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National Currency Exchange, Inc. v. Perkins

OCTOBER 5, 1964.




Appeal from the Municipal Court of Chicago; the Hon. THOMAS R. CLYDESDALE, Judge, presiding. Affirmed.


This is an action on a check drawn May 14, 1960 and dated May 16, 1960. Prior to the due date of the check, on May 14, the payee, John Stauropoulos, endorsed and cashed the check at plaintiff's currency exchange. The drawer, defendant Perkins, instructed drawee bank, Commercial National Bank of Chicago, to stop payment on the check on May 16. The plaintiff presented the check to the drawee bank for payment but it was dishonored. Plaintiff secured a default judgment against Stauropoulos, the payee therein, which judgment remains unsatisfied. Consequently, plaintiff brought the instant action against the defendant, the drawer thereof. The trial court found against defendant, and entered judgment on the instrument.

The sole question presented to this court, which is one of first, and perhaps last, impression in this State is whether one who purchases for value and in good faith a postdated check before its maturity or due date is a holder in due course and does not take the check subject to whatever defenses are available as between the original parties.

The facts are uncontroverted. The defendant, Perkins, is engaged primarily in the distribution of amusement machines. On May 14 he was contacted by a customer and restaurant owner, John Stauropoulos, who informed defendant of his intention to open a second restaurant. In return for permitting defendant to install an amusement machine in his proposed restaurant, Stauropoulos asked defendant to lend him $450.

Desiring to obtain this business, defendant issued the check, postdating it for the purpose of investigating Stauropoulos' representations and background. Upon discovering that Stauropoulos was insolvent and about to close his one restaurant, and that he had no intention of opening a second one, defendant, at the opening of business Monday morning, May 16, instructed his bank to stop payment on the check.

On May 14, Stauropoulos and another man entered plaintiff's currency exchange, and presented the check for cashing. Stauropoulos was known to the cashier, Mrs. Ross, who testified that since the amount of the check was over $250, she first cleared it with her employer, and determined that defendant's company existed. She then cashed the check. Her further testimony was that postdating would not enter into consideration in cashing a check, and that in the instant case she did not notice that the check was in fact postdated. Mrs. Ross also stated that the man accompanying Stauropoulos represented himself as being from defendant's company, and showed credentials and assured her that the check was genuine, though upon cross-examination she could not recall the type or nature of the credentials.

Plaintiff deposited the check in its account at the Exchange National Bank, but it was returned with the notation that payment had been stopped on May 16.

To sustain his position defendant argues that a postdated check is irregular within the meaning of Sec 72 of the Negotiable Instruments Law (c 98, § 72, Ill Rev Stats (1959)). That section in part reads:

72. [Who is a holder in due course] § 52. A holder in due course is a holder who has taken the instrument under the following conditions:

1. That the instrument is complete and regular upon its face.

The only authority cited by defendant to support his interpretation of Sec 72 is the case of Wilson v. Mid-West State Bank, 193 Iowa 311, 186 N.W. 891 (1922). However, in that case actual notice of fraud was clearly proven. The court's dicta that a check postdated by three weeks is irregular, unauthorized and not in due course of business and that it carries notice of defect upon its face, so that a purchaser before maturity is not a holder in due course, was not essential or necessary to support its judgment and is clearly obiter. The Negotiable Instruments Law was not cited and the decision otherwise, is unsupported by other authority and, though interesting to read, is not persuasive.

In 21 ALR 234, the annotation following the case of Wilson v. Mid-West State Bank cited by the defendant, the annotator states:

"From the foregoing review of the cases, it appears to be the uniform opinion that the mere fact that a postdated check is negotiated before the date it bears, does not prevent the transferee from becoming a bona fide holder. Insofar as the decision in the reported case (WILSON v. MID-WEST STATE BANK, ante, 229) holds to the contrary, it is unsupported by prior decisions. It seems evident, however, from the opinion as a whole, that the other facts negativing the bona fide character of the holder were instrumental in causing the court to reach the conclusion against his bona fide character.

"The Negotiable Instruments Law is not clear in the matter. In Section 12 (see 32 of chap 98, Ill Rev Stats 1959) it is provided: `The instrument is not invalid for the reason only that it is antedated or postdated, provided this is not done for an illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires the title thereto as to the date of delivery.' In the cases decided under the act the check has been held a negotiable instrument prior to the date borne thereby. Albert v. Hoffman (1909), 64 Misc. 87, 117 N Y Supp 1043; Kuflik v. Vaccaro (1918), 103 Misc 239, 170 N.Y. Supp 13; Triphonoff v. Sweeney (1913), 65 Or. 229, 130 P. 979. And so under the English Bills of Exchange Act. Royal Bank of ...

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