Opinion
April, 1895.
Albridge C. Smith, for plaintiff.
John Delahunty, for defendant.
Defendant drew her check for $450 against her account with the Madison Square Bank on August 8, 1893, payable to her own order, and indorsed the same, receiving the amount called for thereby from the Hoffman House, to the credit of whose account the check was placed with the Seaboard National Bank and paid to the latter by the Saint Nicholas Bank, on the same day, as clearing house agent for the Madison Square Bank. On the day following the check was sent by the Saint Nicholas Bank to the Madison Square Bank for collection, but was not presented for payment owing to the fact that the latter institution was on that day insolvent and in the hands of the state banking department.
Notice of the fact that the check was unpaid was sent to defendant by the Saint Nicholas Bank about three weeks thereafter, and upon her subsequent failure to pay the amount this action was brought by the plaintiff as receiver of that bank and a verdict for the amount claimed was directed at the trial subject to a review of exceptions at the General Term.
An objection was made that the complaint did not allege, nor was it proven, that presentment for payment had been made and prompt notice of dishonor given to the defendant, and the point is now presented.
In view of the further facts alleged in the complaint and proven at the trial, an allegation and proof of presentment and notice were not necessary.
A drawer of a check is discharged from liability by reason of the drawee's default if presentment for payment is delayed beyond the space of one day after its delivery ( Syracuse, etc., R. Co. v. Collins, 57 N.Y. 641; Kelty v. Bank, 52 Barb. 328; Cawein v. Browinski, 6 Bush. [Ky.] 457; 99 Am. Dec. 684; Strong v. King, 85 id. 336), but where the drawee suspends payment within the time required for presentment, such presentment and notice of dishonor are not essential in order to charge the drawer. Lovett v. Cornwell, 6 Wend. 369; affd. S.C. reported Cromwell v. Lovett, 1 Hall (N.Y. Super. Ct.) 64. See, also, Syracuse R. Co. v. Collins, 3 Lans. 29. So, also, where the drawee has no funds of the drawer wherewith to pay the check ( Little v. Phenix Bank, 2 Hill, 425; Mohawk Bank v. Broderick, 10 Wend. 304; Murray v. Judah, 6 Cow. 490; Brush v. Barrett, 82 N.Y. 400; Franklin v. Vanderpool, 1 Hall, 78; 3 Am. Eng. Ency. of Law, 212, and cases cited; Daniel Neg. Inst. § 1596), and the same rule properly applies in the case of a partial deficiency of deposit to meet it. Daniel Neg. Inst. § 1597; Eichelberger v. Finley, 7 Harris J. (Md.) 381; 16 Am. Dec. 312.
Upon the day when the check in suit was drawn the defendant's account with the Madison Square Bank was credited with but $440.63, an amount insufficient to meet the check, and that bank had suspended payment within the time allowable to the holder, the Saint Nicholas Bank, for presentment. 3 Am. Eng. Ency. of Law, 214.
Hence the objection was not well founded.
The only other point raised by the defendant, and presented in support of the exception to the denial of the motion for dismissal of the complaint, is that the Saint Nicholas Bank, by reason of the contract made with the Madison Square Bank to pay its depositors' checks when presented at the clearing house, practically stood in the shoes of the latter, and that the most which it could demand from the defendant upon this check would be the difference between her deposit with the Madison Square Bank and the amount paid.
This position is not tenable. The evidence utterly fails to support the assumption that, by the contract between the two banks, the Saint Nicholas Bank assumed the relation held by the Madison Square Bank to its depositors, or had any claim to funds on deposit with the latter otherwise than as holder of checks drawn against it, which checks in no way effected an assignment to the holder of the depositor's funds in bank. Duncan v. Berlin, 60 N.Y. 151; Attorney-General v. Ins. Co., 71 id. 331; Risley v. Bank, 83 id. 324; First Nat. Bank v. Clark, 134 id. 368.
The Saint Nicholas Bank assumed merely to meet certain calls upon the Madison Square Bank by honoring checks drawn upon it, and was secured by a deposit of collateral security, and nothing is found in the relation of the parties which would require the former to relinquish its rights as lawful holder of the checks so received and look only to this security, which, as a matter of fact, in the present instance was exhausted upon the day when payment of the check in suit was made.
The case of Wheatland v. Pryor, 133 N.Y. 97, relied upon by defendant, fails in any manner to bear upon the question.
In so far as it deals with the existence of commercial paper, that case but applies familiar doctrines, with regard to the transfer and ownership of a draft, to a state of facts lacking the remotest connection with the situation before us.
Exceptions overruled and judgment for plaintiff upon the verdict as directed below, with costs.
BOOKSTAVER and GIEGERICH, JJ., concur.
Exceptions overruled and judgment for plaintiff on verdict, with costs.