IMPORTANT FEDERAL AND STATE STATUTES AND DECISIONS AFFECTING THE AND LEGAL TERMS. TABLE OF CASES. ANNOTATIONS, FULL TEXT ACCEPTANCE AND CERTIFICATION DEFINITION 1a. Defined and distinguished.-A draws check on B bank and the payee has it certified. According to the Negotiable Instruments Act, certification for the holder discharges the drawer. A draws his sixty days draft on B and the payee procures B's acceptance. In this case as I understand the drawer is not discharged. As the Negotiable Instruments Aet provides that certification of a check is equivalent to an acceptance, I would like to see this seeming inconsistency explained and the difference between acceptance and certification defined. Opinion: A check is only one species of a bill of exchange, namely, "A bill of exchange drawn on a bank, payable on demand." (Negotiable Instruments Act, § 185.) The acceptance of a bill of exchange "is the signification by the drawee of his assent to the order of the drawer. The acceptance must be in writing and signed by the drawee." (Negotiable Instruments Act, § 132.) The Act provides that "except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on demand apply to a check" ($185) and it further provides that "where a check is certified by the bank on which it is drawn the certification is equivalent to an acceptance" (§ 187) and further that "where the holder of a check procures it to be accepted or certified the drawer and all indorsers are discharged from liability thereon" (§ 188). But it does not follow because there is a special provision, applicable only to checks which are certified for the holder and not to bills of exchange generally, diseharging drawer and prior indorsers, that the declaration that certification of a check is equivalent to acceptance of a bill of exchange makes the consequence of certification for the holder the same in both cases so far as the liability of the drawer is concerned. In case of check certification it is expressly provided that the drawer is discharged, but this provision is applicable to check certification only and there is no similar provision applicable to acceptance of bills of exchange generally. It is obvious from the provisions of the Act itself, which contain rules governing presentment for acceptance of bills of exchange and recognize the continuing liability of the drawer of an accepted bill by other provisions relating to the preservation of such liability at maturity that the effect of acceptance of a bill for the holder is different from that of acceptance of a check for the holder. The provision that certification is "equivalent to an acceptance" must be taken as relating to the obligation of the bank but the acceptance of a bill of exchange other than a check is clearly not the same thing, or equivalent to certification of a check in its effect on the liabilities of the drawer and indorsers. Paton's Digest.-65. ance Distinguishing between acceptance and certification, the drawer of a bill of exchange which requires acceptengages that on due presentment it will be accepted while the drawer of a check makes no such engagement. The term "acceptance" as originally understood implied that the drawer requests the drawee to pay the amount at a future date and this request the drawee "accepts." In this meaning the term would have no application to checks which are not payable in the future but only on demand. Where, instead of paying the check, the bank at the request or with the consent of the holder or at the request of the drawer certified it to be "good," this was originally and is still termed "certification." The provision of the Negotiable Instruments Act that "where a check is certified by the bank on which it is drawn the certification is equivalent to an acceptance" is doubtless derived from the language of the Supreme Court of the United States in Merchants Bank v. State Bank, 10 Wall. (1870) 604, 19 L. ed. 1008, which in sustaining the validity of a certified check used the following language: "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. "It cannot be doubted that the certifying bank intended these consequences, and it is liable accordingly. To hold otherwise would render these important securities only a snare and delusion. "A bank ineurs no greater risk in certifying a check than in giving a certificate of deposit. In well regulated banks the practice is at once to charge the check to the account of the drawer, to credit it in 'certified check account,' and when the check is paid, to debit that account with the amount. Nothing can be simpler or safer than this process. "The practice of certifying checks has grown out of the business needs of the country. They enable the holder to keep or convey the amount specified with 1025 |