice of nonacceptance were necessary for the convenience and benefit of the maker, and to relieve him of the cost and annoyance of a litigation, by affording him an opportunity to pay, in case his depositary refused to accept the check. Smith v. Miller (1870) 43 N. Y. 175, 3 Am. Rep. 690; Commercial Bank v. Hughes (1837) 17 Wend. (N. Y.) 98; Knapp v. Green (1894) 79 Hun, 267, 29 N. Y. Supp. 350; Wilbur v. Warren (1887) 104 N. Y. 192, 10 N. E. 263. I am of the opinion that the Statute of Limitations has run against this action, both under the ruling of the general term in Brust v. Barrett (N. Y.) supra, on account of the failure of the plaintiff's intestate to present the check within six years, and also under § 410 of the Code, which, I think, should be construed as requiring that the time within which the action must be commenced must be computed from the time when the right to make the demand was complete. The right to make the demand was complete upon the delivery of the check, and the holder of a check should not be permitted to postpone indefinitely the liability of the maker, by omitting to present the check for payment. When the Statute of Limitations would be a bar to an action on the indebtedness represented by the check, it should also bar an action on the check. Syracuse, B. & N. Y. R. Co. v. Collins (1870) 3 Lans. (N. Y.) 33; Bradford v. Fox (1868) 38 N. Y. 289. The early ruling that, as between the drawer and payee of a check, the check must be presented within a reasonable time or the drawer will be released to the extent of any damages he may have sustained, and that the burden is on the payee to show that the drawer has not sustained damages, was made before the enactment of the Statute of Limitations, and that phase of the question was not considered. Commercial Bank V.

Hughes (1837) 17 Wend. (N. Y.) 94; Little v. Phenix Bank (1842) 2 Hill (N. Y.) 425; Harker v. Anderson (1839) 21 Wend. (N. Y.) 383; Smith v. Miller (1873) 52 N. Y. 548; Murray v. Judah (1826) 6 Cow. (N. Y.) 490. If, however, the holder of a check is entitled to a reasonable time to present the same before the Statute of Limitations commences to run thereon, I think it must be held, as a matter of law, that a presentation after fourteen years is not within a reasonable time. White v. Southland (1870) 2 Albany L. J. (N. Y.) 50; Reizenstein v. Marquardt (1888) 75 Iowa, 294, 1 L.R.A. 318, 9 Am. St. Rep. 477, 39 N. W. 506; Herrick v. Woolverton (1869) 41 N. Y. 589, 1 Am. Rep. 461; Palmer v. Palmer (1877) 36 Mich. 487, 24 Am. Rep. 605; Lyle v. Murray (1851) 4 Sandf. (N. Y.) 595; Stafford v. Richardson, (1836) 15 Wend. (N. Y.) 306." The appellate division, in affirming this decision (1896) 7 App. Div. 461, 39 N. Y. Supp. 1020, after stating the facts, merely said: "It is apparent from the facts disclosed that the payee did not present the check to the bank within a reasonable time, and that, upon the facts disclosed, it was proper to hold as a matter of law, that the presentment was not made in a reasonable time. Inasmuch as this action was not brought until fourteen years after the date of the instrument (nor was any demand made within about fourteen years), we think the Statute of Limitations was properly held to be a defense to the action."

These cases are also good authority on the point that the date of actual presentation cannot be taken as the date for the statute to commence to run where there was no presentation within a reasonable time, but they do not fix a specific time.

It has been said by way of argument or as dictum, that the Statute of Limitations begins to run in favor of the drawer of a check to bar an action thereon when the check has been presented to the drawer and payment has been refused. Merchants' Nat. Bank v. State Nat. Bank (1871) 10 Wall. (U. S.) 676, 19 L. ed. 1028 (dictum);

Bull v. First Nat. Bank (1887) 123 U. S. 105, 31 L. ed. 97, 8 Sup. Ct. Rep. 62 (dictum); Haynes v. Wesley (1900) 112 Ga. 668, 81 Am. St. Rep. 72, 37 S. E. 990 (see explanation of this case, infra); Wright v. MacCarty (1900) 92 Ill. App. 120 (dictum); First Nat. Bank v. Needham (1870) 29 Iowa, 249 (statement made arguendo); Cowing v. Altman (1877) 71 N. Y. 435, 27 Am. Rep. 70 (obiter); Re Boyse (1886) L. R. 33 Ch. Div. (Eng.) 612, 56 L. J. Ch. N. S. 135, 55 L.T.N.S. 391, 35 Week. Rep. 247 (a bill of exchange).

In Haynes v. Wesley (1900) 112 Ga. 668, 81 Am. St. Rep. 72, 37 S. E. 990, cited supra, the drawer had no funds in the drawee bank with which it could pay the check, and the decision is based upon this fact (see citation of same case under succeeding heading); but the court quoted Merchants' Nat. Bank v. State Nat. Bank (U. S.) supra, on the general rule, and it set out in the syllabus that the statute commences to run at the time the check is presented and payment thereon is refused, unless presentation is in law excused.

Where no funds are available.

The Statute of Limitations begins to run in favor of the drawer of a check to bar an action thereon from the date of the check, if, at the time of delivery, there are no funds in the bank upon which it is drawn, to the credit of the drawer, out of which it may be paid, presentation and demand for payment being in law excused. Haynes v. Wesley (Ga.) supra; Culver v. Marks (1889) 122 Ind. 554, 7 L.R.A. 489, 17 Am. St. Rep. 377, 23 N. E. 1086 (see explanation of this case infra); Brush v. Barrett (1880) 82 N. Y. 400, 37 Am. Rep. 569; Bethell v. Bethell (1887) L. R. 34 Ch. Div. (Eng.) 561, 56 L. J. Ch. N. S. 334, 56 L. T. N. S. 92, 35 Week. Rep. 330 (see explanation infra).

Culver v. Marks (1889) 122 Ind. 554, 7 L.R.A. 489, 17 Am. St. Rep. 377, 23 N. E. 1086, supra, is not a strong case upon the proposition to which it is cited herein for the reason that the action was not barred by the twenty-year limitation period, even though the statute commenced to run at the date

of the check, and the court does not say affirmatively that it began to run at that date. It seems to have been contended that the action was barred by the statute that bars actions not based upon written contracts in six years, so the court merely said: "It is contended that the right of recovery was barred by limitation. What we have said in passing upon the complaint disposes of this question. The check being in writing, and constituting the foundation of the action, it is not barred by the Statute of Limitation." By reference to other Indiana cases, especially Nichol v. Henry (1884) 98 Ind. 34, one is able to estimate the significance of these words, for it is there disclosed that, at about the time this action was brought, the period of limitations for actions based "upon contracts in writing" was fixed at twenty years, while if the contract was not in writing the period was six years. The checks in the instant case were dated in 1869 and 1870, while the claim thereon was filed in 1885, so the action would have been barred if it had not been in writing. The discussion preceding the language quoted, while not a direct discussion of limitations, shows quite clearly that the court meant to hold that the statute commenced to run at the date of the checks, since it held the fact that the drawer had no funds in the bank at that time to be a sufficient excuse in law for not presenting the checks for payment, so that a cause of action, sufficient to start interest running, arose at that time.

In Brush v. Barrett (1880) 82 N. Y. 400, 37 Am. Rep. 569, supra, the court said: "If the evidence established that there were no funds in the bank to meet the check when it was drawn, the check was due immediately, and the judge was wrong in his refusal to charge the jury as requested. The rule is well established that if the drawer has no funds in the hands of the drawee, an action can be maintained against the former without any presentment or notice of nonpayment. Mohawk Bank v. Broderick (1833) 10 Wend. (N. Y.) 304; Fitch v. Redding (1850) 4 Sandf. (N. Y.) 130;

The

Healy v. Gilman (1857) 1 Bosw. (N. Y.) 235; Johnson v. Bank of North America (1868) 5 Robt. (N. Y.) 554. As the cause of action was complete when the check was made, and the plaintiff could allege a want of funds as an excuse for nonpresentment of the check, and no presentment was required, it is very clear that the statute began to run from its date. It is insisted that the want of funds in the bank is the result of the fraudulent act of the drawer, which operates as a waiver of presentment, and the defendant is estopped from alleging any such fact, and that it is no defense to an action upon the check. We are unable to see upon what ground the doctrine of estoppel can be invoked under the circumstances, and the position taken cannot be upheld. want of funds is an established fact in the case, which affects the liability of the drawer and relieves the holder from the obligation ordinarily incurred to present the check. It renders it due without presentment and demand; and being due, no reason exists why this fact is not available to the drawer as well as the holder. While the drawer fails to provide funds, the holder neglects to present the check; and both parties are thus in fault. The holder may avail himself of the maker's default by bringing a suit immediately without any demand, and if he delays to enforce his claim by action within six years, the drawer may plead the Statute of Limitations as a bar. If the check is due, so that the holder can collect it without delay, it is due as to both the parties, and each is entitled to the benefit arising from the facts actually existing. The breach of the contract is the cause of action, and the statute begins to run from the time of such breach, even if there is fraud on the part of the defendant. East India Co. v. Paul (1849) 7 Moore, P. C. C. 85, 13 Eng. Reprint, 811, 14 Jur. 253, 1 Eng. L. & Eq. Rep. 49; Battley v. Faulkner (1820) 3 Barn. & Ald. 288, 106 Eng. Reprint, 668, 22 Revised Rep. 390; Whitehouse v. Fellowes (1861) 10.C. B. N. S. 765, 142 Eng. Reprint, 654, 30 L. J. C. P. N. S. 305, 4 L. T. N. S.

177, 9 Week. Rep. 557; Wilkinson v.
Verity (1871) L. R. 6 C. P. (Eng.) 209,
40 L. J. C. P. N. S. 141, 24 L. T. N. S.
32, 19 Week. Rep. 604, 16 Eng. Rul.
Cas. 208. It may also be remarked
that the action to recover the amount
of the check on the ground of a want
of funds rests on contract, and the
same measure of damages is recover-
able as if the check had been present-
ed for payment and was not paid. The
cause of action is the same in each
case, and the statute runs equally
against any form of action arising
from the nonpayment of the check.
As the order granting a new trial must
be upheld upon the ground already
discussed, it is not necessary to con-
sider the question whether the Statute
of Limitations runs against the check
from the day of its date without re-
gard to the want of funds, and without
any presentment and demand of pay-
ment."

In Bethell v. Bethell (1887) L. R. 34 Ch. Div. (Eng.) 561, 56 L. J. Ch. N. S. 334, 56 L. T. N. S. 92, 35 Week. Rep. 330, supra, the holding does not fully support the proposition to which it has been cited for the reason that the check was undated and was to be

held while the drawer completed a loan that would supply funds for its payment. The court held that the statute commenced to run to bar the holder's action thereon at the time he received a letter informing him that the loan would not be completed. As it was understood that the holder should date the check when he presented it, there would seem to be ground for the theory that it could be regarded as dated when the letter was received, but the court does not so state, merely holding that the holder was excused presentation, and that his cause of action arose to start the statute running when the letter was received.

But it has been held that where the holder of a draft presents it for payment within a reasonable time, and payment is refused on the ground that the drawer has no funds there,-it being understood that he had none there when he drew the draft,-the Statute of Limitations does not commence to run in favor of the drawer until the date payment was refused. Wood v. McMeans (1859) 23 Tex. 481. J. W. M.

WILLIAM P. HUBBARD
V.

EQUITABLE LIFE ASSURANCE SOCIETY, Plff. in Err.

West Virginia Supreme Court of Appeals — January 29, 1918.

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1. If the insured, after refusal upon propter terms, of a loan provided for in the policy, borrows the money so stipulated and applied for from other persons upon collateral of his own other than the insurance policy, and at a rate of interest higher than that specified in the loan provision of the policy, but the lowest obtainable, he is entitled to recover the interest so paid in excess of what he would have had to pay the insurer for the use of the same amount for the same period under such loan provision, and the reasonable value of his services in procuring the loan, but no compensation for the use of the securities so employed as collateral. [See note on this question beginning on page 895.]

Headnotes by POFFENBARGER, P.

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