Urwiller v.

Platte Valley State Bank

136

164 Neb. 630, N.W. 2d 88,

Digested by Zoe Velasco Law 108 NIL
Topic: Constructive Acceptance
McCord issued a check, drawn on Platte, to Urwiller, as payment for livestock and merchandise.
The check was then deposited to Urwillers bank, Ravenna. Ravennas correspondent sent the
check to Platte, and Platte marked it for return, due to insufficient deposit. Only eight days later
was Urwiller advised that payment of the check had been refused, and a total of ten days later
did the check
return to Urwiller. Urwiller thus argues that because Platte retained the check, it is bound to
pay.
The Court held that the NIL provision on constructive acceptance (see below) applies only to
instruments that have been presented for acceptance, and not those presented for payment, as
was the case here. 2 tractors were offered for sale to Petitioner by Respondents assignor,
Industrial Products Marketing.. A deed of sale with chattel mortgage with a PM were made by
the Petitioner. Evetually, the tractors broke down so petitioner refused to pay. DOCTRINE: The
respondent, a financing company which actively participated in the sale on installment of the
subject two Allis Crawler tractors, cannot be regarded as a holder in due course of said note
because it had actual knowledge about the condition upon the warranty of the tractors..
FACTS
Urwiller engages in buying and selling livestock, principally, hogs. Ira McCord was a
licensed hog buyer and a regular customer. The instrument at issue is a check that
McCord issued to Urwiller.
Calendar of events
Tue, 8 Dec: McCord purchased from Urwiller bedding, feed, and 50 heads of hogs (still
attached to the hogs, I reckon). As payment therefor, McCord issued a check to
Urwiller in the amount of $2,491.11, to be drawn on his account from Platte Valley
State Bank. The hogs, their heads, and the rest of the purchased goods were shipped to
San Francisco, CA that same evening.
Wed, 9 Dec: Mrs. Urwiller went to Ravenna bank, with which her husband had an
account. She then deposited McCords check with other checks in the regular course
of business, giving no special instruction regarding the former. Consequently, the bank
forwarded McCords check for collection through regular channels, i.e. to its
correspondent bank, Federal Reserve Bank. Federal then sent it to Platte for
payment.
Sat, 12 Dec: Saturday was a regular business day for Platte. During their business hours,
they received the check, proofed it, and posted it for action on the next business day,
Monday.
Mon, 14 Dec: Platte decided not to pay the check, but mark it for return, since
McCord did not have sufficient funds on deposit. However, on this date, bank
examiners came and assumed control of bank records, including cash items. These were
not returned to the bank officers until they had all been checked and approved.

Wed, 16 Dec: Due to the seizure of Plattes records, actual return was sent to Federal
only on this date.
Thu, 17 Dec. Ravenna advised Urwiller that payment of the check had been refused.
Sat, 19 Dec. The check was returned to Urwiller. Urwiller here contends that under the
provisions of the Negotiable Instruments Law, the failure of the drawee bank to either (a)
remit the proceeds of a check, or (b) return a check to the holder within 24 hours
after receipt for payment constitutes acceptance of said check, such that the drawee bank
is bound to pay the check.

ISSUES & HOLDING

WON Platte is bound to pay the check by virtue of its retention thereof? NO.
RATIO
The NIL provides:
Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within
twenty-four hours after such delivery or within such other period as the holder may allow, to
return the bill accepted or non-accepted to the holder he will be deemed to have accepted the
same.
This section applies when a bill has been delivered for acceptance, and not for payment, as
was the case here. The check was presented to Platte for payment, and not for acceptance
merely.
The Court here recognized that there are divided opinions regarding the applicability of the rule.
In First State Bank of Talihina v. Black Bros. Co., the Court held that when, as in this case, a
check is presented to a drawee bank, the action contemplated [] is that of payment, such that
the term acceptance is contradistinguishable.
Meanwhile, Wisner v. First National Bank of Gallitzin discusses the opposite view. However, the
Court is unwilling to construe the statute to impose a penalty upon the banks when its language
does not clearly so provide. Hence, since what occurred in this case was presentment for
payment and not acceptance, the trial court was correct to so dismiss the petition.
DISPOSITIVE
Petition is DISMISSED.