12 Abb. Pr. 200 | New York City Court | 1872
This action was brought to recover six thousand five hundred dollars,
The allegation and the denial of indebtedness went to a mere legal inference or conclusion (Fosdick v. Groff, 22 How. Pr., 158).
On the hearing before the referee, it appeared that on February 9, 1870, the plaintiff, who held and owned the check of Mayor Kalbfleisch for seven thousand dollars, indorsed and delivered it to the' defendants, and received of them their three checks; one for one hundred and fifty dollars, one for three hundred and fifty dollars, and the other for six thousand five hundred dollars. The two former, intended for present use, were paid ; the latter, not to be directly paid, was noted on its face as a 'memorandum check.
On the trial before the referee, that memorandum check was properly received in evidence, under the general objection that it was irrelevant. FTo question was raised as to the form of the complaint, a general count for money lent and advanced, or as to the mayor’s check being regarded as, in effect, equivalent to money. The questions contested on the trial were as to the undertaking of the defendants in giving this check, and whether that undertaking had been qualified by the relation which the witness, McBain, had to the original transaction, or was afterwards satisfied by McBain’s having received money of the defendant.
The memorandum check is of modern use: a form of contracting where immediate payment at the bank is not contemplated, or a more formal contract not considered necessary. But, in view of its having been a late contrivance, coming into use after the rules peculiar to checks in the unqualified form and to strictly commercial paper had been well settled, and of its depending somewhat upon usage or custom,
In a leading case in this State (Dykers v. Leather Manufg. Bank, 11 Paige, 612), the custom of Wall-street had been proved to the effect that the memorandum indicated an understanding that the check should not be presented at once, or while the drawer ha,d no funds at the bank, and so injure his credit. In that case the letters “ memP had been put on the corner of the check without the knowledge of the party to whom it was given, and were not noticed by the teller of the bank when payment was made. That payment was approved. But, in addition to the fact that the drawer was in funds at the moment, it appeared that the payee had held the check for some days. Even the Wall-street custom might well have been thus met and satisfied. But the chancellor regarded that custom as objectionable ; as an attempt by the mem. to convert “ an ordinary check on a bank into something contrary to its legal effect,” and held that the mem. did not affect the negotiability of the check, or the holder’s right to immediate payment.
If the custom in aid of the memorandum were invoked “to change the check into something contrary to its legal effect,” the objection would be insuperable. A custom should not be in conflict with the rules and principles of law. A contract is to be respected, not only in view of its terms, but of its legal effect; and that legal effect can no more be changed or contradicted by parol than its express terms may be. The check on a bank states no day for the presentation or payment of it, but the law supplies the omission, and what the law supplies is, in effect, part and parcel of the contract.
In the absence of such an objection, the custom or usage may perform an important office, especially
The first step, therefore, towards the recognition of the custom in question, is to give significance to the fact that the word “memorandum” thus written on the face of the check is a part of the contract. In this instance that word was written by the drawer when the check was made and delivered. The parties knew what was intended ; what the memorandum signified. Why does that word appear on the face of the paper ? It was written for some purpose,—for what purpose %
■ The objection that the custom seeks to give such effect to the memorandum as to convert the common check on a bank into something else, thus changing the legal effect, presupposes that a check in the common form has been made, and is thus sought to be transformed. With deference, that view is erroneous. It may be assumed that this memorandum check was made as such instruments usually are. The defendants did not make a common check to be changed to something else, but made this check in the form in which it now appears. The objection due to the act of altering the contract by adding, erasing, or tearing off words and terms, or of bringing in by the custom, or otherwise, something extraneous to subvert or modify the contract, does not apply. The question would rather seem to be, whether a portion of what the parties thought proper to add or annex, as part of the instrument, can be overlooked, and a change not contemplated by the parties be thus imposed.
The argument, if not the ruling, in Dykers v. Leather Manuf. Bank (supra), repels the notion of distinguishing between the special and common check.
That distinction, recognized in Skilman v. Titus (3 Vroom, 96), was clearly stated in Franklin Bank v. Freeman (16 Pick., 535). In the latter case (p. 539 of op.), Mr. Justice Putnam says: “A memorandum check is a contract by which the maker engages to pay the bona fide holder absolutely, and not upon a condition to pay if the bank upon which it be drawn should
Some elementary writers, in stating the rule that custom or usage is not respected if contrary to the law applicable to contracts, assume that the custom as to memorandum checks is within that rule. Other and later writers take quite another ground.
In Story on Prom. N, § 499, it is said that these memorandum checks, as between the parties thereto, seem designed as mere evidence of indebtedness, and are in the nature of the common due bill.
Edwards, in his work on Bills and Notes (2 ed., 754), has a like statement.
And Mr. Parsons, referring to the ruling in Dykers v. Leather Manuf. Bank (supra), that the mem. written on the check does not affect the rights of the holder, says: “We think this might have been doubted, because there is a well known custom in all our commercial cities of drawing and using checks in this form merely as due bills” (3 Pars, on Notes and Bills, 66).
And a yet later writer says : “ Memorandum cheeks, so called, are instruments of quite common use in business circles.' .... As between the drawer and the drawee they are a species of evidence of indebtedness” (Morse Treat, on Banks and Banking, 313).
But it may be stated that with us the memorandum check is negotiable, and, if presented at the bank when the drawer has funds, may be paid as other checks may be ; that no term of credit can be imputed, preventing the holder from exacting payment within a reasonable time ; and that the memorandum operates as a waiver of presentment and notice, the contract being an unconditional engagement to pay the money.
The contention in this case having been between the parties to the original transaction, the consideration for which this momorandum check was given, was open to inquiry. That consideration having been sufficient, and there having been neither fraud nor mistake, the defendants who had signed their names as principals, became bound as such. It was no more competent for them to show that although they had given their three checks for, and on receiving the seven thousand dollars, it was then and there understood and agreed, that they should not pay the checks, or. that McBain should pay them, than it would be for the maker of a promissory note, by such proof, to relieve himself from all liability.
The theory of the defense was, that the loan had been made to McBain, or to the defendants by and for him; and with that view, proof was taken as to his having been instrumental in inducing' the plaintiff to get the money of the mayor to be placed with the defendants. But that loan was obtained by the plaintiff of the mayor, upon his own note, and the pledge of his collateral securities. McBain had no interest whatever in the check, and no claim upon its proceeds ; and his application to the plaintiff to make the loan, seems to have been on behalf of the defendants. But no question of agency was involved. After obtaining the
The plaintiff’s understanding was, that the defendants wanted to improve the appearance of their bank account. He says that McBain and Fish so represented. Even McBain, called as a witness, says, “I said to Mr. Turnbull that I wanted the money to place with Osborn & Fish. I told him that I was under obligations to them, and wanted to place it there. My intention in putting the money there was to do them a favor so that their bank account would stand better.”' All that was quite consistent with a friendly interest in the defendant’s standing at the bank, and with the fact that the money going from the plaintiff to them for their accommodation, was to be repaid by them.
The statement of McBain, that he placed the money with the defendants, cannot be reconciled with the conceded events, the controlling facts in the case.
The intent of the parties, the character of the transaction, and the consequent claim and liability, are best deduced from the papers exchanged. But that intent could also be gathered from the proofs at large, from the acts and the omissions. ■ If this was a loan ‘to Mc-Bain, what occasion was there for the intervention of the defendants ? Why did not he, rather than they, receive the mayor’s check and give the plaintiff his checks for the two small sums, his memorandum check for the balance % If this were not a loan to the defendants, why did they receive the seven thousand dollars of the plaintiff and give their checks in exchange ?
The testimony taken with a view to substitute Mc-Bain as the debtor in the place and stead of the defend
Upon the exchange of the papers, the defendants acquired title to the check for seven thousand dollars, and had the power to apply the money as they thought proper. Whatever use they may have made of it, their obligation to pay the amount represented by this memorandum check remained as an original and unqualified undertaking.
We think that the judgment entered on the referee’s report should be reversed, and a new trial granted, costs to abide the event.
Judgment accordingly.