
    MIDDLEKAUFF v. STATE BANKING BOARD et al.
    (No. 3577.) 
    
    (Supreme Court of Texas.
    June 12, 1922.)
    1, Payment <&wkey;67(2) — Debtor’s note to creditor presumed conditional payment of debt.
    When debtor issues his own negotiable paper to his creditor, it does not amount to a payment of the indebtedness for which it is given, unless the circumstances show that such was the intention of the parties; the presumption being that it is a conditional payment.
    2. Banks and banking &wkey;sl5 — Depositor giving own check for “cashier’s check” can recover thereon from state guaranty fund on insolvency of bank.
    Where a depositor had an open, unsecured, noninterest-bearing account in a bank, and in exchange for the bank’s cashier’s check he made and delivered to the bank his own check on his deposit for like amount, held that a “cashier’s check” being in its legal effect the same as a certificate of deposit or certified check', the depositor could recover the amount of the cashier’s check, where the bank was declared insolvent, out of the guaranty fund created under the banking laws of the state.
    [Ed. Note. — For other definitions, see Words and Phrases, Cashier’s Check.]
    Proceedings for original mandamus by J. S. Middlekauff against the State Banking Board and others to compel payment to relator of $3,000 out of guaranty fund under the banking laws of the state.
    Writ issued.
    R. B. Cousins, Jr., of Strawn, for relator. Hawkins, Hawkins & David, of Breckenridge, amicus curiae.
    ' C. M. Cureton, Atty. Gen., and C. W. Taylor, Asst. Atty. Gen., for respondents.
    
      
      Reftearing denied June 21, 1922.
    
   GREENWOOD, J.

Relator brought this suit in the Supreme Court, against the State •Banking Board, the Commissioner of Insurance and Banking, the State Treasurer, and the Attorney General, to compel the payment to relator of $3,000 out of the guaranty fund created undér the banking iaws of the state.

Prior to December 21, 1920, relator deposited certain sums of money in, the Beeray Guaranty State Bank, of Leoray, Tex., which was chartered under the banking laws of Texas. The Bank operated under the “guaranty fund plan.” The bank was closed on account of its insolvency on December 31, 1920.

On-December 21, 1920, the relator had an open, unsecured, and noninterest-bearing deposit with the bank of $3,712.35. On that day he cashed a check for $200, leaving a balance to his credit as a general depositor in said bank of $3,512.35. At the same time, relator obtained from the bank its cashier’s check, which was signed by its cashier, and which, omitting the cashier’s signature, read as follows:

“No. 1184. Beeray Guaranty State Bank, Beeray, Texas, Dec. 21, 1920: Pay to the order of J. S. Middlekauff. $3,000, three thousand dollars. Cashier’s check.”

In exchange for the cashier’s check, relator gave his own check on the bank for $3,000. The cashier’s check was never paid, on account of the insolvency of the bank. Relator presented a claim for the payment to him of $3,512.35 out of the guaranty fund, by reason of the aforesaid indebtedness of the bank to him. His right to payment of $512.35 out of the guaranty fund was not questioned, and that sum has been paid to him.

The single question for our determination is whether, on the facts stated, the relator is entitled to have the balance of his claim against the bank, amounting to $3,000, paid out of the guaranty fund; it being contended by respondents that after the acceptance of the cashier’s check relator no longer had an. unsecured and noninterest-bearing deposit in the bank. Before the cashier’s check was applied for, on December 21, 1920, relator was a general depositor in the bank. He was the bank’s creditor for $3,512.35. The bank was his débtor in that amount. The money which relator placed in the bank had become the property of the bank. The obligation of the bank was to pay to him $3,512.35, on demand, which obligation . was manifestly secured by the guaranty fund, an'd in no other way. Unless otherwise agreed, this obligation of the bank to relator as a depositor could be discharged only by payment in money to him, or to his order, of the full amount of his deposit.

No facts are relied on to show an agreement by relator releasing the bank from its obligation, or to show a payment in discharge of same, to the extent of $3,000, save that relator gave the bank his check against his deposit for $3,000, and received the bank’s check on itself for that sum. It is essential to the extinguishment of an obligation, by the debtor’s issuance of his own negotiable paper therefor to his creditor, that both debtor and creditor intend the paper to discharge the obligation. The law indulges in no pre- , sumption from the creditor’s acceptance of the paper that it is to operate as an absolute payment. The presumption is, on the contrary, that the parties intend that the paper shall operate only as a conditional payment. The condition implied is performance of the promise evidenced by the paper. Upon the paper’s dishonor, the creditor may enforce the debtor’s original obligation.

In McGuire v. Bidwell, 64 Tex. 45, the court, through Judge Stayton, said:

“The rule is that the negotiable promissory note of the debtor does not amount to payment of the Indebtedness for which it is given unless the circumstances show that such was the intention of the parties.”

Again, in Johnson v. Amarillo Improvement Co., 88 Tex. 510, 31 S. W. 505, the declaration in Crane v. Clay, 25 English Daw and Equity Reports, 451, was quoted with approval, as follows:

“A bill given for and on account of money due on a simple contract operates as a conditional payment, which may be repudiated at the option of the creditor, if the bill be unpaid at maturity in his hands, in which case he may rescind the transaction of payment and sue on the original contract.”

The transaction between relator and the bank negatives an intent by either party for the cashier’s check to wipe out the bank’s debt. Relator had put his money in the bank for safe-keeping, being entitled to rely on the security afforded by the guaranty fund. He chose not to have the bank pay him $3,000, on his check, in discharge of its obligation in that amount. He sought to avoid the risk of carrying that much money on his person. He did not care to substitute another debtor for the bank. We cannot reasonably attribute to him the purpose to merely weaken his security. The certificates for relator’s deposits, whether on slips or in a passbook, evidenced that he had an unsecured, nonin-terest-bearing debt against the bank, payable to him or his order on demand, for his unchecked and unpaid balance. The cashier’s check evidenced the same obligation, save it specified the balance, and, in ordinary course, it would have enabled relator to utilize his balance with more facility. Had relator had his own $3,000 check certified, or had he taken the bank’s formal certificate of deposit for that amount, no one could maintain that he meant such negotiable paper to extinguish the bank’s liability to him as a depositor. Yet it seems plain enough that we can ascribe no different intention to the parties, with respect to discharge of the bank’s obligation, supported by the guaranty fund, than •if their transaction had been consummated by means of formal certificate of deposit or by certified check. 5 R. O. L. 483, 484; Walker v. Sellers, 201 Ala. 189, 77 South. 715.

Referring to a cashier’s check, which a depositor of a bank obtained by having, the amount .of the check entered on his passbook as a payment to him, the Supreme Court of Illinois said:

“The check was not drawn by a depositor, * * * but was simply an acknowledgment of an indebtedness on the part of the bank to the payee of the order. As between the bank and appellant [the payee] it was, in legal effect, the same as a certificate of deposit or a certified check.” Clark v. Chicago Title & Trust Co., 186 Ill. 444, 57 N. E. 1061, 53 L. R. A. 232, 78 Am. St. Rep. 294; Id., 85 Ill. App. 295.

To the same effect, see Lummus Cotton Gin Co. v. Walker, Supt., 195 Ala. 555, 70 South. 754.

Relator’s check for $3,000 against his deposit has not been paid. He drew the cheek /to get $3,000, not at that moment, but when he or his transferee might choose to present the cashier’s check. The cashier’s'check was but the vehicle by which the payment of relator’s check was to be accomplished. Upon the dishonor of the bank’s check, .relator’s deposit stands as though he had never drawn his own $3,000 check, nor received the bank’s worthless check. Western Brass Mfg. Co. v. Maverick, 4 Tex. Civ. App. 535, 23 S. W. 728; Anderson v. Owen, 112 Miss. 476, 73 South. 286; Bank of Greenville v. Kretschmar, 91 Miss. 615, 44 South. 930.

We are not inclined to hold that a cashier’s check will ordinarily draw interest in advance of its presentment for payment. The essential understanding of the parties is that the principal only is to be paid whenever the holder may elect to present the check for payment.. Duncan v. Magette, 25 Tex. 248. However, having held that relator could repudiate the check, on the bank’s insolvency, as he did, it is not necessary for us to determine the question.

Since it plainly appears that the transaction between relator and the bank did not discharge the bank’s obligation to relator as a general depositor, entitled to the benefits of the guaranty fund, such transaction presents no obstacle to his maintenance of this suit.

We express no opinion as to the right, with respect to the guaranty fund, of a payee of a cashier’s check, to whom no obligation has been previously incurred under a.general deposit. It is enough to say that relator’s un-extinguished rights under his open, unsecured, and noninterest-bearing deposit furnish the basis on which we predicate the decree in his favor.

It is ordered’ that this suit be dismissed as to the respondents no longer in office, and that a writ of mandamus be issued against the remaining respondents, requiring the allowance of the claim of relator for payment out of the bank guaranty fund.

CURETON, C. J., took no part in the decision of this case. 
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