Strauss v. American Exchange National Bank of New York

Mr. Justice Windes delivered the opinion op the Court. The question presented in this record is whether the County Court of Cook County erred in allowing defendant in error credit in an accounting with the .assignee of Herman Schaffner & Co. for a check or draft of $55,000, dated June 1, 1893, drawn by said Schaffner & Co. on defendant in error, accepted and certified on June 3, 1893, and paid June 5, 1893. Herman Schaffner and A. Gr. Becker, comprising the firm of Schaffner & Co., were private bankers in Chicago, and defendant in error was their Hew York depository and correspondent. Schaffner & Go. had for many years prior to June 1, 1893, done business with the Hational Bank of Illinois at Chicago, which cleared for Schaffner & Go., and paid their checks that came through the Chicago clearinghouse. In the regular course of business between Schaffner & Go. and the National Bank of Illinois on June 1, 1893, Scbaffner & Go. made their draft of that date for $55,000, addressed to defendant in error at Hew York, and payable to W. A. Hammond, cashier of the Hational Bank of Illinois. This draft was on the same day cashed by the latter bank, that is, .it gave its cashier’s check to Schaffner & Co. for the draft, and having endorsed it to the Merchants National Bank of Hew York for collection for account of National Bank of Illinois, forwarded the same to the Merchants National Bank of Hew York for collection in the regular course of business. On the same day Schaffner & Co. sent to defendant in error certain items for collection and credit to their account, aggregating $61,936.62. These items were received through the mail by defendant in error on the "morning of J une 3, 1893, before ten o’clock, and credited to Schaffner & Co. before that hour on its books. After the close of business ón June 2, 1893, said Hammond heard that said Schaffner had disappeared, and thinking that Schaffner & Co. might be in financial trouble, he telegraphed to the president of the Merchants Hational Bank not to present the draft in the ordinary way, but to have it certified at 10 a. m. of June 3d. Between 10 and 10:15 a. m. of June 3d, the draft was presented to the paying teller of defendant in error for certification, and it was certified in the following words: “Accepted June 3, 1893, payable through the Hew York clearing house,” and was then charged to the account of Schaffner & Co. Hp to this time defendant in error had no notice of the assignment of Schaffner & Co. June 2, 1893, said Schaffner did disappear, and on June 3, 1893, the bank of. Schaffner & Co. closed its doors and made a general assignment for the benefit of its creditors, and during the afternoon of that day that fact became known to the cashier of defendant in error, who was then at the bank in charge of its business. June 4th was Sunday, and on June 5, 1893, said draft was paid by defendant in error, which plaintiffs in error, creditors of Schaffner & Co., claim was contrary to their rights and the rights of the assignee -of Schaffner & Co., because, as they say, the draft was payable through the clearing house of New York, by the bank of defendant in error situated there; that the contract was one to be performed in New York, and that the laws of New York fix the rights of the parties; that the certification of the draft created no obligation between defendant in error and the person presenting the draft, except to guarantee the genuineness thereof, and that there was so much money on hand to meet it, that defendant in error should not have paid the draft, but held the funds and accounted to the assignee of Schaffner & Co. for the same. It is conceded that under the law of Illinois, and the facts above stated, the presentation and certification of the draft operated as an assignment to the payee of the funds of Schaffner & Co. in the hands of defendant, in error', to the amount of the draft, and if it were not conceded, that is the law of Illinois. Munn v. Burch, 25 Ill. 40; Brown v. Leckie, 43 Ill. 497; National Bank of America v. Indiana Bkg. Co., 114 Ill. 483. What the law of a foreign State is, in a case of this kind, must be proven like any other question of fact. It appears from the record and abstract, that plaintiffs in error, and also defendant in error, offered and read in evidence on the trial, divers decisions of the courts of New Y ork from different reports, giving the book and page where such decisions might be found, but both abstract and record fail to show what any of such decisions are. So far as the record is concerned, it shows that certain proof was made, but what that- proof was it fails to show. In the absence of any proof as to what the law of New York is, we must presume it is the same as the law of Illinois, which, we have seen, sustains the judgment of the County Court in allowing defendant in error credit for the draft. But if we are to hold that the law of New York is sufficiently proven, it does not sustain the contention of plaintiffs in error that the payment of the draft was wrongfully made by defendant in error. As we have seen, the National Bank of Illinois was a Iona fide holder for value of the draft, having taken it in the regular course of business, and paid for it by its cashier’s check; that it was forwarded to New York for collection, and the day following, when it ivas ascertained that Schaffner' & Co. were probably in financial trouble, Hammond, its cashier, telegraphed to the Merchants National Bank, to which it had been sent, to have the draft presented and certified, which was done by defendant in error, and charged to the account of Schaffner & Co. in the regular course of business, and before it had any notice whatever that Schaffner & Co. were involved financially, and before it had any notice that Schaffner & Co. had made an assignment. The certification, under this state of circumstances, made defendant in error liable to pay the amount of the draft, as it did, on June 5, 1893. After a careful examination of the cases from New York, cited by plaintiffs in error, we are unable to see their application to the case at bar, because of the particular facts of each case distinguishing them from this case. They are all cases of- checks which were raised or altered after being certified. In the latest case cited by plaintiffs in error, being a case of a draft raised after certification (Clews v. Bank of New York, 89 N. Y. 418), the court says : “ By the certification the drawee bank becomes responsible to pay the holder whatever is properly due upon the check, and nothing more.” In the case of Meads v. Merchants Bank of Albany, 25 N. Y. Rep. 146, where the bank teller had certified the check in the usual course of business, the court said, speaking of the certification by the teller: “ His certificate that it was good was a true representation of the state of the account of Plumb with the bank, and bound the bank to hold and retain the amount for which the check was drawn to meet it, on presentation by any person by whom it might be held. It was equivalent to the acceptance of a negotiable bill of exchange, in favor of the holder, for that amount by the bank.” Citing Farmers & Mechanics Bank of Kent Co. v. Butchers and Drovers Bank, 16 N. Y. 128. “ The defendants received this check for value.” In the case of Thomson v. Bank of British North America, 82 N. Y. 1, the law of Hew York in case of a certified check is stated by the court as follows : “ Ordinarily, where the payee or holder of a check which is payable immediately, instead of demanding payment procures the check to be certified, the check is as between the drawer and holder regarded as paid, and the holder must look to the bank whose obligation it has accepted, in lieu of the money, because by procuring the certification he has caused an amount of the drawer’s funds or credit, equal to that for which the check was drawn, to be set apart for the payment of that check, and withdrawn from the control of the drawer, and his funds are as effectually diminished as if the money had been paid; while the bank has given a negotiable obligation to the holder of the check, which is equivalent to a certificate of deposit. If the holder of the certified check should lose it, he would still have his remedy upon it against the bank, but could not have recourse against the drawer, whose funds had thus been locked up or transferred to the credit of another party. And even the subsequent payment of the check by the bank upon a forged endorsement, would not relieve it of its liability upon the contract it had made with the true owner, nor restore • to the drawer the right to draw upon the ' bank for the funds which had been appropriated to the payment of the check, and were consequently no longer his.” See also First Natl. Bank of Jersey City v. Leach, 52 N. Y. 350. We therefore think that in the decree of the County Court there was no error, and it will be affirmed.