Opinion
48244.
ARGUED JUNE 1, 1973.
DECIDED JUNE 27, 1973. REHEARING DENIED JULY 18, 1973.
Complaint. Bartow Superior Court. Before Judge Emeritus Morgan.
Warren Akin, for appellants.
Gettle Fraser, Jerry L. Berthold, for appellee.
1. The grant of the summary judgment for the plaintiff was error.
2. The issue of the failure of the trial court to join as parties the bank and the United States, is moot.
3. Consolidation of these cases with one pending in a U.S. District Court, can be accomplished at the trial court level by the consent of all parties and the United States District Court, and not by this appellate court.
ARGUED JUNE 1, 1973 — DECIDED JUNE 27, 1973 — REHEARING DENIED JULY 18, 1973 — CERT. APPLIED FOR.
Three suits were filed by Lamar B. Hill (plaintiff) against Frederic A. Harris, Marshall Evans and James F. South (defendants) in the Superior Court of Bartow County, Georgia. The facts in all three cases are identical. They were consolidated by the trial judge and will be treated as one case by this court.
Each of the defendants was elected as a director in the First National Bank of Cartersville (First National, or the bank). At the time of their election, none of the defendants owned any stock in First National and thus could not qualify as directors. Code Ann. § 13-2002. The plaintiff conveyed and transferred to each of the defendants 100 shares of stock in First National, thus making each defendant eligible to become a director. At the time of the transfer, the stock had not been paid for. On May 18, 1972, the defendants were written a letter by Gettle and Fraser advising that they were the plaintiff's attorneys and that the plaintiff would sell the defendants the stock previously transferred and conveyed for $4,500.
On June 6, 1972, the United States of America (United States) filed notice of levy against the plaintiff in the total amount of $3,626,925.38. The foregoing was a tax lien claimed by the United States and was duly recorded in the general execution docket in the office of the Clerk of the Superior Court of Bartow County on June 7, 1972. Also on June 6, 1972, the United States served notice of levy on the bank which stated in part, "you are further notified that all property, rights to property, moneys, credits, and bank deposits now in your possession and belonging to this taxpayer (or with respect to which you are obligated) and all sums of money or other obligations owing from you to this taxpayer or on which there is a lien provided under Chapter 64 Internal Revenue Code of 1964, are hereby levied upon and seized for satisfaction of the aforesaid tax, together with all additions provided by law, and demand is hereby made upon you for the amount necessary to satisfy the liability set forth herein, or for such lesser sum as you may be indebted to him to be applied as a payment on his tax liability."
On June 7, 1972, each defendant directed the bank by letter to draw $4,500 from their respective accounts and to issue a cashier's check in that amount payable to the plaintiff and to deliver it to the offices of Gettle and Fraser, the plaintiff's attorneys.
On receipt of these written instructions, the bank withdrew $4,500 from the account of each of the defendants and issued three cashier's checks for $4,500 payable to the plaintiff and then, rather than delivering the checks as instructed, the bank maintained physical control over the checks.
On June 22, 1973, the bank filed suit in the United States District Court for the Northern District of Georgia, Rome Division, against the plaintiff (Hill), setting forth the facts heretofore stated with reference to the bank's holding the aforesaid cashier's checks payable to the plaintiff and setting forth its claim against the plaintiff.
On June 23, 1973, the plaintiff filed the suits which are the subject-matter of this appeal, against the defendants. The defendants filed their respective answers and motions to dismiss the complaint. The defendants also made a motion to make the bank and the United States parties to the suits so that all the various claims and rights could be adjudicated in one action, since the subject-matter of the plaintiff's suits ($4,500 allegedly owed by each defendant to the plaintiff for stock in the bank) was claimed by the bank and the United States as well as the plaintiff.
The plaintiff amended his complaints, alleging a conspiracy between the defendants and the bank and added an additional count in which he sought punitive damages. This latter count was subsequently stricken and has no bearing on this appeal.
In their answers to the plaintiff's complaint, each defendant admitted the purchase of 100 shares of First National stock from Hill for $4,500, but contended that the stock had been paid for by the issuance of the $4,500 cashier's checks payable to the plaintiff by the bank.
The trial judge overruled the defendants' motions to make First National and the United States parties to the actions, and sustained the plaintiff's motions for summary judgment against each defendant for the $4,500 sued for. It is from these orders and judgments that this appeal is taken.
1. What was the effect of the bank's withdrawing $4,500 from each defendant's account and issuing cashier's checks in such amounts to the plaintiff? The answer to this question is found in certain basic definitions as applied to the facts in the case sub judice. In Wright v. Trust Co. of Ga., 108 Ga. App. 783, 787 ( 134 S.E.2d 457), this court held as follows: "We make no distinction between a cashier's and a treasurer's check, and are convinced that those differences which exist between a certified check and a cashier's check are not material to this discussion. The same rights accrue as between the bank and the payee. Lummus Cotton Gin Co. v. Walker, 195 Ala. 552 (70 S 754). `A certified check has a distinctive character as a species of commercial paper and constitutes 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 had and received.' McIntire v. Raskin, 173 Ga. 746 (3c) ( 161 S.E. 363). The certification of a check by the bank at the instance of the payee amounts to a payment of the check as to all parties except the payee and the bank. Thompson v. Thompson, 203 Ga. 128 (2a) ( 45 S.E.2d 632); Mitchell v. Asbury, 94 Ga. App. 465 ( 95 S.E.2d 341). It is frequently likened to a bill of exchange accepted in advance. A cashier's check is the primary obligation of the bank. Nissenbaum v. State, 38 Ga. App. 253 ( 143 S.E. 776); Bank of Statham v. National Bank of Athens, 143 Ga. 293 ( 84 S.E. 966). `A cashier's check is a bill of exchange drawn by a bank upon itself.'"
The character of the cashier's checks here requires the application of a different rule than that stated in A. M. Kidder Co. v. Clement A. Evans Co., 117 Ga. App. 346 ( 160 S.E.2d 869) and Rossville Fed. S. L. Assn. v. Chase Manhattan Bank, 223 Ga. 188 ( 154 S.E.2d 243), relied on by the plaintiff. In both cases, the checks were ordinary checks drawn on an account in which there were insufficient funds. It is axiomatic that such checks do not constitute payment until they are presented to the maker's bank and honored. Rossville Fed. S. L. Assn., supra, Hn. 3.
Certain basic definitions are critical to the resolution of this case. "`Issue' means the first delivery of an instrument to a holder or a remitter." Code Ann. § 109A-3-102 (1) (a) (Ga. L. 1962, pp. 156, 237). "`Instrument' means a negotiable instrument." Code Ann. § 109A-3-102 (1) (e). A check is a negotiable instrument. Code Ann. § 109A-3-104 (2) (b) (Ga. L. 1962, pp. 156, 239). A cashier's check is a negotiable instrument. 10 CJS 410, Bills and Notes, § 5, n. 60. "`Holder' means a person who is in possession of a document of title or an instrument or an investment security drawn, issued or indorsed to him or to his order or to bearer or in blank." (Emphasis supplied.) Code Ann. § 109A-1-201 (20) (Ga. L. 1962, pp. 156, 161). "Remitter" means one who remits. Webster's New International Dictionary (2d Ed.), unabridged. "`Remitting bank' means any payor or intermediary bank remitting for an item." Code Ann. § 109A-4-105 (f) (Ga. L. 1962, pp. 156, 286). "`Item' means any instrument for the payment of money even though it is not negotiable but does not include money." Code Ann. § 109A-4-104 (1 g) (Ga. L. 1962, pp. 156, 284).
"A cashier's check is a check of the bank's cashier on his or another bank. It is in effect a bill of exchange drawn by a bank on itself, and accepted in advance by the act of its issuance; and in substance is an order or direction to the bank to pay the payee from its funds, a written promise of the issuing bank to pay on demand. It is not a receipt, but is a negotiable instrument." (Emphasis supplied.) 10 CJS 409, 410, Bills and Notes, § 5 a (1).
A check is (among other things) a chose in action. 10 CJS 409, Bills and Notes, § 5 a (1), n. 51. Thus a cashier's check is a chose in action. A chose in action is personalty. Code § 85-1801.
Ordinary choses in action are subject to tax liens. Worley v. United States, 340 F.2d 500 (CA 9, 1965). The United States statutory lien for taxes can be asserted against intangible property, such as a debt. United States v. Eiland, 223 F.2d 118 (CA 4, 1955). Under 26 USCA § 6321, providing that the United States shall have a lien on any property of a taxpayer who is liable to pay any tax and who neglects or refuses to pay after demand, "property" is used in a board sense, designed to include all concepts of such term. Golden v. State, 1955, 285 P.2d 49, 133 CA.2d 640. Summer v. Allison, 127 Ga. App. 217 (1a) ( 193 S.E.2d 177).
The matter now reduces itself to one of simple contract. Under the stated facts, there can be no serious disagreement that there was a valid verbal contract between the plaintiff and each defendant. The plaintiff had performed his part of the contracts by the conveyance and delivery of 100 shares of First National stock to each defendant. Payment by each defendant was all that remained for complete performance. Each defendant instructed the bank to withdraw the necessary funds from his account, issue a cashier's check to the plaintiff, and deliver the same to the plaintiff's attorneys. Once the funds were withdrawn from the defendants' respective accounts, the defendants had no control or dominion over them. Once the cashier's checks were issued, the funds represented thereon became the property of the plaintiff and as such was subject to levy by the United States. The bank was served with notice of the tax levy by the United States on June 6, 1972, and was absolutely bound to honor the tax lien on the plaintiff's property (the three cashier's checks) or become liable to the United States for the sums represented thereon. The lien of the federal government for income taxes attached to all property of the plaintiff in the possession of First National, and thereafter the property (cashier's checks) had, in a sense, two owners: the plaintiff and, to the extent of the lien, the United States. United States v. Cox, 119 F. Supp. 147 (DC ND Ga., 1953). The situation here is much the same as if the United States had levied the tax lien on each of the defendants after the plaintiff conveyed the bank stock to the defendants, but prior to the defendants' payment therefor. Once the levy was made and the money to be used for payment of the stock was seized by the United States as a result of the levy, the plaintiff could not successfully contend that he had not been paid. Thus, once the moneys were withdrawn from the defendants' accounts and the cashier's checks were issued in the plaintiff's name, they became his property. The defendants could not recall the cashier's checks or stop payment on them. Insofar as the defendants were concerned, the issuance of the cashier's checks constituted payment of their debt to the plaintiff and completed performance of the contract. The plaintiff is receiving the benefit of the sale of his First National stock to the defendants through the application of the sale proceeds toward payment of his tax obligation to the United States.
The trial court erroneously granted the plaintiff's motion for summary judgment.
2. The defendants enumerate as error the failure of the trial court to join as parties the First National Bank of Cartersville and the United States of America. We need not pass on this enumeration, as the question is rendered moot by our holding in Division 1 of this opinion. However, it is noted in passing that 28 USCA § 2410 (a) (5) would seem to authorize such joinder as far as the United States is concerned. A like observation is made with regard to Code Ann. § 81A-119 (a) (Ga. L. 1966, pp. 609, 630; 1972, pp. 689, 694), as applied to First National.
3. Contemporaneously with the filing of the notice of appeal, the defendants moved this court to remand this case to the trial court with direction to make the First National Bank of Cartersville and the United States of America parties and to consolidate these cases with other litigation then pending in the Superior Court of Bartow County, but which has subsequently been removed to the United States District Court, Northern District of Georgia, Rome Division.
In Division 1 of this opinion, we have attempted to clearly express ourselves regarding the rights of the parties in this case. In Division 2, we have noted the mootness of the joinder issue in this case as far as First National and the United States are concerned. The only provision regarding the consolidation of civil cases that presently exists in our state, is found in Code Ann. § 81A-142 (a) (Ga. L. 1966, pp. 609, 654). If, on the appearance of these cases in the trial court, the parties to all cases consent to the cases being consolidated, and the United States District Court consents to the consolidation and removal, such can be readily accomplished. It is patently beyond the power and jurisdiction of this court to do so. This is particularly true in this instance, since the other cases have been removed to the United States courts and, thus, are not pending in the courts of this state.
Judgment reversed. Eberhardt, P. J., and Pannell, J., concur.