President of the Montgomery County Bank v. Albany City Bank

The plaintiff, the Montgomery County Bank, being the owner of a draft drawn by Loucks & Cray upon Morgan Cray, of the city of New York, indorsed by L. Jones, and Jones & Hart, transmitted it to the Albany City Bank, its correspondent and agent in the city of Albany, for collection. That bank received it on the 8th of July, and immediately transmitted it to the Bank of the State of New York, its Correspondent and agent in the city of New York, for the same purpose. It was received by the latter bank on the 10th of July (the day of its maturity), and sent immediately to the [13] drawee, and left with him until the next day (July 11th), when payment was for the first time demanded, which was refused, and notice of non-payment was given to the drawers and indorsers on the same day. The drawers were insolvent. The indorsers were responsible, but refused to pay because payment was not demanded of the drawee on the 10th of July, and notice of non-payment then given. Held, that the indorsers were discharged, and that the plaintiffs were injured, to the amount of the draft, by the neglect of the bank in New York to present it and demand payment in season. That the Albany City Bank was responsible to the plaintiffs for the negligence of the bank in New York. That the latter bank was responsible to the Albany City Bank alone for its acts and omissions, and was not liable to the Montgomery County Bank, as it had made no contract with that bank, express or implied, and owed it no duty. That the objection to the recovery against the bank in New York was not waived by the neglect of that bank to demur to the complaint, but was properly taken on the trial, as neither the complaint nor the proof presented a cause of action against that bank. The Supreme Court having rendered judgment against both defendants jointly, for the amount of the draft and interest, the judgment was affirmed as against the Albany City Bank, with costs, and reversed, and the complaint dismissed with costs, as against the Bank of the State of New York. The defendants joined in the answer, and in bringing the appeal. (S. C., 8 Barb. 396; 7 N. Y. 449.)