British & American Mortgage Co. v. Tibballs , 63 Iowa 468 ( 1884 )

Rothrock, Ch. J.

There is no real controversy as to the facts of the case, which, so far as material to the question involved, are as follows:

The plaintiff, as indicated by its name, is engaged in the business of loaning money on mortgage security. On the first day of September, 1877, it made a loan of $1,200, for five years, to the defendants, Bosella E. and Ilenry W. Tibballs, for which they executed their promissory note, and semi-annual interest coupons at the rate of eight per cent per annum. To secure the note, they executed a mortgage upon a farm in Monroe county. Afterwards the defendant, Massey, purchased the fann, and assumed the payment of the debt secured by the mortgage. The interest-coupons were paid as they became due. In September, 1882, the plaintiff, having its place of business in the city of New York, sent the note- and the last coupon by mail to the Monroe County Bank for collection. A formal release of the mortgage was also deposited with the bank, to be delivered to Massey upon payment of the debt.

The note and mortgage were presented to Massey for payment by the cashier of the bank on the 29th of September. On the 2d day of October, Massey appeared at the bank to make payment. lie was accompanied by one Eoules, who was indebted to him in the sum of $400. Massey had a certificate of deposit of $200 ou the First National Bank in the same town, which had been assigned to him by his daughter, lie went to that bank and drew the money on the certificate, and Massey, Eoules and the cashier of the Monroe County Bank went into a small room in the bank, and Eoules paid Massey $400, which was handed to the cashier. Then Massey delivered to the cashier a demand certificate of deposit upon the bank for $390, which represented money that he had, about a month before that time, deposited with the bank to pay on the mortgage. lie also delivered to the cashier three other demand certificates of deposit upon the bank, which had been transferred to him by his son, amounting in the aggregate to $150. The balance of the debt, which amounted in all to $1,248, was paid to the cashier in currency, .and the note, coupon, and the release of the mortgage were delivered by the cashier to Massey.

The bank made no remittance of any of the proceeds of the claim to the plaintiff, and it suspended payment on the 7th day of October, and on the 11th day of the same month it made an assignment for the benefit of its creditors. The plaintiff was not advised that Massey had paid part of the debt by the surrender of the certificates of deposit until after the bank had suspended payment, when it at once repudiated the transaction, and brought this action to recover, upon the ground that the debt is unpaid to that extent; and the question to be determined is, whether the surrender of the certificates of deposit should be held to be payment.

Counsel for the plaintiff base their right to recover mainly upon the well established rule, that an agent haying a money demand for collection cannot discharge the obligation by receiving anything but- money, unless specially authorized by his principal so eo do; and it is contended that the certificates of deposit were not money, and that they are no more than obligations of the bank to pay the amount of money which they represented to the holder on pi-esentation.

It appears in the .evidence that, on the day in which the transaction occurred, the bank was paying in cash all certificates of deposit presented to it. Roules, who paid the $400 to Massey, drew it from the bank on that day. upon certificates of deposit, and'the bank had on that day over $8,000 cash on hand with which to transact its current business, and at the time of and after the transaction, Massey saw displayed upon its cash table from four to eight hundred dollars. There can be no doubt that if Massey had px’esented his certificates he would have been paid.. If he had done this, and immediately returned the money to the cashier, it is conceded- that this would have been payment. It was shown in evidence that it was customary for the Monroe County Bank, and, indeed, for all other banks, to receive their certificates of deposit in payment of claims in the hands of-the bank for collection. Bnt it is not shown by the evidence that the plaintiff had notice of snch custom. "We do not think it neeessary either to prove the custom or bring notice of it home to plaintiff. Courts take judicial notice of the general customs and usages of merchants,' and of whatever ■ ought to be generally known within the limits of their jurisdiction, such as matters of public history affecting the whole people; (1 Greeneleaf on Evidence, § § 4, 5, 6;) and we think that the system by which nearly all the banks in’this country' transact monetary affairs by the use of checks, drafts and certificates of deposit, and without the actual handling of bank notes or coin, is so well known and understood, that no business man, much less a company whose sole occupation is loaning money, should be allowed to profit by pleading ignorance of it. The plaintiff, in effect, claimed that Massey should’have presented his certificates of deposit at the bank counter, and had the money counted out to him, and then counted it back to the’cashier. The law does not require any such vain and unnecessary formality in the transaction of business. According. to the argument of the plaintiff, Massey should either have done this, or have seen to it that the bank made the proper application of the certificate of deposit to the payment of the debt. This would have been unavailing. Suppose that in such case a person doing business with a bank should insist upon seeing that the proper application was made. He would be advised, and properly' too, that he had his release from the mortgage and receipt for the debt, and that the bank would -attend to-its own business without Iris interference!

It is claimed by the plaintiff’s counsel that the bank was’ not authorized to receive anything but money in the discharge of the debt. "When the interest coupon was transmitted to the bank, it was accompanied with a letter from the plaintiff to the bank, in which it was stated that, although the same was payable in gold coin, yet the bank might receive currency in payment. And the letter accompanying the note directed that the note, mortgage, and release should be delivered “in exchange for a New York draft, free of exchange, for the $1,248 represented by the bond and the coupon.” Now, if Massey had procured a draft on New York from some other bank, and delivered it to the Monroe County Bank, and the bank had delivered him the note, coupon and release of the mortgage, this would have been payment which the bank was authorized to receive, and yet it would not have been payment in money as defined by plaintiff’s counsel. This direction of the plaintiff shows very plainly that it was not expected that Massey should collect together bank notes or coin, and present himself at the counter of the bank and count it down in payment.

It is claimed that the bank was insolvent on the day of the transaction, and counsel claim that the certificates were not worth ten cents on the dollar at that time. If it were shown that Massey knew this at the time of the transaction, there might bfe ground for the claim that he ought not to have entrusted the bank with making the application of the certificates of deposit. But the evidence does not show that Massey knew that the bank was then insolvent. On the other hand, the court was fully warranted in finding from the evidence (which we need not set out) that Massey supposed, and had reason to believe, that the bank was solvent and responsible. He knew that the plaintiff had intrusted its collections in Monroe county to the bank, and he had paid the previous interest coupons to the bank, and most of them in certificates of deposit.

As a further, final and, to our minds, more cogent reason why, under the facts of this case, the loss should not fall upon Massey, we -may say that the Monroe County Bank was a bank of discount, exchange and deposit, and the plaintiff* directed that the proceeds of the mortgage should be transmitted by draft on New York, and it would be an insult to the business intelligence of plaintiff’s officers that they intended that the draft of some other bank should be procured and sent to the office of plaintiff in New York. The Monroe County. Bank was its accredited collection agent, and it was expected that its draft should be sent, and because this was not done was not the fault of Massey.

AFFIRMED.