Story Case

Tony Smietanka received his weekly pay in a check, which he indorsed each week to the saloon keeper on his way home. Quite unexpectedly, the factory in which he worked was closed on the twenty-sixth of April by the bankruptcy of its proprietor. The next day Tony was served with a summons in a suit brought by the saloon keeper, August Schwittermann, upon the check Tony had indorsed to him upon the previous Saturday, the twenty-second of April Tony could not speak English very well, but he managed to tell the court that it was four days after he indorsed the check before the suit was started. The saloon keeper admitted that he had kept all of that Saturday's checks in his safe, waiting until Wednesday, a convenient day to go down town to his bank. At that time, the bank upon which the check was drawn had stopped paying any checks drawn by Tony's former employer, and by the next day the right of recourse against him was worthless because of his failure. Tony had acquired a piano and an ice-box which August Schwittermann knew would satisfy his claim. Is he entitled to a judgment, or has Tony a defense?

Ruling Court Case. Riekford And Others Vs. Ridge, Volume 2 Campbell Reports, Page 537

Riekford and others were bankers at Aylesbury. At noon on June 13, Riekford cashed a check for Ridge. The check was dated June 11. It was drawn by Min-gay, Nott & Company on Smith, Payne & Company, bankers in London. On the morning of June 14, Riekford sent the check to an agent in London, who received it about 4 p. m. However, he might have sent it by a post which left Aylesbury at 6 p. m. the day before. Riekford's agent presented the check to Smith, Payne & Company on the morning of June 15; but by this time, Mingay, Nott & Company had no funds left in the bank. Riekford's agent in London said that, even if the check had been received in the forenoon of June 14, it would not have been presented until the following morning.

Suit was brought against Eidge, seeking to charge him as indorser. He contended that he was discharged of liability, because due diligence had not been exercised by Riekford and his agent in presenting the check for payment.

Lord Ellenborough said: "It is always to be considered whether, under the circumstances of the case, the check has been presented with reasonable diligence. This is what the Law Merchant requires. The rule that the moment a check is received by post it should invariably be sent out for payment would be most inconvenient and unreasonable. The rule to be adopted must be a rule of convenience, and it seems to me to be convenient and reasonable that checks received in the course of one day should be presented the next." Judgment was given for Riekford.

Ruling Law. Story Case Answer

The Negotiable Instruments Law provides: "A check must be presented within a reasonable time after its issue, or the drawer will be discharged from liability thereon, to the extent of the loss caused by the delay." This is merely the codified statement of the law as applied by the merchants. The drawer of a check remains liable, however long the holder may be in presenting the check. But if any loss is sustained by him by reason of the delay, he will be discharged as to such loss. As, for instance, should the bank on which he drew the check fail, if the holder of a check does not present it within a reasonable time, the drawer is discharged from further liability on it.

As between a holder of a check and an indorser, the rule is otherwise. In this case the check must be presented within the time prescribed by the Law Merchant, which is usually the following day, when the parties live in the same place. If they live in different places, it is usually held that the check must be started back to the bank on which it is drawn on the day after it is received. No definite rule can be laid down in all cases; what is a reasonable time will vary with the circumstances.

If the check indorsed by Tony Smietanka was worthless, Tony was entitled to know that at a very early date so that he could protect himself against the one from whom he received it. No one expects a check to represent a long time loan. August Schwittermann ought to have presented the check to the bank on Monday, or to have deposited it on that day with his own bank, so that it could be presented for payment on Tuesday. His failure to do so was careless and his carelessness is a complete discharge to Tony. The loss must be borne by August, and judgment should be given for Tony.