#### Causey v. Eiland.

Opinion delivered January 9, 1928.

*931 Ira J Mack and Boyce & Slayton, for appellant.

D. T. Cotton, for appellee.

Hart, O. J.,

(after stating the facts). The decree of the chancellor was correct. The rule governing the liability of a bank on a certified check has been clearly stated by the Supreme Court of Alabama as follows:

> “A certified check has a distinctive character as a species of commercial paper, the certification constituting a new contract between the holder and the certifying bank; the funds of the drawer are, in legal contemplation, withdrawn from his credit and appropriated to the payment of the check, and the bank becomes the debtor of the holder as for money paid and received.” National Bank v. Miller, 77 Ala. 168, 54 Am. Rep. 50.

*932This view of the effect of a cashier’s check has been adopted by this court in Merchants’ & Planters’ Bank of Camden v. New First National Bank of Columbus, Ohio, 116 Ark. 1, 170 S. W. 852, Ann. Cas. 1917A 944. In that case the court quoted from an opinion of the Supreme Court of the United States in Merchants’ Bank v. State Bank, 10 Wall. (U. S.) 604, 19 L. ed. 1008, the following.

> “By the law merchant of this country the certificate of the bank that a check is good is equivalent to acceptance. It implies that the check is drawn upon sufficient funds in the hands of the drawee, that they have been set apart for its satisfaction, and that they shall be so applied whenever the check is presented for payment. It is an undertaking that the check is good then and shall continue good, and this agreement is as binding on the bank as its notes of circulation, a certificate of deposit payable to the order of the depositor, or any other obligation it can assume. The object of certifying a check, as regards both parties, is to enable the holder to use it as money. The transferee takes it with the same readiness and sense of security that he would take the notes of the bank. It is available also to him for all the purposes of money. Thus it continues to perform its important functions until, in the course of business, it goes back to the bank for redemption and is extinguished by payment. ’ ’

So it will be seen that when the Bank of Swifton issued the certified check to Nichols there was an absolute liability on its part to pay the check when received. This brings us to the question of the effect of the indorsement of the certified check by Nichols to the American Exchange Bank of Leslie. This indorsement was made by Nichols on March 1, 1926. This was before the issue of the writs of garnishment in this case. At that time it may be stated that the facts would have justified a finding that Nichols acted, fraudulently in making the sale of his stock of drugs to G-. A. Causey and his associates. The record, however, does not show that the American Exchange Bank of Leslie had any knowledge *933of that fact. According to the evidence in the case, when Nichols indorsed the cashier’s check of the Bank of Swifton for $3,500, he directed the cashier of the American Exchange Bank of Leslie to credit $500 of this amount to his personal account and to credit a note which he owed William Ashley with the sum of $3,000. This was done. The account of Ashley was on that day credited with the sum of $3,000 and the account of Nichols was credited with $500. These facts bring the case squarely within the principles of law announced in Merchants’ & Planters’ Bank of Camden v. New First National Bank of Columbus, Ohio, 116 Ark. 1, 170 S. W. 852, Ann. Cas. 1917A, 944. In that case it was held that a bank which has received a certified check for deposit and has credited the deposit with the amount of it, was a bona fide holder, and might enforce payment of it as against the drawee bank.

The record does not show that the American Exchange Bank of Leslie received the certified check for collection. Nichols indorsed the check in blank to the bank. The bank received such certified check, and credited the account of Nichols with $500 of the amount of the certified check. The remaining $3,000 was, under the direction of the bank, credited on a note of $4,500 owed by Nichols to William Ashley. At the time this was done the American Exchange Bank did not have notice of any facts that would lead it to believe that Nichols had acted fraudulently in the sale of his stock of drugs and had thereby secured money with which to purchase the certified check from the Bank of Swifton. The American Exchange Bank of Leslie became the absolute owner of the -certified check when Nichols indorsed it in blank to the bank, and the -bank credited Nichols with $500 of this amount and allowed $3,000 of it to be used as a credit upon a note due by Nichols to Ashley, and no subsequent garnishment of the funds could .affect the rights of the bank. The -certified check became its absolute property when the transaction was closed..

*934As we have already seen, a cashier’s check is of an' entirely different nature to an ordinary check. It is a. bill of exchange drawn by a bank upon itself, and is accepted by the act of issuance. Hence there is no right of countermand, and the check would pass in the same manner as a bank bill, and, as above stated, become the absolute property of the bank at Leslie when it was indorsed by Nichols and the amount of it credited to his account and on a note owed by him to Ashley. This made the Bank at Leslie absolutely liable to Ashley for the' $3,000.

It follows that the.decree of the chancery court must be affirmed.