112 N.Y.S. 973 | N.Y. App. Div. | 1908
Lead Opinion
Plaintiff and defendant are members of the New York Clearing House Association, .instituted to facilitate banking transactions in the city of New York. Its scheme of operation is clearly described in Mt. Morris Bank, v. Twenty-third Ward Bank (172 N. Y. 244), as follows: “ That association appears by its constitution to have adopted a very simple manner of settling the drafts, checks and other claims of its various members against the others. Each member, every morning, delivers to the clearing house the cheeks, drafts and notes it holds against the other banks and receives credit therefor, while it is charged with all checks, drafts or notes payable by it and deposited by other banks. If its deposits exceed the drafts . and checks deposited against it, it receives from the clearing house during the day the amount of the excess in money, while if the reverse proves the case, it is obliged to pay the balance against it to the clearing house. In this daily settlement of the clearing house no account is taken of the fact that the cheeks may be bad. All checks, drafts or notes on any bank are charged against it, though the accounts of the drawers of those checks or the makers of the notes may not be good for their amounts, and even though the checks be forgeries.” By section 14 of the constitution it is pro
Rule 1 of the rules of the Clearing House Association provides as follows: “Return of checks, drafts, etc., for informality, not good, missentj guarantee of endorsement or for any other cause, should be made before three o’clock of the same day.”
On December 5, 1907, one Alfred Epstein, who then had a deposit account with the plaintiff bank, drew a check on the plaim tiff to the order of the Astor Company for $2,000. The said check was duly indorsed by the said Astor Company and deposited in the defendant hank. On the morning of December 6, 1907, the said check was included among the checks presented by the defendant to the Clearing House for payment, and the amount thereof was charged against the plaintiff and paid by it. After such payment and. return of said check to the plaintiff, and on the same day between half-past two and twenty-five minutes of three in the afternoon, the plaintiff sent the said check by its messenger, -who testified that he went at once as direct as he possibly could, to the bank of the defendant at Broadway and Thirty-ninth street and presented the check to the paying teller and demanded the money for it. This presentation and demand was made from four to ten minutes after three o’clock in the afternoon. The defendant refused to return the sum, upon the ground that the demand having been made after three o’clock was too late. There was no evidence that • any change in the situation to defendant’s detriment had occurred. Thereupon this action was brought, arid a jury having been waived,
It appears that the drawer of the check, Epstein, for some days prior to the date thereof, had to his credit in the plaintiff bank only the sum of $143.73, which deposit had not been increased up to the time of the trial of the action. The question involved is the meaning,. force and effect of the provisions of the constitution and rules of the Clearing House which bound both banks as members thereof.
No case is this State has been cited to us which bears directly upon the point at issue. The Supreme Judicial Court of Massachusetts has, however, construed somewhat similar provisions of the • constitution and rules of the Boston Clearing House. In Merchants’ National Bank v. National Eagle Bank (101 Mass. 281) the rule under consideration was the following : “ Whenever checks are sent through the Clearing House which are not good, they shall be returned, by the bank receiving the same, to the banks from which they were received, as soon as it shall be found that said checks are not good; and in no case shall they be retained after one o’clock.” The language of the Hew York rule that the “return of checks * * * should be made before three o’clock .of the same day” does not seem to be so imperative as the Boston rule, “ and in no case shall they le retained after one o’clock.”
It appears in the above case that at a quarter before one o’clock the teller handed four checks to the messenger with directions to ■ return them to the banks, with whose numbers they were marked, as not good, and to collect the amounts of them from those banks. The messenger made a' mistake as to the number on one of the checks, went to the wrong bank with it and was obliged to return to the plaintiffs’ banking house in order to ascertain the true number. In consequence of this mistake, it was from five to seven minutes after one o’clock when he presented the check in question at the defendant’s banking house, where payment was refused on the ground that it had not been presented before one o’clock. The court said: “ Under this arrangement, the payment required of the Clearing House to. a creditor bank, upon a check presented, must be regarded as only provisional until the hour of one o’clock, to become complete only in case the check is not returned at that time. And
The court also considered the force of that part of the rule which reads: “ In no case shall they be retained after one o’clock,” and. said that, if necessary to save the forfeiture, it would .hold that the delivery to the messenger before one o'clock, with sufficient time to reach the bank before that hour, would be enough to^satisfy the requirement that the check should not be retained after one o’clock.
This case was cited with approval in Manufacturers’ National Bank v. Thompson (129 Mass. 438); Exchange Bank v. Bank of North America (132 id. 147). And in Merchants’ National Bank v. National Bank of the Commonwealth (139 Mass. 513) the court
It follows, therefore, that the judgment appealed from should be affirmed, with costs and disbursements to the respondent.
Patterson, P. J., Laughlin and Scott,. JJ., concurred; Ingraham, J, dissented.
Dissenting Opinion
It is not disputed but that if this check had been presented to the plaintiff and paid, the plaintiff could not have recovered the-amount from the defendant, on the ground that the account of the drawer of the check was not good, or that a mistake had been ma(te in paying the check.' The check, however, was presented to the plaintiff through the Clearing House and paid in that way. The plaintiff bases its claim that it is entitled to repayment' upon the ground that a payment through the Clearing House wast not a voluntary payment and, therefore, as the balance due the drawer of the check by the plaintiff did not equal the amount called for by the check, the plaintiff was entitled to recover back from the defendant the amount that the defendant received in payment of the check.
The New York Clearing House Association is a voluntary association organized by the several banks in the city of New York, of which both the plaintiff and defendant are members, the object of the association being “ the effecting at one place of the daily exchanges between the several associated banks, and the payment at the same place of the balances resulting from such exchanges.” The association of banks had thus united to avoid the necessity of presenting at each bank the checks drawn on it, and provided a method whereby all checks drawn on the associated banks should be paid at oné time and place so that each bank could receive for the checks held by it upon associated banks the amount called for by them. It was an entirely voluntary association, and no bank was bound to collect its checks through the association. It was simply a method adopted to save the trouble and expense of the individual presentment of each check to the bank upon which it was drawn.
By section 12 of the constitution of this voluntary association it was provided that the hour for making exchanges at the -Clearing
It is not disputed but that the banking day closed at three o’clock and that to make a valid presentment of a check or draft drawn upon a bank it must be presented to the bank upon which it was drawn before three o’clock- of the day it was due. Any bank would be justified in refusing to pay a check or draft drawn upon it presented after the close of business on any particular day, and the associated banks, recognizing this fact, had provided that a check which was to be returned must be returned within the business hours of the day upon which it had been presented to the bank which had obtained payment through the Clearing House. There can be no question but that this was a perfectly reasonable regulation voluntarily adopted by the associated banks for their own protection, and a failure to return a check within the time fixed by the constitution and by-laws of the association clearly, it seems to me, left the interested banks in the position of having accepted and paid the check and the rules of law applicable to such a paid
The case relied on in the prevailing opinion is that of Merchants’. National Bank v. National Eagle Bank (101 Mass. 281). The ruling in'that case was that if the plaintiffs delivered the check to a messenger before one o’clock, to be returned to the bank depositing it, in the usual course of their business, and with time sufficient, in the absence of any accident or mistake, to reach the depositing bank 'by one o’clock, it would be a compliance with the vote, especially in view of the language of the vote that the bank should not retain the checks after one; but that irrespective of the peculiar working of the vote, the failure of the bank to return a check by one o’clock¡ could be a defense to the depositing bank only to the extent that such bank was injured by such delay. And the affirmance of that instruction was based upon the fact that the particular check in that case was not returned in
same right to reclaim, which would have existed if the payment had been made by-the simple act of passing the money across the counter directly to the payee on the presentation of the check. The manifest purpose of the provision is to fix a time at which the creditor bank may be authorized to treat the check as paid, and be able to regulate with safety its relations to other parties.” In this case there was no evidence that there was any mistake of fact in relation to this cheek, and it seems to be conceded that if, under the circumstances here disclosed,- the check had been actually paid over the counter the plaintiff would not be entitled to recover. Here the failure to return the check before three o’clock was, under the rule adopted b_y the Supreme Court of Massachusetts, equivalent to payment over the counter. I think, therefore, even applying the Massachusetts rule, that the payment must be treated as a voluntary payment, and that the plaintiff is not entitled to recover.
I think the judgment appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Judgment affirmed, with costs.