tice of facts which make the certification dishonest, he is not a bona fide holder. First Natl. Bank v. Union Trust Co. (Mich.), 122 N. W., 547. 131e. Memorandum Check.-A memorandum check is a check given by the drawer to the payee named therein, not to be presented at the bank for payment, but as evidence of an obligation of the drawer to the payee, or as a memorandum of the indebtedness. It may be marked "Memorandum," or "Memo," and so marking it makes it a memorandum check. The payee can proceed against the drawer as on a note, and need not present it at the bank. But if he does present it and the bank pays it the maker will be liable to the bank. The words "Memorandum," or "Memo" the bank need pay no attention to. As between the drawer and the bank it is the same as any other check. As between the drawer and the payee it is a "due bill," and if the payee uses it contrary to his agreement with the drawer, he becomes liable to the drawer. As to other parties to whom it is negotiated the drawer is liable as on a note, and presentation at the bank is not necessary to bind him, as he did not intend that it should be presented. Franklin Bank v. Freeman (Mass.), 16 Pick., 535; Cushing v. Gore, 15 Mass., 68; Dykers v. Bank, 11 Paige (N. Y.), 612. CHAPTER VII. NONPAYMENT AND MISPAYMENT. 132. Refusal to Pay.-When a depositor draws a check against an account actually sufficient to meet it, the bank must pay. If it dishonors a check, it makes itself liable: in some states to the depositor only; in others to the holder of the check. As in most states a check is not an assignment, the majority of courts hold that no one has a right against the bank except the maker of the check, unless the bank has accepted or certified. It has been held in some states that where a check is paid to the wrongful holder, this is equivalent to an acceptance of the check of the drawer and gives the real owner a right against the bank; but this is not the rule in most states; and the Negotiable Instruments Law provides that an acceptance must be in writing, so that a wrongful payment might not now be held to be an acceptance under that law. 133. Must Answer to Depositor.—But to the depositor the bank must answer, if it refuses to pay his orders so long as it has funds of his sufficient to meet the orders. As we have seen, there is an implied contract that the bank will honor his orders. A bank may have just reason to refuse to pay, as where it has a lien or right to set off the depositor's balance against a debt which he owes the bank. See Sec. 165. But where he actually has sufficient unincumbered funds, the bank must pay. If the deposit has been attached, or the bank enjoined from paying, it can of course refuse to pay. Zimmerman v. Murphy, 131 Ill. App., 56. 134. Amount of Damages-A refusal to pay gives the depositor a right of action against the bank, for damages. In what amount the damages will be laid depends upon all the facts and circumstances. If there is anything to indicate that the conduct of the bank was wilful, or that it delayed to make reparation, the bank would be liable not only for the amount involved in the dishonored paper and interest thereon, for which it will always be liable, but also for such damages as a jury might find were suffered by the party in the harm done his credit, his reputation, business, etc. An innocent mistake on the part of a clerk has been held to give no ground for the jury to "mulct the bank,” though in that case $600 damages was awarded for refusal to pay checks aggregating $318. Though no actual damage is shown, usually nominal damages, i. e., in an amount to give the depositor at least something, perhaps only the interest on the amount, for the wrong done him, can be recovered. Sometimes a jury might be warranted in finding one dollar, one cent, etc. All the circumstances must be weighed. When no real loss is incurred, no wilful refusal on the part of the bank is shown, and the check is finally paid, only nominal damages can be recovered. However, a depositor will usually be given substantial damages, over and above the actual amount of the checks unpaid and interest, when a bank without just cause refuses to pay his checks, even though no special damage is shown. Clark v. Bank, 83 N. Y. S., 447. Such a refusal is bound to work harm to the one whose check is dishonored. Some cases have held that where the check of one engaged in trade is wrongfully dishonored the bank is liable, but later cases make the bank liable even where the depositor is not engaged in trade. His credit, reputation, and standing are as susceptible to injury through a refusal to pay as the character of one engaged in commercial pursuits. Sometimes the smaller the check, the greater the injury done. The jury must determine from all the circumstances what damages have been incurred. The wrong done is in the nature of a slander, besides being a breach of contract, and any special damages suffered can always be recovered when proved. Generally nominal damages only can be recovered in an action on the contract, unless special damages can be proved, but in a tort action for the wrong done, substantial damages can be recovered in any event. Where the bank has not been negligent, and where upon discovering its mistake it immediately takes steps to correct same, the court will not allow an excessive verdict. The check must have been presented at the bank, during business hours, and payment actually refused. The mere privilege given a depositor, to draw against items deposited for collection, does not give him an absolute right to draw, and if items are not paid the bank can charge them back, and if by so doing the account is insufficient to meet a check, the bank can refuse to pay. When a check is presented which bears notice of any irregularity, the bank might save itself from liability for a refusal by making a qualified refusal, or requesting a short time to investigate, and thus prevent a loss in case its suspicion should be well founded. 135. Lost Checks.-Usually when a check is lost the drawer stops payment of the lost check and issues a duplicate, marking it "Duplicate." The same rights and liabilities attach to the duplicate as existed in or under the lost check. If one who endorsed the original also endorses the duplicate, he is liable only to the same extent as on the original, and time in which presentment must be made to bind him is reckoned from the time of the delivery of the original. 136. Lost After Endorsement.-If a check has been lost after endorsement and comes into the hands of a bona fide holder to whom the bank pays, the money cannot be recovered back from him; and if the bank has been ordered to stop payment, such bona fide holder can recover from the maker and prior endorsers. Where the check has been lost after endorsement, or is payable to bearer, the drawer may demand a bond of indemnity before issuing a duplicate, as he will be liable to a bona fide holder, and the bank can safely pay to a bona fide holder when a check has been lost after endorsement in blank by the payee, and payment not stopped. 136a. Where the check is not payable to bearer, and if payable to order has not been endorsed, the drawer will not be liable on it. He can stop payment at the bank and should immediately do so. 137. Paid Checks.-The bank, upon making payment, should require a surrender of the order, as a voucher of payment to the holder. The surrendered checks should be held by the bank until the customer's pass-book is balanced, when a return of the check with the balanced book, and an acceptance without objection made by the customer, if not binding on him, is at least good evidence toward proving payment by the bank for him. Where the check is an overdraft, the bank should hold it as evidence of the indebtedness of the drawer. Paid checks also serve as evidence of payment by the drawer to the payee. FORGERY. 138. Forged Signature of Drawer. The bank must follow strictly the orders of the depositor, and where it pays on a forged or altered check it cannot charge the customer. Under the Negotiable Instruments Law a forged signature is declared to be wholly inoperative against any person whose name is forged, and a material alteration vitiates the instrument as against any person whose name appeared thereon when altered, except that a bona fide |