Bank of Columbia v. Fitzhugh

Earle, J. at this term, delivered the opinion of the court. This is a suit on a promissory note, brought in Washington county court by the appellants against the appellee, who endorsed the same. The note was given on the 31st of March 1818, by Samuel Fitzhugh, of the District of Columbia, to William Fitzhugh junr. of Washington county in this state, for @2500, payable to him, or his order, 60 days after date, and negotiable at the Bank of Columbia; and being endorsed to the bank, it was discounted for the accommodation and use of the maker. At the trial of the case the note was offered in evidence to the jury, the endorsement of Wm. Fitzhugh junr. on the same being admitted to be of the proper handwriting of the defendant. And it was proved by the plaintiffs, under a commission, that payment of the note was demanded of Samuel Fitzhugh, the drawer, on the third day of June 1818, being the day after the three days of grace, and the same was refused by him, and that notice of nonpayment was given to Wil? — 247 — Ham Fitzhugh junr. by a letter deposited in the post office at George Town, directed to Wm. Fitzhugh junr. Hager’s Town5 Maryland, dated and deposited in the post office on the said third day of June 1818. The plaintiffs further proved under the commission, that it had been the constant and almost undeviating practice and usage of the Bank of Columbia, from Its first establishment in 1793, until after this note became due, to demand payment on the day after the three days of grace, and to give notice oí nonpayment to the endorsers on the same day; that a similar usage had prevaled for many years in all the banks in Washington and George Town-, and that the same was of public notoriety, and universally and familiarly known to all merchants, and others, of Washington county, in the District of Columbia, where the said banks were established» And it being admitted that the defendant, at the time he endorsed the note, and also at the time the same became due, was not a citizen of George Town, in the District of Columbia, but that the said defendant was, at the times above mentioned, amitizen of this state, residing in Washington county, the plaintiffs, by their counsel, prayed the opinion and direction of the court to the jury, that if they should find, from the evidence ia the cause, that from the year 1798 up to the time the note offered in evidence became due, it was the established practice and usage of the Bank of Columbia-, and that it was the usage and practice of all the other banks in Washington county, in the? district, from the time they respectively went into operation, until and at the time the said note became due; and that it was the universal practice of merchants in the said county to present negotiable notes that were due and unpaid, to the drawer for payment, on the fourth day, i. e. on the day after the third dayof grace; and that suchusage and practice was of public notoriety, and familiarly known to all merchants, traders, dealers and customers, in the said county; and that the negotiable note, offered in evidence was presented fbr payment to the drawer, and notice given to the defendant, as endorser thereof, according to the said usage and practice, that then the plaintiffs were entitled to recover. The court refused this opinion and direction, and their refusal gave rise to the exception, the matter of jyhich we are now to revise and consider. — 248 — This usage of the Bank of Columbia of demanding payment bn the fourth day, has been recognized in this court on a former occasion, in the case of the Bank of Columbia vs Magruder, 6 Harr. & Johns. 172, as a reasonable and legal usage, the evidence of which should be received, to come at the understanding of parties in their contracts, which are made with reference to the usage. And it was determined, by that case, to be of the essence of the contract, and to constitute a part of it although, not expressly incorporated in it, where it was personally known to the party. This decision was given upon the case submitted, which was most streneously urged on the ground of knowledge, brought home to the defendant; and however strong its expressions are, it was not its object to touch any other subject than' the one considered; and it was by no means its view to close the door against the question now raised, which we understand to be, whether, without actual knowledge, the usage is binding on the appellee who endorsed the note to the Bank of Columbia? A usage of universal prevalence becotnes a part of the existing law, and is to be noticed ex oficio by the courts of justice; but a particular usage has a circumscribed and limited application, and must be supported by proof. Where it is well established, it is as obligatory on the objects of its operation as the general law. The usage under our notice is of this fixed and established character. It is of great notoriety, and long standing; is recommended by its uniform and unvaried operation; and has the sanction of the judicial tribunals of the country. For years back it has been made to bear on merchants and others dealing with the bank; and the first inquiry is, whether the appellee’s acts have brought him within the sphere of its operation? And we are strongly inclined to think they have. The note, made negotiable at the bank, was endorsed by him for the accommodation of the maker, and he appears to us as much identified with the negotiation, and to have become as much a dealer at the bank, as if he had endorsed it for value received. His remote situation makes no difference, as the transaction brings him in contact with the institution, and he and the drawer have both to look to the district as the place where the money is to be paid, and the contract to be performed. If for the pur* — 249 — poses of this decision the appellee is to be viewed in the light of a dealer with the bank; the next and mofe important inquiry is, is he bound to take notice of the uságe, and will the lav?' presume his knowledge of it? The argument is, that he is placed in a situation to know, and is therefore presumed to know. There are usages analogous to this; which Have been resorted to in the interpretation of contracts, where it will be found from the authorities, the party has been deemed to be bound without personal of special knowledge; Such, among others, is the case of Noble vs Kennoway, 2 Doug. 511, where the distinguished judge,, who pronounced the Opinion of the court on the construction to be given to’ a policy of insurance, is represented to say, "every underwriter is presumed to be acquainted with the practice of the trade he insures; and that, whether it is recently established or not. If he does not know it, he ought to inform himself; it is no matter if the usage! has only been for a year.” The case of Vallance vs Dewar, 1 Camp. 503; is to the same effect. The action ivas Upon á policy, and in giving it an interpretation, Lord Ellenborough adjudged, that a usage which was notorious must be presumed to be equally within the knowledge of both parties; and if a usage be general though not hill-form, the underwriters are bound to take notice of it. There was a Case decided in the supreme court of New York, in the year 1820, which bears á yet closer analogy to the case We are considering, inasmuch as it relates to the demand of payment of promissory notes. It is the casé of the Bank of Utica vs Smith, and is reported in 18 Johns. Rep. 230. The note was made payable at the Mechanics’ Bank in the city of New-York, and payment wás démanded within a quarter of an hour after 3 o’clock, P. M. which is the time for closing the bank as to ordinary business. This supposed irregularity was seized on, among others, to defeat the claim, and the defendant bottomed himself on the undeniable general position, that presentments for payment must be made at a bank, where it is the appointed place of payment; during the regular hours of business; To this was opposed the usage of the Mechanics’ Bank, whose course of doing business was to allow 15 minutes after banking hours for the presentment and payment of notes. It — 250 — was contended by counsel, that the usage was not sufficiently shown, that it ought to be proved and brought home to the knowledge of the defendant; but it was notwithstanding decided by the court, that the bill was properly presented at the bank for payment, and although it was near a quarter of an hour after the usual time for closing the bank as to other business, it was yet within bank hours, the 15 minutes being the accustomed time for such presentments, and of the course of business at the bank, the defendant being the endorser, ought to have informed himself. His admitted residence was at Peterborough, Madison county, in the state of New-York. But h was earnestly pressed upon us, on the argument, that the usage of the Bank of Columbia is entirely unlike the usages which were decided on in the cases above mentioned,because it is directly repugnant to the general law of the district. By that law, which is the law of this state, demand is made on the third day of grace, and not on the day after the third day. We have to confess We cannot perceive that this argument has much force in it. We have already determined, that the contract with the bank, is not made with a reference to the existing law, where the party has a personal acquaintance with the custom; and we think it will be no great stretch of the adjudication to say, that the contract is not made in reference to the general rule, where the particular rule is presumed to be in the knowledge of the party; if in the first case, so in the last, the' usage enters into the contract, and becomes a part of it, and must be regarded in the interpretation of it. Direct authorities, however, are to be found, where the particular custom has been determined to prevail over the existing law, although in terms opposed and repugnant to it. The case of Cutler vs Powell, 6 Term. Rep. 320, is of this description. The suit was upon a promissory note given to the mate of a ship for a certain sum of money, provided he proceeded on his voyage, and continued to do duty to the port of destination. He died on the voyage, and agreeable to the principles of the common law, it was clear that nothing was due on the note, as he did not continue to do duty to the port of destination. An inquiry, nevertheless, into the usage in such cases, was directed to be made by the court; and all the judges expressed a willingness to sanction an allow — 251 — anee for the time the service was performed, if the usage would warrant it. A case still more to the purpose on this point was decided in the year 1809, in the supreme court of errors in the state of Connecticut, Halsey vs Brown, 3 Day’s Reports, 346, where assumpsit was brought against the owners of a brig for certain gold and silver coins shipped on board, to be transported and delivered to a mercantile house in New-London, for which a bill of lading was given by the master in the usual form. On the trial of the general issue, the ship owners, to repel their liability, gave evidence of a usage or custom that the freight of money received by the master of a vessel was his perquisite; that he was to be compensated for the transportation of it, and not the owners of the vessel,'and that the contract was considered as being personal, and of individual obligation, but not as the contract of the owners. This evidence was objected to, but suffered by the court to go to the jury, and the defendants obtained a verdict; on a motion for a new trial it was forcibly argued, that the law rendering the owners liable for goods received by the master to be transported, was the settled law of the state; that the contract of the master was the contract of the owners; his nondelivery was their nondelivery; and that the maxim respondeant superiores well applied. The court stated the true question to be, whether evidence of a particular custom or usage could be given in evidence to control the general law; they admitted, that by the general law owners of vessels were answerable for the contracts of their masters; but they said it may be controlled by a special local usage, so far as that usage extended, which would operate on contracts made in view of or with reference to it; and they refused a new trial. It is believed many other cases might be produced where special usages have been decided to control and govern the general law repugnant to them; but the court are fully satisfied on the point, and deem it unnecessary to multiply references to authorities. It is their opinion, that the defendant is placed in a situation to be acquainted with the above usage of the Bank of Columbia, and must be presumed to know it; and that his contract is to be considered to have been made in reference to the — 252 — usage, and not to the general law, which confines the demand of payment to the third day. JUDGMENT REVERSED, AND PROCEDENDO AWARDED.