Citizens Bank v. Lay

Lewis, P., delivered tbe opinion of tbe court. We are of opinion that the decree is right, and must be affirmed. The transaction between Pickrell and tbe First National Bank, necessarily operated either as a sale or payment of the note in question. It was not the former, and must therefore have been the latter. It is essential to a sale that there be a seller on the. one hand and a buyer on the other. Here there was neither. The note was deposited in bank by Gilmour, the owner, for collection only. He himself testifies that he “gave no authority to the bank, or to any of its officers, or to anyone else, to sell or transfer the note to anyone.” It is equally certain that the bank did not undertake to sell or transfer it to Pickrell, whatever may have been his object in taking it up. It makes no difference that he declared his intention to the officials of the bank to deposit it as collateral plsewhere, and that at his request it was delivered to him uncancelled. The duty of the bank was discharged when it received the money and surrendered the note, and this'was all that it did or intended [439] to do. The payment by Pickrell was therefore a payment of a debt which he had covenanted to pay, and the note was thereby extinguished. In Lancey v. Clark, 64 N. Y. 209, the defendant made, his note for the accommodation of the firm of Lambert & Lincoln, for whom it was discounted. Before the note matured Lincoln wrote to the plaintiff to take up the note, and to furnish money for that purpose. The plaintiff sent the money to Lincoln, who placed it in bank to his individual credit, and on the day the note fell due took up the note with his individual cheek. He did not assume to act for the plaintiff, or ask to have the note transferred to anyone. He asked to have the note protested, so that he could hold the indorser and maker after protest. After he had thus paid and taken it, he sent it to the plaintiff. In an action on the note, it was held that the plaintiff did not take title from the bank, but from Lincoln, and subject to any de-fence against it in the hands of the latter; that the bank could not be made a seller without its knowledge or consent, and did not transfer the note, but only took payment, and that the plaintiff ivas not entitled to recover. The coui’t said: “ The plaintiff did not take title from the bank. It matters not that he furnished the money, and that Lincoln promised to use it in taking up the note for him. It matters not that the note AATas protested, so that the indorser and maker could be held, or that the bank did not intend absolutely to discharge and cancel the note. The question is, did the bank transfer or sell the note to the plaintiff? * * * All the bank did was to take payment of the note, and deliver it up to a party paying and liable to pay, after protesting it, so that he could make such use of it as the law and the facts would authorize. It did not transfer or intend to transfer it. The plaintiff, therefore, took no title to it from the bank, but he took it from Lincoln, and cannot therefore enforce it against the defendant.” The same principle was asserted in Eastman v. Plumer, 82 N. [440] H. 288. In that case the defendant executed the note upon which the suit was brought as surety. At its maturity it was taken up by the principal debtor with money furnished for the purpose by the plaintiff. "Whereupon, the note was surrendered, but the plaintiff was not known in the transaction by the holder to whom the money was paid. It was held that the note was satisfied, and that the action was not maintainable. To the same effect is the opinion of Judge Hughes, of the United States district court, in Dooley v. V. F. M. Ins. Co., 3 Hughes, 221. See also, 2 Danl. on Nego. Insts. sec. 1222. In the light of these principles, the note in question when delivered to Pickrell was paid and satisfied. Por although the maker of "a promissory note payable at a bank has until the close of business hours on the day of its maturity in which to pay, yet payment may be demanded, and hence may be made, at any time after the commencement of business hours on that day. 2 Danl. on Negó. Ists. secs. 1210,1235. The authorities, as counsel have said, are not agreed upon the point as to the precise time when suit may be brought on a dishonored note payable at a bank; some holding that.it cannot be brought until the day after its dishonor, others that it may be brought at any time after the expiration of business hours ou the day it is payaable, and others still, that it may be commenced as soon as payment is refused on that day. But we do not perceive the analogy between any of these cases and the question before us. For whatever may be the rights of the maker in respect to a suit against him, undoubtedly he may pay at any time after payment is demandable, and such payment will operate as an extinguishment of the note. So here, when payment wras made by Pickrell, the note was discharged, and could not thereafter be negotiated by him. He w^as not a party to the note, and in taking, it up wras only fulfilling his contract with the maker. It is certain the latter was discharged by the payment to the bank, and the lawr is well settled that after payment at maturity, [441] a note cannot be re-issued, so as to charge any party thereto who otherwise would he discharged, unless with his knowledge or consent. Story on Bills, sec. 223; 2 Danl. on Nego. Ists. sec. 1233; Burbridge v. Manners, 3 Camp. 193; Gardners. Maynard, 7 Allen, (Mass.) 456. But if it were conceded that the note was transferred hy the bank to Pickrell, and that having been deposited with the Merchants National Bank before 3 o’clock P. M. on the day of its maturity, the latter bank acquired a complete title thereto, the result would be the same. Por, when afterwards surrendered to Pickrell, the note was long past due, and the Citizens Bank, the appellant here, acquired the note, not-from the Merchants National Bank, but from Pickrell, and therefore took it with all its infirmities. Now, inasmuch as Pickrell, by his covenant with Chaffin had bound himself to pay the note when due, it is plain that in an action on the note there could have been no recovery by Pickrell against Chaffin; and if the note as to Chaffin was paid, the trust-deed executed by the latter to secure its payment was in effect discharged. It is insisted, however, that Pickrell having delivered the note to the Citizens Bank as a valid, subsisting security, his alienee, Lay, is estopped from denying that it was. But we cannot concur in this view. The vitality of the note in Pick-rell’s hands was gone, and could not be restored -without Chaf-fin’s consent; and whatever may have been the effect of the former’s representations upon him, it is clear that the alleged estoppel cannot operate as against Lay. The latter was a purchaser for valuable consideration of the lot upon which the trust-deed had been executed, and testifies that at the time of the purchase he was informed by Pickrell that the note had been paid. This Pickrell denies, but the circumstances of the case tend to sustain the statements of Lay. It is not shown that Lay had notice of any representations by Pickrell to the Citizens Bank, or of the fact that the note secured by the trust442 deed bad been passed to the bank; and although the lien of that deed had not been formally released on the record, yet he had the right to rely on Pickrell’s representations to him that the note had been paid. He was, therefore, a purchaser without notice of, and consequently is not bound by, any estoppel in pais resting on his vendor, Pickrell. See Bigelow on Estop-pel (8d ed.), 378. DECREE AEPIRMED.