Roth v. Guardian Thrift & Loan

WOOD (Fred B.), J.

From Leonard’s, Inc., plaintiff received, duly endorsed, a check for $4,000, drawn by Guardian Thrift and Loan, a corporation, in favor of Leonard’s, Inc., as payee.

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Upon presentation to the drawee bank it was discovered that payment had been stopped. Plaintiff then brought this action for $4,000, costs of suit and general relief against Guardian Thrift and Loan, Leonard’s, Inc., Robert C. Leonard, president of Leonard’s, Inc., and Leon Lyon, who had personally guaranteed Leonard’s, Inc.’s endorsement.

After the filing of an answer by Leon Lyon and Guardian Thrift and Loan plaintiff moved for and was granted a summary judgment against them. The question upon this appeal is whether or not there is any triable issue of fact. Our examination of the record convinces us that there is, and that the judgment should be reversed.

The answer alleges that Leonard’s obtained the check on the basis of forged documents, a defense which would be good against plaintiff unless she is a holder in due course, and presents the issue whether or not she took the check under such circumstances as would make her a holder in due course. (See Civ. Code, § 3133.) This issue turns upon the question whether or not plaintiff upon receiving this check

expressly agreed to accept it in payment

of a debt then owed her by the payee-endorser.

[322]

The applicable rule of law we find well expressed in

Bramante

v.

Krug,

143 Cal.App.2d 771 (hearing by Supreme Court denied), at 773 [300 P.2d 71]:

“ ‘The rule appears to be established by authority that the taking of a note, either of the debtor or of a third person, for a prior existing debt is no payment,

unless it be expressly agreed to take the note as

payment; and that upon failure to pay such note the creditor may ignore it and sue upon the original debt.