Lunt v. Bank of North America

By the Court, Leonard, P. J. The Bank of North America are the holders of two checks drawn by Jacob Gr. Oonrad of Chicago, banker, in favor of E. J. Tinkham, [228] cashier of the Second National Bank of Chicago, upon the Importers and Traders’ Bank of New York, together for the amount of $45,000, and by the said cashier indorsed to tiie Bank of North America. The checks were drawn and dated respectively the 26th and 27th days of September, 1864. They were presented for payment during the forenoon of September 30, but it was refused, for the want of funds. There were also several other checks drawn by Courad for value, at Chicago, upon the same bank, in New York, shortly after the said two checks, which were also presented for payment, and refused, at the same time with the said two checks. The whole balance in bank, applicable to the payment of these checks, on the morning of September 30,1864, was less than $31,000, and the Importer^ and Traders Bank reduced that balance on the same day over $25,000, by charging to Conrad certain uncollected demands not then due, in the possession of the bank for collection for the account of Conrad. These and other demands were subsequently collected by that bank, so that at the trial there was about $40,000 in bank, arising from the funds and assets of Mr. Conrad. On the 30th of September, 1864, Mr. Conrad executed a general assignment for the benefit of his creditors, to the plaintiffs in this action, Lunt & Cook, by virtue of which they claim to recover the funds and assets placed by Mr. Conrad in the said bank. There are other facts relating to the rights of other defendants, but no appeal has been taken in* their behalf, and we have no occasion to refer to them. The Bank of North America claim that the said checks now held by that bank, amount to an equitable assignment, not only of the sum standing to the credit of Mr. Conrad on the 30th of September, but also of the sums subsequently collected by the Importers’ and Traders’ Bank from demands received from him for collection, and this court at special term have rendered judgment according to the said claim of the Bank of North America, and against the claim of the plaintiffs. [229] The checks held by the said Bank are drawn in the ordinary general form, not discribing any particular fund, or using any words of transfer of the whole or any part of the account standing to the credit of Mr. Conrad. They contain only the usual request, directed to the bank, to pay to the order of the payee named a certain sum of money. Such checks have long been held, both by elementary writers, and judicial decisions in this state, to be of the same legal effect as inland bills of exchange. There is no liability of the party upon whom such an instrument is drawn until after it is accepted. Such check is always revocable by the drawer until payment or acceptance. How' can it be said that these checks held by the Bank of North America are an assignment of the funds of the drawer, any more than the subsequent ones drawn before the execution of the assignment to the plaintiffs ? Neither have been preferred by the general assignment of Mr. Conrad. The payee took no special security upon the bank account of the drawer. He could have done so, had he not been satisfied with the credit or mercantile honor of the drawer, before parting with his money. The two cases in 3d Comstock’s Beports are entirely conclusive in the case before us. Judge Buggies says, in the case of Harris v. Clark, (p. 115,) "The research of the counsel for the plaintiff has not enabled me to find a case where it has been held that upon a negotiable bill of exchange the drawee»has been made liable in equity to the holder of the bill without his acceptance or assent. Such an instrument gives to the holder no lien upon the funds in the hands of the drawee.” That case also holds that a draft payable out of a particular fund operates as an assignment pro tanto to the drawee ; that an accepted bill of exchange operates in the same way, but that effect is not given to a bill not accepted. The learned judge also adds, “ The principle appears to be firmly established that a bill of exchange does not of itself give to the holder, either at law or in [230] equity, a lien upon the funds of the creditor in the hands of the debtor until after acceptance by the latter.” The cases are carefully reviewed, and it is unnecessary here to repeat what has been there so well stated. I am unable to perceive any difference, in the application of these* principles, between the case of an unaccepted bill of exchange and a banker’s check. The reasoning is in force here, although in the case just referred to the action was assumpsit to recover upon a bill of exchange, delivered by the drawer to his sister without consideration, donatio mortis causa. The case of Cowperthwaite v. Sheffield, (3 Comst. 243,) was an action of assumpsit to recover the amount of a bill of exchange drawn against a shipment of cotton, which was refused acceptance. The Court of Appeals, notwithstanding" very strong equities in favor of the plaintiffs, decided against the claim that the bill should be held to be an equitable transfer or appropriation of the proceeds of the cotton. There is no evidence or finding to warrant the presumption that the plaintiffs relied upon anything but the credit of the drawer and indorser of this check. There was no verbal arrangement even, that the check was to operate as an assignment of the fund or property in the bank upon which it was drawn. In the case last referred to, it was said, (p. 252,) that such a claim “ could only be in favor of a party who had notice of the arrangement, between the drawer and drawee to appropriate the fund, and who had purchased the bills or became liable upon them, upon the faith of it.” In that case there was a letter' of advice that the bills had been drawn against the shipment of cotton, which, no doubt, induced the Bank of England to discount the bills. But this was held not sufficient to create an equitable appropriation. No such fact exists in this case. Were this court to sustain the judgment, it would, confer a new capacity upon mercantile or banker’s checks not before supposed to exist. The judgment should be reversed, and the Bank of North [231] America be adjudged to return the money with interest, and that the plaintiffs recover the amount of the fund with costs of the action and of the appeal, from the said bank. [New York General Term, June 3, 1867, Leonard, Clerke, and Welles, Justices.]