
    ELLIOTT v. FIRST STATE BANK OF FT. STOCKTON.
    (Supreme Court of Texas.
    Jan. 22, 1913.)
    1. Bills and Notes (§ 68) — “Acceptance” op Check — Principal’s Liability.
    A reply telegram from one bank to another, stating that it had money on deposit to pay a check in a certain amount drawn by E. in IC.’s favor, was equivalent to an “acceptance,” and made such bank primarily liable for the payment of the check.
    [Ed. Note. — For other eases, see Bills and Notes, Cent. 'Dig. §§ 110^115; Dec. Dig. § 68.
    
    For other definitions, see Words and Phrases, vol. 1, pp. 53, 54.]
    2. Bills and Notes (§ 27) — Accepted Check — Liability op Drawee.
    Under Rev. St. 1895, art. 1203, providing that judgment shall not be rendered against a party not primarily liable on a bill of exchange, unless judgment shall have been previously rendered against the acceptor, no judgment could be rendered against the drawer of a check who was only secondarily liable, where no judgment was shown to have been rendered against a bank which, by its acceptance of the check, became primarily liable.
    [Ed. Note. — For other cases, see Bills and Notes, Cent. Dig. § 37; Dec. Dig. § 27.]
    Error to Court of Civil Appeals of Fourth Supreme Judicial District.
    Action by the First State Bank of Ft. Stockton against D. S. Elliott and another. From a judgment of the Court of Civil Appeals (135 S. W. 159) reforming a judgment for plaintiff and rendering judgment, defendant Elliott brings error.
    Reversed and remanded.
    Chas. T. Haltom, W. C. Jackson, and Howell Johnson, all of Ft. Stockton, for plaintiff in error. O. W. Williams, of Ft. Stockton, for defendant in error.
    
      
      For other cases see same topic ana section NUMBER in Dec. Dig. & Am. Dig. Key-No. Series & Rep’r Indexes
    
   PHILLIPS, J.

This was a suit by the First 'State Bank of Ft. Stockton against D. S. Elliott, as the drawer, and O. H. Kil-patrick, as the indorser, of a check drawn by Elliott in Kilpatrick’s favor on July 11, 1908, for the sum of $1,790 on the City National Bank of Corpus Christi, which on the same day was cashed by the plaintiff for Kilpat-rick, the payment of which was refused by the City National Bank of Corpus Christi on presentation. The check was given by Elliott to Kilpatrick in completion of a land purchase. Prior to its date, Elliott’s father had deposited to Elliott’s credit in the City National Bank of Corpus Christi the sum of $1,890 for his use in paying Kilpatrick for the land, and to enable him to make the purchase, under such circumstances as to make it a special deposit for that purpose, as found by both the trial court and the honorable Court of Civil Appeals.

In closing the land transaction at Ft. Stockton, Elliott first gave Kilpatrick a check for $1,890, which Kilpatrick requested the plaintiff to cash. Its cashier declined to cash the check, unless in some way assured that it was good, but offered to take it for collection. A discussion of the matter resulted in the plaintiff sending the Corpus Christi bank the following telegram: “Fort Stockton, Texas, July 10, 1908. City National Bank, Corpus Christi, Texas. Will you pay check D. S. Elliott, $1,890.00? Rush answer. [Signed] First State Bank.” It received the following telegram in reply: “Corpus Christi, Tex. 7/11/08. First State Bank, Ft. Stockton, Texas. D. T. Elliott has deposited with us $1,790.00 to pay check drawn by D. S. Elliott favor of O. H. Kilpatrick. [Signed] City National Bank.” Thereupon it appears that D. S. Elliott gave to Kilpatrick two cheeks upon the Corpus Christi bank, one for $100, which was paid on presentation and is not in issue; the other being the cheek in suit, for $1,790, which, as stated, was cashed for Kilpatrick by the plaintiff. Payment of the check was refused by the bank because of its having been served with a garnishment writ, on July 11, 1908, in a suit instituted in Nueces county, wherein Dan A. Leary and A1 Chastain were plaintiffs, and Kilpatrick, W. W. Sands, and P. H. Chilton were defendants. The check was subsequently protested.

The trial court found that the indorsement and delivery by Kilpatrick of the check to the plaintiff amounted to an equitable assignment to the plaintiff of the $1,790 on deposit to Elliott’s credit in the bank, but that Elliott and Kilpatrick remained liable to the plaintiff on the check as drawer and indorser, respectively, and that the check, in the event of its nonpayment, carried with it an equitable lien on the land conveyed by Kilpatrick to Elliott, in part payment for which it was given. It rendered judgment against both Elliott and Kilpatrick for the amount of the check, with interest, and for the protest fees, decreed in plaintiff’s favor the foreclosure of such lien, and provided that Kil-patrick should have judgment over against Elliott for any amount of the judgment he might be required to pay, and that in such event he should be subrogated in the amount of such payment to the lien. Elliott alone appealed.

The Court of Civil Appeals approved the conclusions of law of the trial court, except in respect to the lien upon the land and Kil-patrick being entitled to any judgment against Elliott. ' It accordingly reformed the judgment and rendered it for the plaintiff against Elliott and Kilpatrick for the same amount as decreed by the trial court, without any lien upon the land, with a judgment in Elliott’s favor against Kilpatrick for whatever amount of the plaintiff’s judgment he might be required to pay.

It is provided by article 1203, Revised Statutes of 1895, as follows: “The acceptor of any bill of exchange, or any other principal obligor in any contract, may be sued either alone or jointly with any other party who may be liable thereon; but no judgment shall be rendered against such other party not primarily liable on such bill or other contract, unless judgment shall have been previously, or shall be at the same time, rendered against such acceptor or other principal obligor, except where the plaintiff may discontinue his suit against such principal obligor as hereinafter provided.”

If the telegram of the Oity National Bank of Corpus Christi to the plaintiff was equivalent to an acceptance of the check, so as to make it primarily liable for the amount, under the statute the judgment against Elliott was erroneously rendered, as it does not appear that any judgment upon the check had ever been rendered against the bank, and the pleading of the plaintiff failed to allege any of the reasons that would excuse suit against the bank under the provisions of article 1204.

The rule as to what is necessary to constitute an acceptance by the drawee of a bill of exchange or a check is thus declared in 1 Daniel on Negotiable Instruments, § 504a: “In the absence of statutory provision, any words used by the drawee to the drawer or holder, which by reasonable intendment signify that he honors the bill, will amount to such acceptance, though it would be different if the words were addressed to a stranger having no interest in the bill.”

In Bigelow on Estoppel, 522, the rule is thus stated: “Any language, it has indeed been said, whether verbal or .written, employed by an officer of a banking institution whose duty it is to know the financial standing and credit of its customers, representing that a check drawn upon it is good and will be paid,, estops the bank thereafter, as against a bona fide holder of the check, from denying the want of funds to pay the same.”

As the writing of the word “good” by a bank officer, accompanied by his signature, across the face of the instrument ordinarily operates even as a certification of a check (2 Daniel, Neg. Inst. § 1606; 1 Morse, Banks and Banking, § 406), we think it must be held that a bank’s written communication, upon inquiry, that it holds a deposit to pay a check of a particular description to be drawn upon it is equivalent to a statement that a check of such description is good and will be honored, and amounts to an acceptance, where thé person to whom the communication is addressed is thereby induced to discount the check. If it be not regarded as a technical acceptance, such a communication, at all events, amounts practically to a letter of credit against a check of such description; and one who, for value, takes the check upon the faith of it is entitled to enforce the liability that it imports as a promise to pay the check. Whilden v. M. & P. Natl. Bank, 64 Ala. 1, 38 Am. Rep. 1.

The deposit here was made with the bank, not as a general deposit, but as a special one for the purpose only of paying Elliott’s check to Kilpatrick in this specific transaction. Because, doubtless, of its recognition, that such was its character and purpose, the bank, in replying to the telegram of the plaintiff, refrained from making answer in the terms of that telegram, and therefore declined to say that it would pay any check drawn by Elliott for such amount. But in saying, as it did in its reply, that it held on deposit $1,790 “to pay check drawn by D. S. Elliott favor of O. H. Kilpatrick” it must have intended for the plaintiff to understand that it would honor such a check. The check was good, in fact, because of the special nature of the deposit. But it was in fact good only because the bank held the money specially dedicated to its payment. The bank’s statement, therefore, that it held the deposit that made it good was clearly equal to a representation that it was good; and it must havé known that its reply was subject only to the interpretation that the check would be honored on presentation.

Because the Oity National Bank of Corpus Christi became primarily liable for the payment of the check, and Elliott was liable only secondarily, and no judgment had been rendered against the bank, the judgments of the Court of Civil Appeals and the district court should be reversed and the cause remanded. Mullaly v. Ivory (Civ. App.) 30 S. W. 259. It is so ordered.  