176 Mass. 300 | Mass. | 1900
This case comes up upon a report of the Justice of the Superior Court who tried the case without a jury. The report sets forth six rulings requested by the defendant, all of which were denied by the court, and two rulings made by the court. The court found for the plaintiff, and the report concludes as follows : “ If, as matter of law on the foregoing facts, the plaintiff is not entitled to recover, judgment is to be entered for the defendant; otherwise judgment is to be entered upon the above finding for the plaintiff.”
We think that there may have been a mistake in the terms of the report, stating what questions of law were reserved for the consideration of this court. As the report is drawn, the only question which is open for consideration here is whether, as a matter of law, on the facts stated in the report, the de
The action was brought to recover the amount of a promissory note for $5,000 made by the Boston Woven Hose and Rubber Company, payable to its own order, indorsed by it, by the Lawrence National Bank, and by the defendant bank, and payable at the plaintiff bank on June 16, 1898. It appears from the testimony set forth in the report that the note was included in the account of the defendant bank against the plaintiff bank in the clearing-house on that day, and the amount of it was charged to the Boston Woven Hose and Rubber Company on the books of the plaintiff bank in red ink, as all clearing-, house notes are charged, at about eleven o’clock; at the same time the defendant bank was credited with this amount among other items in its clearing-house account. About twelve o’clock the paying teller of the plaintiff bank called up by telephone the treasurer of the Boston Woven Hose and Rubber Company, the maker of the note, and told him that the note was in the bank, to which the treasurer said, “1 will attend to that later.” At ten minutes before one o’clock the messenger of the plaintiff bank, at the request of the paying teller of that bank, called up the defendant bank upon the telephone and asked for “time ” on the note of the Boston Woven Hose Company. He was asked if the note was likely to be paid, answered “Very likely,” and received the reply “ All right.”, At a few minutes before two o’clock the paying teller of the plaintiff bank called to the attention of the cashier of that bank the fact that this note had not been paid ; the cashier thereupon went to the telephone and tried unsuccessfully to speak with some officer of the Boston Woven Hose and Rubber Company who knew about the bank account; he was told that he would have to speak
After this conversation the cashier directed the bookkeeper to cross out the charge of $5,000 against the Boston Woven Hose Company and the credit in favor of the defendant bank of the same amount, and sent the messenger of the bank with the note to the defendant bank to tender it back and demand the $5,000 credited by reason of it in the clearing-house. This was refused, and the present action was brought.
By the rules of the clearing-house, errors in any item in the clearing-house account, or any claims arising from a payment in that account not being good, were to be adjusted directly between the parties to that account; and in case the item which was not good consisted of a check, it was to be returned not later than one o’clock. There was no rule of the clearing-house as to the time when items other than checks should be returned, which were included in the clearing-house settlement, and turned out not to be good. There was evidence that there was a custom among banks, which cleared notes through the clearinghouse, fixing the time, within which the conditional payment of a note included in a clearing-house settlement, could be avoided
We understand this testimony to mean that the custom of banks, which are members of the clearing-house association, to clear notes held by them through the clearing-house, in place of presenting them for payment at the bank where they are payable, is not universal; but that the custom among those members of the association, which choose to clear their notes through the clearing-house in place of presenting them is universal, and that the custom is that if the notes are not returned before the time of closing of the bank, in case of the plaintiff two o’clock, the conditional payment becomes absolute.
With the single exception of the testimony of the cashier of the plaintiff bank, all the witnesses concurred in their testimony that under no circumstances did the time for returning a note continue beyond two o’clock or the business hours of the bank at which the note was payable. Some witnesses testified that the time was two o’clock, without reference to the business hours either of the bank at which the note was payable or the bank which held the note; others testified that it was the close of business hours of the paying bank; others testified that it was one o’clock, unless “ time ” was asked for, and if “ time ” was asked for, it was two o’clock.
In the case at bar, there was on the testimony no question but that the business hours of the plaintiff bank closed at two
There was some testimony by the cashier of the plaintiff bank which was in conflict with that of the other witnesses. I refer to his testimony that if “ time ” was asked for and granted on a note which had gone through the clearing-house, the time for the return of that note was fixed at the time when the books of the paying bank were actually closed and the safe locked; that there was no regular time for the return of the note in such a case; and that it was the duty of the paying bank to return the note when it was found that it was not good. All the other witnesses testified that when “ time ” was granted, it meant until two o’clock; some of them testified that “ time ” was asked for because, unless “ time ” was granted, the time for the return of the note was one o’clock; and others testified that there was so much doubt as to whether, m the absence of the granting of “ time,” the time was one or two o’clock, that it was usual to get time, if the note was not returned by one o’clock.
The presiding judge made the following findings and rulings :
“ The association has not in writing established any rule regulating the return of 'other items,’ including promissory notes, or limiting the time in which they may be returned. I find that it has not otherwise established such a rule. I find also that such a rule has not been established by a universal, uniform, and general custom, and rule that a custom, if one exists, to return such notes before the end of the business hours of the receiving bank would be bad, as being in derogation of law and of the rights of the parties, to whom the receiving bank would owe certain duties by reason of having the notes at its place of business for payment on the day when they became due.”
The reason given in the report by the presiding justice for these rulings was: “ The bank receiving the note for collection owes to the person depositing the note with it the duty of holding it and having it ready for delivery upon pay-' ment during the entire business day, and to the maker of the
We are of opinion that these rulings were wrong.
It would be entirely proper for banks, which are members of a clearing-house association, to agree that a promissory note, included in the clearing-house settlement, and in that way conditionally paid without inspection, shall be returned as soon as it is found out that it is not a good item in that account, and to limit the time within which it can be returned, and to provide that if it is not returned within the time so fixed by the clearing-house, the conditional payment made without inspection shall be avoided and the parties left in the same position that they would have been in had the note not gone through the clearing-house and no conditional payment had been made. A promissory note may not be a good item in the clearinghouse settlement, either because the account to the credit of the maker at the bank, where it is payable, is not large enough to pay it, or because the bank has no right to charge notes made by the depositor who was the maker, of the note in question to his account without a check being drawn therefor or specific instructions being given to that effect, as was the
If the members of a clearing-house association should provide in their rules that such notes must be returned by twelve o’clock, for example, and, if not so returned, the conditional payment would become absolute, the bank holding the note for collection would have two hours in which to present the note for payment. Such an article in the rules of the association of a clearing-house would not violate the rights of the holders of the note, or the duties which either of the banks owed to him. A bank holding a note for collection for account of one of its depositors does not violate the duty it owes to the depositor if (1) it presents the note for payment at any time during business hours, and, on payment being refused, protests it, as it may do for non-payment; or if (2) it leaves the note for collection at the bank at which it is payable without making a demand for payment. The duty imposed by law upon the receiving bank does not require that either of these acts should be done at any particular moment during the banking hours of the day on which the note is payable. Moreover, the rules of the clearing-house might provide that the paying bank, on discovering that the note was not a good item in the account, should be entitled to repayment of the amount thereof, on giving written notice to the bank in whose clearing-house account the note was included, and should then beep the note as a note left for collection without presentment for payment.
The ruling of the presiding justice is evidently based upon the decision in National Exchange Bank v. National Bank of North America, 132 Mass. 147. In that case the bank at which the promissory note was payable had no right to pay the note in question without a check from the maker of it; there was no request for time made by the bank at which the note was payable; the note was held until ten minutes before two o’clock, at which hour it was sent-to the bank which held it for collection, after the bank at which it was payable had ascertained from the maker that the note would not be paid. The statement of the findings of the presiding justice before whom that case was tried, without a jury, is as follows: “ The presiding justice has found specially, 6 that a large number of the banks are in the habit of sending
The conclusion reached in that case on the facts there found by the presiding justice was undoubtedly correct, and the statement of the way in which the conditional payment of a note, made by its being included in a clearing-house settlement, was to be treated was also correct on the facts found. But it cannot fairly be taken to be a statement of the way in which a note included in a clearing-house settlement is to be treated in a case where the evidence as to the effect of including a promissory note in a clearing-house settlement is different from the evidence in that case.
In the case at bar the evidence on that point was different;
In the case at bar there was evidence, apart from the evidence of custom, that it was impliedly agreed between the two banks in question that the note was to be treated as checks were treated, namely, as paid, if not returned, and that the effect of the granting of “ time ” was to fix the time, at which the conditional payment became absolute, at two o’clock. The fact that the note was sent through the clearing-house, followed by the fact that the plaintiff asked for “ time,” and that at three o’clock the cashier of the plaintiff bank told the assistant treasurer of the corporation which was the maker of the note that the note had been paid, was evidence on which a jury could have made a finding to that effect. In addition to this, there was evidence that there was a universal custom that if a bank, a member of the clearing-house, included promissory notes in the clearing-house settlement, they were to be treated as paid if not returned at some hour, either one or two o’clock,if “ time” was not asked; and if “time” was asked and granted, not later than two. On this point there was conflicting testimony; .but though there was a conflict, there was evidence that when “ time ” is given the conditional payment becomes absolute at two o’clock.
Under the terms of the report the correctness of these rulings is not before us; but inasmuch as these rulings are set forth at length in the report, we think it may have been the intention of the presiding justice to leave them open for argument. Under these circumstances, we think that the report should be discharged that the defendant may have an opportunity for presenting to the Superior Court a motion for an amendment of the report, or for such other action in the premises as it may be advised.
So ordered.
This case was tried in connection with another action by the same plaintiff against the Merchants’ National Bank involving a similar transaction with reference to a note made by the Western Rubber Company.