26 A.D. 110 | N.Y. App. Div. | 1898
The complaint in this action alleges that during and previous to the month of Rovemher, 1890, plaintiff was a depositor of the defendant; that on or about the 25th day of October, 1890, one George K. Kirldiam, the plaintiff’s partner in business, received from one Blanchard a sight draft for the sum of $3,120, drawn by said Blanchard, as president of a corporation known as the Interstate Investment Company, upon the Bank of South Hutchinson, of South Hutchinson, Kans., a financial institution doing a general banking business; that the said draft was indorsed payable to this plaintiff, or to his order, and delivered to him by- said George K. Kirk-ham, and deposited by plaintiff with the defendant for collection, and tire amount of said draft was thereupon entered by the defendant in the plaintiff’s pass book as a draft deposited for collection ; that thereupon the defendant forwarded the said draft to its agent and correspondent, the Boatmen’s Bank of St. Louis, an incoi’porated financial institution .doing a. genez-al banking business at St. Louis, Mo., which in turn forwarded the draft to its agent and correspondent, the Fii’st Rational Bank of Hutchinson, Kans.; that the said draft was presented by the said First Rational Bank of Hutchinson to the Bank of South Hutchinson, whereon it was di’awn, and was accepted by it; that thereupon the said Fizst Rational Bank of
For a second cause of action the plaintiff realleged the facts before stated, and alleged that the defendant had failed to return the check drawn by the Bank of South Hutchinson upon the Merchants’ Exchange Rational Bank of Rew York, and to demand the draft deposited by the plaintiff with the defendant, and had failed and refused to have the said draft protested, or to deliver to the plaintiff the said draft so deposited with the defendant by the plaintiff.
The facts alleged in the complaint before referred to were either admitted by the answer or proved upon the trial. The plaintiff testified that one Blanchard was indebted under a guaranty to Mr. George K. Kirkham, and that he drew a draft as president of the Interstate Investment Company upon this South Hutchinson bank, and gave it in payment of that indebtedness to the plaintiff, who was then acting as agent and attorney in fact for George K. Kirkham, payee in the draft; that the plaintiff, acting under that power of attorney, indorsed the draft and took it personally to the Bank of America, and deposited it in the Bank of America; that it received it, and plaintiff asked the cashier if he would place it to his credit; that the cashier said no, he could not do that, but that he would notify the plaintiff when the draft was collected, and then would place it to the plaintiff’s credit. On Hovember third a postal card came to the plaintiff from the bank signed by the cashier, in which he told the plaintiff to bring his pass book to the bank to have the amount of this draft placed to his credit. Hpon taking the pass book to the Bank of America it placed this amount to his credit. On the eighth or ninth of Hovember, subsequently, the defendant informed the plaintiff that the check upon the Merchants’Exchange Rational Bank of Rew York, which had been, sent to them as the check given'in payment of. the draft, was unpaid, as the Rew York bank upon which it was drawn had refused to pay it, and nothing was then said about
For the defendant it was jn-oved that it was the custom of banks in the United States, when a draft is sent to a bank outside of the city of Hew York from a Hew York city bank for collection, for the drawee bank to pay that draft upon itself by what is called a return exchange upon Hew York; that is, the drawee bank gives in payment of the draft drawn upon it a draft upon its Hew York • correspondent for the amount of the draft; that in some instances such draft or check is a draft or check of the drawee bank, in other instances, of some other institution, and that the Hew York exchange is generally drawn to the order of the collecting agent. There was no proof but that the Bank of South Hutchinson was solvent or that it would not have responded to a demand on it for the amount of its draft on Hew York which was unpaid.
It will thus be seen that the main facts are conceded. The plaintiff deposited a draft with the defendant for collection. The defendant accepted the draft for collection, and thereby assumed the responsibility of a collecting agent to the plaintiff. It sent this draft to its agent in Missouri, which adjoins the State of Kansas, where the drawee was located, for collection. The draft was presented to the drawee for that purpose; was delivered to the drawee and the defendant’s agent accepted as payment a sight draft of the drawee upon its correspondent in Hew York; and, subsequently, upon receipt of information from its agent that the draft had been paid, the defendant credited the plaintiff with the proceeds of the draft and notified the plaintiff of such credit. The question is whether this defendant is authorized to repudiate such credit, and to refuse to recognize this draft so deposited for collection as paid, without returning the draft so deposited properly protested, so as to charge the drawer. It must be conceded here that, upon the credit given by the defendant to the
The legal obligation assumed by a bank receiving from a customer a draft drawn by a third party for collection has been much discussed, and, where there is no express agreement, has resulted in considerable difference of opinion. It seems, however, to' be now well settled in this State by repeated adjudications of the Court of Appeals. It was the duty of the defendant to present the draft to the bank upon which it is drawn for payment (Indig v. National City Bank, 80 N. Y. 103), and it is liable for a'loss occasioned by the acts of its correspondents or. other agents selected by it to effect the collection. “ In such a case the collecting bank assumes the obligation to collect and pay over, or remit the money due upon the jDaper, and the agents it employs to effect the collection, whether they be in its own banking house or at some distant place, are its agents, and in no sense the agents of the owner of the paper. Because they are its agents, it is responsible for their misconduct, neglect or other default.” (St. Nicholas Bank v. S. N. Bank, 128 N. Y. 30.) This defendant then assumed this obligation and sent this draft to its agent, the Boatmen’s Bank at St. Louis; and the Boatmen’s Bank forwarded the draft to its agent at Hutchinson. That agent at Hutchinson presented the draft to the drawee, in performance of its duty, and demanded payment. At that time the drawee of the draft was under no legal obligation to either the plaintiff or the defendant or the defendant’s agent to pay the draft. If it had refused to pay, no cause of action would have existed in favor of either against the Bank of South Hutchinson. That bank, the drawee of the draft, however, assumed to the defendant or its agents the obligation to pay that draft, and in pursuance of such obligation it gave its sight draft on New York payable to the order of the Boatmen’s Bank of St. Louis, and that was accepted by the agent, the Boatmen’s Bank, in lieu of or as a means of payment of the draft.
The question as to the effect of a receipt by a creditor of a check or draft pf a debtor in payment of a debt has been much discussed, but it seems to be now settled that the receipt of. such a check or draft is not a payment of the debt unless there is an express agreement to that effect, the burden being upon the debtor to prove that agreement. But in such a case, where the check or draft is given upon the incurring of the obligation, it is at least prima faaie a conditional payment. (Story Prom. Notes, § 104; 2 Pars. Notes & Bills, 157; Dan. Neg. Inst. § 1261.) It seems also to be settled that where, at the time of the incurring of an obligation, the debtor delivers to the creditor a note or bill of a third person for the indebtedness, the presumption is that the creditor takes it in payment. (Noel v. Murray, 13 N. Y. 171.) In this case, therefore, the defendant’s agent having accepted this draft upon New York, upon presentation of the draft upon the South Hutchinson bank, the presumption is that it was received as payment of the draft, and as
It seems to us, therefore, that the defendant was liable to the plaintiff for the amount of that draft which it had collected from the Bank of South Hutchinson, irrespective.of what its agents had accepted as such payment from the Bank of -South Hutchinson. This view is entirely consistent with .the decision.of the Court of Appeals in the case of Indig v. National City Bank (80 N. Y. 103). There the defendant, having received for collection a note payable at the Bank of Lowville, in pursuance of its duty to present it to that bank for payment, sent it by mail directly to the bank where it was payable. It appeared that that was the ordinary method of transacting such business, and that the defendant was justified in adopting the ordinary mode, and it was held that, by thus transmitting the. note to the bank where it was payable, the defendant did not constitute the Lowville bank its agent and thus was not responsible for its failure to pay. The opinion of Judge Rapallo in that case does not appear to have been concurred in by a majority of the court. Judges Folger and Andrews did concur in that opinion. Church, Ch. J., concurred on the question of damages, and Miller,
The view before expressed, that the delivery of this draft to the Bank of South Hutchinson and the receipt by the defendant’s agent of this draft upon Hew York was a payment of that draft, is amply sustained by the authorities. In the case of People ex rel. P. C. Savings Bank v. Cromwell (102 N. Y. 482) the court says: “ If upon presentation of a check or order such agent or bank should refuse payment, the debt remains unpaid, but if the creditor accepts anything other than legal currency in payment, the debt is discharged. The authority of the depositary is simple, and limited to the act of making payment, and if the creditor goes further and deals with it for any other transaction than that of receiving payment, he does
The case of First Nat. Bank v. Fourth Nat. Bank (77 N. Y. 323) was an action brought to recover damages alleged to have been occasioned by the negligence of the defendant in the performance of its duty as agent in collecting a draft sent to it for that purpose. The draft was received by the defendant on the morning of March twenty-sixth, and was on the same morning presented- to the drawee for payment. Upon such presentation it received from the drawee its check for the amount on the Third National Bank of New York, and the draft was delivered to it.1 The defendant did not present the check to the bank for payment on that day, but it was sent through the clearing house and presented for payment .on the next day, the twenty-seventh. The drawee failed on that day, and the bank refused to pay the check. The defendant then took the check, and on the same day returned it to the drawee, and received back the draft for which it had been given, and then formally demanded payment of the draft, and caused the same to be protested for nonpayment ; and on the next day, March twenty-eighth, due notice of such non-payment was sei'ved by mail' upon the plaintiff. It was held that, upon these facts, sufficient was done to charge the drawer of the draft, but that the mere fact of preserving the liability of the drawer upon the draft was not the performance of the whole duty of the collecting agent to its principal ;• that a collecting agent must so act as to charge all the parties to the paper and will become liable for a loss occasioned by its negligence.
In the case of Smith v. Miller (43 N. Y. 171), which was again before the Court of Appeals (52 id. 545), it was expressly held that to preserve recourse to the drawers of the draft the plaintiff should, when the check given in payment thereof was dishonored, have demanded back the draft and again presented it for payment, and in case of refusal, given notice of such demand and refusal to the drawers, and that the fact that the drawees were insolvent was no
The Supreme Court of Pennsylvania states the rule to be as follows : “ It is safe to say, as a general rule, that when a bank receives a check from one of its depositors for collection, it must return him the check or the money. It is also equally clear that if the collecting bank surrenders the check to the bank upon which it is drawn, and accepts a cashier’s check, or other obligation in lieu- thereof, its liability to its depositor is fixed-—as much so as if it had received the cash. ■ It has no right, unless specially authorized to do so, to accept anything in lieu of money.” (Fifth Nat. Bank of Pittsburgh v. Ashworth, 2 L. R. A. 493.) The authority cited in the opinion and in a note to the case would seem to sustain the proposition thus broadly stated.
It is sufficient for the decision of this case to sustain the first proposition, that the defendant was bound to return to the plaintiff either the draft which it had received for collection or the money. It credited him with the money, and it thus became indebted to him for that amount. To justify them in canceling that credit or refusing to pay on demand, they were at least bound to deliver to him the draft properly protested, so as to charge the drawer; and, in the absence of such a return of the draft, they were liable for the money. It was proved without contradiction that the plaintiff demanded the return of the draft deposited with the defendant for collection, and that the defendant failed to comply with that demand. The acts of the defendant, after it had knowledge of the fact that the draft upon Hew York which it had received from the South Hutchinson bank had not been paid, clearly recognized its obligation to the plaintiff. It again and again requested the plaintiff to endeavor to induce the Bank-of South Hutchinson to provide funds to pay-the draft upon Hew York, and the plaintiff did make such endeavor. During all this time the proceeds of the draft deposited with the defendant for
We think, therefore, that upon the facts as proved the defendant was liable to the plaintiff for the amount of this draft deposited with it for collection.
Some criticism is made upon the plaintiff’s complaint, on the ground that it is not sufficient to sustain a cause of action to recover the proceeds of this draft as paid. The complaint, however, alleges all the facts necessary to sustain the judgment, and expressly alleges that the defendant’s agents did receive the draft of the Bank of South Hutchinson upon New York in payment of the draft deposited with it for collection; and while there are many immaterial facts alleged in the complaint, and the draftsman appears to-have had a rather misty idea as to the ground upon which he based his cause of action, the facts necessary to make the defendant liable upon the ground before indicated are alleged, and these facts were either admitted by the answer or proved without contradiction upon the trial.
The judgment is reversed and a new trial ordered, with costs to the appellant to abide the event.
Baérett and McLaughlin, JJ., concurred ; Van Brunt, P. J., concurred in result; Patterson, J., dissented.
Judgment reversed, new trial ordered, costs to appellant to abide the event.