Zaloom v. Ganim

Hendrick, J. A check is defined by section 321 of the negotiable Instruments Law as “ a bill of exchange drawn on a bank, payable on demand.” The same section provides: “ Except as herein otherwise provided, the provisions of this chapter applicable to a bill of exchange payable on demand apply to a check.” Section 322 limits the time within which a check must be presented in the following language: “A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay.” As to a reasonable time, the law (section 4) reads: “In determining what , is a reasonable time or an unreasonable time, regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case ” The facts, found by the trial justice must be regarded aa the facts of this particular case and are in part as follows: The defendant gave his check, dated August 4, 1910, drawn on the European-American Bank in this city, and delivered it, between four and five o’clock in the afternoon of the day of its date, to the plaintiff in payment of a debt. Plaintiff, on the following day, August 5, 1910, deposited the check to his account in his own bank of deposit,, the National Reserve [38] Bank, which is also located in this city. On August 6, 1910, the National Reserve Bank, in the regular course of business, presented the check to the European-American Bank for payment, where payment was refused, because of the fact that the State Banking Department had taken possession of the bank, which had suspended payment. Had the check been presented on August 5, 1910, it would have been paid. There being no question of fact in dispute, the determination of what is reasonable diligence in presenting the check for payment in order to charge the drawer is one of law for the court. National Bank v. Zimmerman, 185 N. Y. 217. The Negotiable Instruments Law does not define the period which 'may elapse between the giving and presentment of a check 'but makes it incumbent on the payee to present it within a reasonable time. § 322. “ Reasonable ” is a relative term, to be determined according to the cireircumstances of the case. 33 Cyc. 1560. “ Reasonable time ” means “ so much time as is" necessary under the circumstances conveniently to do what the contract requires should be done.” 13 N. Y. Supp. 922. Lord Ellenborough, in a leading case (Rickford v. Ridge, 2 Campb. 537), discussing the rules of law applicable to checks, their presentment, notice and- protest as between drawer and payee, says: “ The rule to be adopted must be a rule of convenience.” Usage of trade is a course of dealing, a mode of conducting transactions of a particular kind. 2 Bouv. L. Dict. 1182. By the phrase “ usage of trade ” the law means usage fixed in the commercial law. It must be known, uniform, certain, reasonable, and not contrary to law or opposed to public policy.- “ The 'true -test of a commercial usage is its having existed a sufficient length of time to become generally known, and to warrant a presumption that contracts are made in reference to it.” Smith v. Wright, 1 Cai. 43. Before the establishment of the Clearing House Association, on October 11, 1853, there were fifty-two banks in this city, each sending messengers 'back and forth to present checks for payment; and, as -there was no national currency, balances had to 'be paid in gold coin. The labor of counting [39] and carrying this was so onerous that actual transfers of cash were made hut once a week, although accounts were balanced on the -pass books and bills were exchanged daily. The bags of coin were, so' heavy and precious that they were often transported in wagons guarded by militia. Since the formation of 'the 'Clearing House Association, the obligations of almost the total number of banks in this city are balanced, daily, with the least possible transfer of actual cash from debtor to creditor banks. The messengers of the various banks meet, daily, at a stated time at the Clearing House, to adjust balances of accounts and receive and pay differences, thus obviating the confusion, labor, expense and danger of loss which would be incident to the presentment of hundreds of thousands of checks daily to the Various banks in this city. Encyclopedia Americana. The. annual report for the year 1910 of the manager of the Hew York Clearing House Association shows that, in 1854, the average daily clearings through the New York Clearing House were $19,104,504.94, and the clearings for that year were $5,750,455,987.06. In 1906, the average daily clearings were $342,422,772.57 and the total for that year wa’s $103,754,100,091.25. In 1910, the daily average clearings were $338,461,911.11 and the total for that year was $10)2,553,959,069.28. The average number of checks that- pass daily through the New York Clearing House is 25.0,000. The Clearing House Association is now composed of thirty-one national banks and eighteen State banks. There are thirty-one banks and trust companies in the city of Hew York and vicinity, not members- of the association, which make their exchanges through banks which are members of the association, -a total of -almost every bank and trust company in this city. This usage of trade -and business in presenting checks for payment has become incorporated into the banking business of the State and country and would -be seriqysly affected if -immediate presentment to the paying bank were required. Bearing in mind the general commercial law that the paying bank -is required to satisfactorily identify the payee (Meyers v. Brown, N. Y. L. J. Feb. 8, 1911), and bearing in mind also the vast number of checks daily used in the [40] city of Yew York, it is apparent that, if the banks and trust companies of Yew York city were required immediately upon their receipt to present deposited checks to the banks upon which' they are drawn for payment, confusion 'amounting almost to chaos would be the result. In Hooker v. Franklin, 2 Bosw. 500 (affirmed, Court of Appeals, October, 1861), Bosworth J., says: “A rule which required all banks in the city of Yew York to present for payment all the checks deposited by their customers, on the day of their deposit, would compel them to decline business of that character, and defeat the objects, in many cases, for which deposits are made, and put an end to certain facilities, which result from obtaining credit for the amount of a check, for the day of its deposit, without providing for its payment until the following morning.” It is further said: “ Certainly no laches can be imputed to a depositary, receiving it for presentment and collection, who, in presenting it on the next day aftei1 its receipt, acts in conformity with the regular and established course of business in such cases.” I 'have not overlooked the cases which hold that a check on a bank in the city in which the payee resides must be presented for payment not later than the day following its receipt. . These cases may be distinguished from the case under review. The facts and circumstances in each case must in a great degree govern the rule to be applied, and the facts in those oases differ materially from those of the present case. They are briefly as follows: In Smith v. Miller, 43 N. Y. 171, the payee of a upon presenting it for payment, by surrendering it to the drawee and accepting a check for the amount which he neglected to present until the following day, discharged the drawer of the draft. . In Carroll v. Sweet, 128 N. Y. 19, a debtor paid his debt with a Check'S! a third party, indorsed by himself. By the neglect of the creditor to present the check for payment until nine days thereafter, the debtor was discharged from liability as indorser, irrespective of any question of loss or injury. In Kramer v. Grant, 60 Misc. Rep. 110, the attorney for [41] thé payee of a check (and for the purpose of that case his agent) appropriated and negotiated the check, instead of depositing it for collection within twenty-four hours after it was received, and the court does not even intimate that presentment for payment must be made within twenty-four hours. In Murphy v. Levy, 23 Misc. Rep. 147, the payee delivered the check to a third party in payment of his debt, and it was not presented by the third party for payment until four days thereafter. In Dehoust v. Lewis, 128 App. Div. 131, tibe check was received in payment «f the debt on October twelfth and was not deposited by an indorsee until October twenty-third, all of the parties residing in the same city. Upon the facts in this case, the deposit of the check on the morning of the day after its receipt, it having been received after banking hours, and its presentment for payment in the usual course of business by the bank of deposit on the day following show due diligence in the presentment of the check. I am confirmed in the views herein expressed by the opinion in Laux & Son v. Fox, 171 Penn. St. 68, 72, 73, a cáse almost identical with the one under consideration. The judgment should be affirmed, with costs. Lehman, J., concurs.