Kilgore National Bank v. Moore Bros. Lumber Co.

102 S.W. 2d 200 (1937); Harvey, Commissioner

Instrument involved Check
Drawer-Waddell
Drawee-Kilgore National Bank
Payee-Moore Bros. Lumber Co.
Facts
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Waddell bought lumber from the firm Moore Brothers and paid using 2 checks
approximately worth $350.
Before accepting the checks, G.J. Moore, a member of the firm, called the
Kilgore Bank (Bank) to ask if the checks were good. A representative of the
bank told him that Waddell had sufficient deposit in the bank and that the
checks would be paid. The sale was then completed.
The Moore Bros. deposited the check in Grand Saline for collection. However,
Grand Saline notified them that the checks were returned unpaid.
G.J. Moore then went to Waddell, and together they went to bank. At the bank
the following transaction occurred: Waddell instructed the bank to pay the
checks. The cashier promised Moore that the checks would be paid
when presented again. The cashier also made an unsigned notation
on the ledger of the bank: Hold for Moore Brothers $350.00
The checks were again deposited by Moore with Grand Saline. One check was
paid, but the other was not paid for because Waddell issued a stop order.
Moore Brothers sued the bank and the trial court ordered the bank to pay the
other check. The bank appealed.

Issue
WON the bank is liable for payment of the other check pursuant to agreement
made by Waddell and the cashier of the bank to the Moore Brothers - NO.
Ratio
The provisions of Sec. 132 (acceptance must be in writing and signed) apply to
a check as well as an ordinary bill of exchange. Pursuant to this provision
and Sec. 189 (bank not liable until it accepts/certifies a check), a bare oral
promise of drawee bank to pay the check does not give rise to any
liability to the holder of a check.
In this case, the mere oral promise by the bank to pay did not give rise to any
liability on part of the bank. The unsigned notation on the ledger of the
bank adds no force to the banks promise. It gave oral promise to pay the
checks, but this standing alone, is insufficient to charge the bank with liability.