88 N.Y.S. 83 | N.Y. App. Div. | 1904
Lead Opinion
This action is brought to recover the amount of a check drawn by one Arthur Johns upon and certified by the defendant. Mr. Johns, who was an attorney at law, had collected for one Edla
The court below left it to the jury to say whether or not the plaintiff became a bona fide holder of the check for value, charging the jury, “that is the first thing for you to consider in this case, because if you reach the conclusion that the plaintiff in this case is not the bona fide holder for value of this instrument, you need go no further. The underpinning of his structure has been knocked out and it must fall to destruction unless he satisfies you, by a fair preponderance of credible evidence, because the burden is upon him in the first instance that he is the bona fide holder for value.” The jury having found a verdict for the plaintiff, they must have found that the plaintiff was the owner of the check. Being.the owner of the check, he presented it to the bank, who certified it without making inquiry as to who it was that presented it for certification; and the question is whether the bank is liable upon this certification to the holder of the check at whose request it was certified. If the bank is liable to the plaintiff for the amount of the check, the other questions presented need not be considered. It must be borne in mind that the bank does not dispute its obligations, to pay the drawer of the check the sum of money represented by it. He had on deposit the amount of the check to his credit. When the bank certified his check it appropriated so much of the amount that the drawer had on deposit for the payment of this check, and, so far as, appears, has that amount now in its possession. Reither does the drawer of this check dispute the fact that he owed to the drawee the amount of money represented by it.
The questions that are usually presented when a bank disputes
By these provisions it seems to me that the solution of the question presented is free from doubt. The defendant had to the credit of the drawer of the check the amount represented by the cheek. The drawer of the check owed to the payee the amount represented by it and in discharge of that obligation sent to the payee the check in question. The payee of the check, for a valuable consideration, delivered it to the plaintiff, who, under section 19 of the Negotiable Instruments Law, thereby became vested with the title of the transferer of the check. By presenting this check to the bank for certification and its certification by the bank a new contract was made between the bank and the holder, by which there was substituted the obligation of the bank for that of the drawer of the check, and thereby the drawer became released from liability ; and as the payee of this check transferred it to the plaintiff, the plaintiff had a good title to the check and the right to enforce it when the bank, by its certification, accepted the check and made a contract with the holder promising to pay it. By the certification the bank voluntarily assumed the obligation of the drawer and agreed to pay the check to the plaintiff. The check and. certification operated as an assignment of the funds to the credit of the drawer with the bank, and the bank became liable to the holder. (Neg. Inst. Law, § 325.) These rules are elementary, and in view of the express provisions of the Negotiable Instruments Law, to which attention has been called, it is not necessary to refer to the authorities to support them. •
The argument of the defejidant is based upon three cases in the Court of Appeals of this State, neither of which, as I view it, presents the precise question here, although it is substantially determined in the first case referred to. The first case is Freund v. Importers & Traders' Nat. Bank (76 N. Y. 352). In that case the
The second case is Lynch v. First Nat. Bank of Jersey City (107 N. Y. 179). It there appeared that one Wilder purchased of the plaintiff a diamond of the value of $500, and delivered to the plaintiff in payment therefor a. check signed by himself upon the defendant to his own order, which was certified by the bank upon which it was drawn and payable through the American Exchange National Bank in New York. The check, however, was not indorsed by Wilder .and the bank refused to pay it. The check when certified was in the possession of the drawer and was certified by the bank at his request. The chief judge of the Court of Appeals, in delivering the opinion of the court, said: “ It, therefore, seems to us that the only question in the case is whether the bank could be made liable to pay, to third persons, Wilder’s funds, by any transfer of this check, except one evidenced by the indorsement of his name thereon; ” that the acceptance of the check was made by the bank when, through its agent, it indorsed thereon a certificate of genuineness and directed its payment by the American Exchange Bank; that that operated as a promise to pay it upon presentation at the American Exchange Bank, bearing Wilder’s indorsement; that “ the obligation of the bank as shown thereby amounts to a representation that the drawer has funds in the bank with which to pay the check, and that it will retain and pay them to the holder through its agency in New York upon presentation there bearing the proper indorsements; ” and that as no contract was made with the plaintiff, the only contract being with Wilder to pay to the holder of the check when he had directed such payment by indorsement, the plaintiff could not maintain an action against the bank upon the indorsement. In referring to Freund v. Importers & Traders’ Nat. Bank (supra) the court said: “ It was held in Freund v. Importers & Traders’ Bank (supra) that a certification by the bank of a check in the hands of a holder who
The third case is Goshen Nat. Bank v. Bingham (118 N. Y. 349); It there appeared that one Brown had an account with the plaintiff bank, and applied to the cashier of the bank to cash, a certain draft drawn by him for $11,000, upon 'certain representations which were false; that Brown was a bankrupt, and had no funds in the bank, except such as resulted from the credit given him upon the.faith of the draft; that the cashier of the bank, relying upon such representations, cashed the draft and placed the proceeds to the credit of Brown, whereupon Brown' drew a check upon the bank for $5,00.0 which the bank certified; that Brown took this certified check to the defendants who cashed it for him, whereupon Brown -disappeared ; that by mistake Brown failed to indorse the check when .he delivered it to the defendants; that while the defendants held this check unindorsed the plaintiff demanded its return, and Upon their refusal to return it an action to recover its possession was commenced. It was decided that the purchaser of a draft or check who obtains title without :an indorsement by the payee, holds it subject to all equities and defenses existing between the original parties, even though he has .paid full consideration, without notice of the existence of such equities and defenses ; that the payee haw ing taken title by assignment, for such was the legal effect of the transaction, the defense of the bank against Brown became effectual as a defense against a recovery , on the check in the hands of the plaintiffs as well; that as between the bank and Brown, Brown had
It was not disputed in either of these cases that if the bank had certified the check at the request of the holder, who had-a good title to it as against the payee, and where there were no equities between the drawer and the payee, or the drawer and the bank, that the bank would be bound to pay the check to the holder at whose request it had been certified. Neither of these cases is an authority against the right of the plaintiff to enforce this contract made between the bank and the holder of the check by the eertificatian. Nor can it be that the fact that the bank did not inquire who Was the owner of the check when it certified it, or with whom it was making a contract to pay the check, can affect the legal liability of the bank to' the person with whom the contract was made. If the certification of the check operated as an assignment of the amount on deposit by the drawer, the holder of the check became the creditor and entitled to enforce the obligation of the bank to pay the amount on deposit. As was said in Freund v. Importers & Traders Nat. Bank (supra), “ If Blun & Sons were then the holders and owners of it (the check), with such right as that they could enforce it against the makers, the certification of it by the defendant had all the legal effect which the same certification would have had, had it been indorsed by the payees. That legal effect is the same as if the defendant had paid the money upon it, with the proper indorsement upon it of the payees. By the certification of a negotiable check, properly negotiated, the depositary of the fund checked upon becomes liable to the owner of the certified paper, and is bound to have in readiness the money to meet it, from the fund drawn upon. When the check is not negotiable, or has not been indorsed, but has by assignment come into the hands of a lawful owner, who has a right to enforce it against the maker, the effect is the same.” The drawer of this check having been indebted to the payee, sent this check to discharge this indebtedness, and the payee having transferred for a valuable consideration the check to the plaintiff, who thereupon became the holder and owner thereof and entitled to enforce it against the drawer, and the holder having presented it to the bank, the bank, upon certifying it became the
I think, therefore, there was' a good cause of action in favor of the plaintiff against the bank upon this certified check which entitled the plaintiff to recover, and that the judgment and order appealed from must be affirmed, with costs.
Van Brunt, P. J., O’Brien and Hatch, JJ., concurred; McLaughlin, J., dissented.
Dissenting Opinion
(dissenting):
The plaintiff, cannot hold the judgment which he has recovered, unless the bank certified the check for Mm. In this the court is- in entire accord. The real question, therefore, is whether the bank did in fact certify the check for the plaintiff; and I am unable to agree with the other members of the court that it did. The check was drawn by one Johns, payable to the order of Mi’s. Muir, and when it was presented to the bank for certification it had not been indorsed by, nor was anything said to indicate to the certifying officer that it had been delivered to her. The messenger who took the check to the bank for certification did not know the teller who certified the check, nor did the teller know him. Under such circumstances, I think we should hold that the certification was for the maker of the check, and not for the plaintiff, who happened to be the holder. Before a check can be said to have been certified for the holder, there must be something on the check itself to indicate that it has beén delivered by the maker to the payee, or else satisfactory information to this effect must be given to the bank. A certification of a check at the request of a maker adds to his obligation that of. the bank, whereas a certification at the request of the holder, after' the check has been delivered, releases the maker and all prior indorsers (First National Bank of Jersey City v. Leach, 52 N. Y. 350; 5 Am. & Eng. Ency. of Law [2d ed.], 1055, 1056), and this is upon the ground that the holder could take the money called for by the check, instead of the certification, if he so desired. While this distinction is of no great importance in the case presented, it is of the utmost consequence in commercial transactions, many of which are now carried on by means of certified checks.
In the present case, if the certification were for the maker of
There are several other errors alleged by the appellant, but the view which I entertain renders it unnecessary to here consider them.
I think the judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Judgment and order affirmed, with costs.