Montgomery County Bank v. Albany City Bank

By the Court, Willard, J. It is well settled that a bank with whom negotiable paper is left for collection, is bound to take the necessary measures to charge the indorsers, upon the default of the acceptor or maker; and that they are responsible to the owner of the bill or note, for a neglect, or omission to [399] perform that duty. (Smedes v. The Bank of Utica, 20 John. 372 ; same case in error, 3 Cowen, 662. McKinster v. Bank of Utica, 9 Wend. 46 ; same case in error, 11 Id. 473. Allen v. Merchants’ Bank of New- York, 22 Id. 215.) Prior to the code, the action might be brought in assumpsit upon the implied contract, or in case for the neglect of duty. Either action was appropriate. The draft in this case was payable thirty days after date. The third day of grace was on the 10th July, and it should have been protested for non-payment on that day. The omission to demand payment on that day, and to follow it up with notice to the indorsers, discharged the latter. (Chitty on Bills, 384, 385.) Bills, notes and checks, says Chitty, when payable' at a time certain, must be presented on the very day they fall due, and a delay of presentment, even one day after the instrument has come to maturity, discharges all the parties not primarily liable. (Id. 401.) There is no doctrine better settled. (See Griffin v. Goff, 12 John. 423 ; 13 Id. 471; Story on Bills, § 325, et seq.) The ground taken by the defendants, that drafts payable at a specified time are left, when payment is demanded, one day with the drawee, for acceptance, does not necessarily arise, because the proof does not show that this draft was so left. But the law is not as the objection assumes it to be. A draft payable on a day certain must be presented for payment on the third day of grace; (see the cases supra;)' or the indorsers will be discharged. • Mr. Chitty says that in some cases it is necessary, and in all advisable, to present a bill for acceptance. (See Story on Bills, §§ 228, 237.) He is speaking of presentments before the bill falls due. When the bill is payable within a specified time after sight, or after demand, it is absohitely necessary, in order to fix the period when it is to be paid, to present it to the drawee for acceptance; for otherwise the time of payment would never arrive. In other cases it is not necessary to present a bill for acceptance before it is due, although it is advisable in all cases to get the bill accepted, as by that means the holder obtains the additional security of the drawee, upon the bill itself, [400] and which consequently becomes more negotiable; and if the drawee refuses to accept, the drawer and indorser, in England, may be immediately sued. (Chiity on Bills, 299.) It is with reference to such presentments for acceptance, before the bill has become due, that it is said it is but reasonable that the drawee should have an opportunity, before he determines whether he will accept or not, of seeing whether he has effects of the drawer in his hands. Hence, in such cases, the holder usually leaves the bill with the drawee twenty-four hours, or until the next day after the presentment, unless in the interim he accepts or declares a determination not to accept. (Chitty on Bills, 305. Story on Bills, §5 228, 237.) But this presentment for acceptance before the bill is due, is a different matter from a presentment for payment on the day it becomes due. The two things seem to have been confounded together by the defendants’ witness on the trial, as well as by their counsel. The judge was therefore right in deciding that no usage justified the Bank of the State of New-York in leaving the draft with the drawee as was pretended to have been done. The promise of Jones & Hart to the plaintiffs, at the time the draft was discounted, was merged in their indorsement. All oral negotiations or stipulations between the parties, which preceded or accompanied the indorsement, are to be regarded as merged in it. The cases on this subject are collected in Cowen & Hill’s Notes to Phil. Ev. p. 1467, and see 1 Phil. Ev. 561. The plaintiffs were not bound to give the defendants notice that the drawer was a member of the firm composing the drawers. They discounted the draft for a third party, before it came to maturity, and are entitled to be treated as the bona fide owners of the draft. Having parted with their funds, on the faith of the indorsement of Jones & Hart, they can hold the defendants for their neglect to charge those gentlemen as indorsers, whereby the plaintiffs have been deprived of their security. The motion for a dismissal of the complaint, as to the Bank of the State of New-York, is based upon the assumption that the action is founded upon contract. The complaint, however, seems to rest the case on the neglect of duty. For the omission [401] of the Bank of the State of New-York to charge the indorsers of the draft, the plaintiffs could, according to the decision of the court of errors in Allen v. The Merchants’ Bank of the City of New- York, (22 Wend. 215,) maintain an action against their own agents, the Albany City Bank. They could also, on common law principles, affirm the act of their agent, and hold the Bank of the State of New-York responsible. And, indeed, for the strict negligence of the Bank of the State of New-York acting as the agent and servant of the Albany City Bank, in regard to business intrusted to the latter by the plaintiffs, both banks are jointly liable. They are both, says Cowen, J. guilty of the same negligence, at the same time, and under the same circumstances; the one in fact, and the other constructively, through its agent. (Wright v. Wilcox, 19 Wend. 343; and see Story on Agency, § 452, et seq.) Again; the objection on the ground of a defect of parties, can only be taken by demurrer. (Code, § 144, sub. 4.) If the defendant fails to demur, he waives the objection. (Code, § 148.) As between the defendants, the Bank of the State of New-York ought to be primarily liable. But they are both answerable to the plaintiffs. Judgment affirmed.