Whitney v. Esson , 99 Mass. 308 ( 1868 )

Chapman, C. J.

The defendants inclosed the draft of Huse & Lowell to the plaintiffs, with a request that they would pass it to the defendants’ credit. The plaintiffs, in reply, acknowledge its receipt, and say they will pass it to the defendants’ credit when paid. As the defendants made no objection to their retaining it on these terms, they are not bound to pass it to the defendants’ credit unless it' has been paid, or unless they have so treated it as to have become responsible for it.

On the last day of grace they presented it for payment; and on receiving the check of Clapp & Co. for the amount, payable to their order at the Third National Bank, they gave up the draft to them to be cancelled. ‘ No notice of the nonpayment of the draft has been given to Huse & Lowell, and the defendants have thereby lost all claim upon them. The question is raised whether the receipt of this check by the plaintiffs was a payment of the draft. If it was not, the plaintiffs have given up the draft to the drawees without payment, and it has thereby been lost to the defendants unless the plaintiffs are liable for it. If it was paid, the payment has been received by the plaintiffs. It would be unreasonable to hold that it was no payment to the plaintiffs, and yet that they were justified in giving up the draft without payment by the acceptor or taking any steps to hold the drawer.

In Russell v. Hankey, 6 T. R. 12, it was held that a banker in London, to whom bills of exchange had been sent for collection by his correspondent in the country, was not guilty of negligence towards his correspondent in giving them up on receipt of checks drawn upon a banker in London, though the checks were dishonored for want of funds. The decision was based upon the ordinary usage in London. But in Byles on Bills, (5th Am. ed.) 24, it is said not to be usual at this day with London bankers to exchange bills for checks, and it is doubtful whether they would now be protected in so doing. In this case it is agreed by the parties that it is a common practice for holders of drafts to accept the check of the drawee in exchange for the draft, though it is not claimed to be a general established usage. It is undoubtedly true that men who keep bank accounts are accustomed to give checks for their debts, and in most cases their standing is such that these checks are taken by their neighbors as readily as cash. This may make a common practice among men who are dealing on their own account, in respect to such dealings ; but such a practice falls short of a usage applying to the collection of drafts for absent parties. And it is not a reasonable usage that one who collects a draft for an absent party should be allowed to give it up to the drawee, and sacrifice the claim which the owner may have on prior parties, upon the mere receipt of a check which may turn out to be worthless.

By taking the check and giving up the draft, the plaintiffs made the check their own as between them and the defendants, and were bound to apply it to the payment of the debt now in suit, in conformity with their agreement.

Judgment for the defendants on the verdict.