Exchange Bank of Virginia v. Cookman

Polsley, J. This was an action of debt brought on a negotiable note for 2,000 dollars, dated June 18th, 1856, payable one hundred and twenty days after its date, at the office of the Exchange bank of Virginia, at "Weston, drawn by Parker B. Cookman and endorsed by the defendants. To which action the defendants pleaded payment and nil debet. At the trial of the cause, after the plaintiff had given the note in evidence, the defendants gave evidence tending to prove that in the latter part of September, 1856, the plaintiff' agreed with the defendant, Parker B. Cookman, that he might make payment of the said note by a deposit of the amount thereof in the Lancaster bank, in the city of Lancaster, in the State of Pennsylvania, to the credit of the plaintiff; and proved that the said defendant did on the 17th day of October, 1856, deposit 3,000 dollars in the said Lancaster bank to the credit of plaintiff. Thereupon the plaintiff' gave evidence tending to prove that it was the — 73 — established custom between the Exchange bank and its dealers, and particularly with the defendant, Parker B. Cookman, that the dealer might deposit funds in any one of several banks in Pennsylvania or Maryland to the credit of the plaintiff; and for the plaintiff on receipt of notice of such deposit to credit the same to the dealer; or, as stated, negatively in the bill of exceptions; that it was the custom and usage of the plaintiff not to give the credit until notice of such deposit was received, and that the defendant, Parker B. Cookman, had notice of and had long acquiesced in that mode of having credit given to him on his indebtedness to the plaintiff. The plaintiff also proved, that the notice of the deposit of the 3,000 dollars was not given until more than a month after it was made, and that the Lancaster bank at the time of the deposit, and for a month after was good and solvent, hut that it failed and became insolvent before the plaintiff received the notice of the deposit. After evidence had been given tending to prove the facts aforesaid, the plaintiff moved the court to instruct the jury, “ That if they believe from the evidence that the defendant, Parker B. Cookman, commenced dealing with the Exchange hank, at Weston, by borrowing money therefrom and executing his notes payable therein in the year 1852, and continuing so to do to September, 1856, and to make payments of his indebtedness by deposits of money in the Lancaster bank and other banks in Pennsylvania, to the credit of the. Exchange bank, at Weston, and that it was the custom of the Lancaster bank to give prompt notice of such deposits to the plaintiff, and that the defendant, Parker B. Cookman, did not receive credits on his indebtedness to said Exchange bank for such deposits until the Exchange bank received notice of such deposits, and that it was not the custom of the Exchange hank, at Weston, to give him credit for such deposits until notice thereof was received: and that the Lancaster bank failed and became insolvent on the 17th day of November, 1856, and has so continued, and that the plaintiff did not receive notice of the deposit so — 74 — made on the 17th day of October, 1856, by said Cookman until the 4th day of December, 1856; that then the said deposit of the 17th of October, 1856, in the said Lancaster bank to the credit of the Exchange bank, at Weston, should not be regarded by the jury as a payment of the debt in the declaration mentioned, or as a set off against the same.” There were three other instructions asked by the plaintiff, but all of them, though differing in form, were in substance and effect the same as the foregoing, all of which the court refused to give, and to which refusal the plaintiff filed four several bills of exceptions; the fourth of which in the words of instruction as above quoted, embrace substantially all the points raised in the others, or any of them. The attorneys for the plaintiff in error contend, “ First, That the established custom of the banks and the previous transactions of the parties for at least four years, and the established custom of dealing between them particularly, the fact that the plaintiff never gave credit to the defendant under similar circumstances with the present, until notice was received that the deposit had been made, and that he acquiesced in that mode of having credit given to him on his indebtedness to the plaintiff, constitutes a substantive part of the agreement in the present case, to the benefits of which the plaintiff is entitled. “ Secondly, That what is claimed as a payment by the defendant was made without authority of the plaintiff, before the maturity of the note.” It may be proper to remark here, in order to exclude a conclusion, that no similar circumstance is shown to have ever occurred between the parties. The debt in controversy was contracted on the 18th day of June, 1856, and it is apparent, on the face of the record, that two several agreements were made by the parties as to the place- of payment. The first one was at the time the debt was credited; of which the note itself is evidence: and by its terms the payment was to be made at the office of the plaintiff, in Weston; or, if the custom constituted a substantive part of the agreement, at either of the several — 75 — banks in. the State of Pennsylvania, or in Baltimore, at the option of the defendant. The second contract, as to the place of payment, was made in September, about 90 days after the former; by which it was agreed, as set out in the first hill of exceptions, that the defendant might make payment of said note by a deposit of the amount thereof in the Lancaster bank, to the credit of the plaintiff. Supposing the custom as proved, to be good, to which of the two contracts does it attach ? — to the original, when the debt was negotiated, or to the subsequent one ? In substance the custom was, That the dealer might deposit funds in any one of several banks, at his option, to the credit of the plaintiff, and that the plaintiff on receiving-notice of such deposit should credit the same to the dealer.” This was the general custom between the Exchange bank and its dealers, and particularly with the defendant, Parker B. Cookman, and always attached as soon as the debt was created; and if a good custom, became a substantive part of the contract — as much so as if it had been incorporated in it, or endorsed on the note. "With such endorsement on the note, or under such general custom, a deposit in any one of the several banks referred to, of the amount of the note to the credit of the plaintiff, with reasonable notice thereof, would have constituted a good payment. In other words, the custom gave the defendant the right of election as to the depository, but imposed on him the duty of giving reasons ble notice thereof to the plaintiff before he was entitled to credit. "Without such reciprocity the custom would evidently not be good. Under the supposed contract, made in September, the defendant had no such election, — the right to pay, at any other place than the office of the plaintiff, was expressly limited to the particular bank designated in the agreement. This was inconsistent with, and repugnant to the custom.— If therefore the custom was .a substantive part of either agreement, it must have been the original and not the after contract; and being a substantive part of the former, the latter notwithstanding its phraseology, must be presumed to — 76 — have been made at tlie instance, and for tbe benefit of the plaintiff; because it was manifestly to the prejudice of the defendants, — they could not possibly derive any advantage from it; but on the contrary, by assenting to it they surrendered their previous customary right to deposit in any one of several banks — the Lancaster bank inclusive, and agreed to be limited to the latter. This view of the question, without controverting the arguments, or the authorities cited by the attorneys for the plaintiff in error, puts the custom out of the case, — if the latter contract is supposed to be proved; and the verdict of the jury is conclusive on that point. The special agreement having superceded the original, and being inconsistent with the custom, must be interpreted like any other contract, by the ordinary and well established rules of law, independent of any usage or custom. That agreement was, “ That the defendant might make payment by a deposit of the amount of the note in the Lancaster bank to the credit of the plaintiff.” And the proof is, that on the I7th of October, before the note was due, the defendant did deposit in said bank the sum of 3,000 dollars to the plaintiff’s credit; but that notice was not given to the plaintiff of the deposit until more than a month afterwards, and that said bank was solvent at the time the deposit was made, but had failed before the notice was given. "Was it the duty of the defendant, under the special contract, to give the plaintiff notice of the payment or deposit? this is the only remaining question. Under the custom it was clearly so; and it was reasonable that such notice should be given: because the defendant had the option of selecting any one of several depositories; but by the special contract a particular depository was appointed by the plaintiff': and by authorizing the defendant to make payment’ in the Lancaster bank, it was, if not expressly, certainly by implication, constituted the agent of the plaintiff to receive the money, and was in no respect the agent of the defendant. It was, as if the plaintiff had — 77 — drawn an order or draft on the defendant directing Mm to pay the amount to tbe Lancaster bank. The payment of the draft on presentation, would have been a complete satisfaction and discharge of the debt. It is true that the special contract was not in writing, but if proved that does not effect its validity. It was a verbal authority or direction to pay to the Lancaster bank: and payment was made literally according to the direction — to the satisfaction of the agent — wMch is as conclusive as if it had been made to the creditor in person. Payment “is the fulfilment of a promise; and it must be made to the creditor himself, or his assigns, or to some person authorized by him to receive it, either expressly or by implication, and when properly made discharges the debtor from his obligation.” Bouvier’s Law Diet., vol. 2, page 303. That the Lancaster bank was authorized by the plaintiff to receive payment, is settled by the decision in the case of Eyles vs. Ellis, 4 Bing. 112-13—13 Com. Law Deports 365. The case is directly in point, and is conclusive as well of the question of agency as of notice. In that case, as in this, the depository failed after the payment was made. Notice of the payment was duly sent to the creditor, but the court' in its decision did not oven allude to the notice. The point decided was, “ That the creditor, by directing the debtor to pay to the Maidstone bankers, made them his agents to receive the money and that the payment to them discharged the debt.” • Payment to an agent is, in law, payment to the principal, and is, of course, notice to him of that fact.— 1 Leading Cases 499-500. No analogy, or similarity is perceived between this case and that of Harper vs. Patton in 1 Leigh 306. In that case, in consideration of forbearance, it was agreed that Patton, the creditor, should send Harper’s flour to his own commission merchant to be sold, and that the nett proceeds should be applied to Harper’s credit. Patton accordingly sent the flour to the merchant with instructions to sell and remit him the proceeds. The merchant sold the flour and received the money, but failed, and without any fault of Patton the — 78 — proceeds were lost. It was held, by a majority of the court, that Harper must bear the loss. The case was decided upon its own circumstances, and settled no principle of law. The eminent reporter himself, was unable to extract any rule or principle from the opinion of the court, but after giving a synopsis of the facts says: “It was held that Harper must bear the loss.” It seems to have been the opinion of the court that the flour remained the property of Harper until it was sold — that then the proceeds were to be remitted to Patton, but that he was not bound to give the credit until they were received, and that as they were lost without any fault of his, Harper must bear the loss. This was in conformity with, and resulted from the terms of the agreement. It was not the flour itself, but the nett proceeds thereof, that was to be credited. Por selling the flour and remitting the proceeds the merchant was the factor or agent of Harper. Patton had no other control over the flour than to ship it, and to order the proceeds to be remitted to himself. He performed his part of the agreement, but the agent failed, no proceeds were received, and of course no credit to be given. In the case now before us the debtor himself was to pay into the depository — the agent of the creditor — and this was all that he was required to do by the terms of the contract. It was the last act to be performed, and its fulfilment discharged the obligation. To the second objection, it is sufficient to say, that the payment being made to, and received by the plaintiff’s agents it is immaterial whether it was made at, or before, the maturity of the noto. I am therefore of opinion that the instructions were all properly refused, that there is no error in the record, and that the j udgment ought to be affirmed.