Martin v. Mechanics Bank , 6 H. & J. 235 ( 1824 )

Buoiianan, Oh. J.

delivered the opinion of the court. Two points were presented to the consideration of the court in the discussion of this cas (¡- — First, That the trans - actions set out in the bill of exceptions, between the appeilees and W. and Jl. JL Woods, amounted m law to a waiver of their right of action, or to an exoneration of the appellant from all liability on account of his endorsement? and second, that by operation of law they amounted to u payment in full of the hill,; which, beginning with the last, will be briefly examined. It is- regretted' that tile account current between W. and A. H. Woods, and the appellees, does not appear in the record,, by which the. character of their dealings might be more distinctly developed, than by the statement in the bill of exceptions, which is, “that on the 27th of May 1820, the day on which the bill fell due, and for a long time before, and"until the 30th of December following, the Messrs-. Woods kept an account with the appellees at their banking house, by. depositing, and from time to.time checking out money; that on the day the bill became due,. they had no money in bank, but that on the 20th of June following the account was balanced, when it appeared that the Messrs., Woods had in bank the sum of g7"00., , That the bill was'discounted before if became-due, and has ever since been held by the appellees.” Now if the amount of the bill in question formed, an item of debt against the Messrs. Woods in that account, making one continued and entire account of all, their dealings, and was so treated by the parties, the principle of Clayton’s case, 1 Merivale, 572, and of Bodenham and Philips vs. Purchas, 2 Barnw. & Ald. 39, would apply; and the balance struck, being the balance of one entire account,, embracing all the transactions between the parties, the amount of the hill constituting a part of the aggregate amount, on the debtor side of the account, it would follow, (the credits exceeding the debits,) that the amount of the bill, was sunk, and the bill in contemplation, of-law discharged,', and could not be. revived as against the endorsors.. But if it was in fact, an item of charge in the account, it was incumbent on the appellant to Isimw it; and not having done so, we must take what appears in the bill, of exceptions as our guide; and looking to that only, it would seem very clear, that the amount of the bill was not carried into the account, but that it was a cash account, consisting entirely of monies lodged in and checked out of bank, unconnected with any other, transaction. In which, according to the usual, course, of such transactions, the bank must have stood charged with, the sums placed in, and credited by the amounts checked out. The statement is, that the Messrs. Woods kept an account with the appellees, “by depositing, and from time to time, checking out money,” confining it in terms to an account of deposits and checks, and excluding the idea if any tiling else forming an item in the account. The case of Hammersley vs. Knowlys, 2 Esp. Rep. 666, much relied on’in argument, was thus — The defendant lent his note to one , Jefferys for his accommodation, who, upon the faith of that note, and others, which he lodged with the plaintiffs as his bankers, borrowed of ihe,m the amount. Jefferys afterwards made a considerable payment into the house, and promised to pay the balance, but in no otherwise made any particular appropriation at the time of the sum paid. The amount of the notes on which the money was lent, constituted the then only subsisting debt, Jefferys afterwards became insolvent, and the suit was brought on the note lent to him by the defendant, in order to cover the general balance which had become due from him to the plaintiffs. But it was held, that as the only subsisting debt, at the time the payment was made by Jefferys on account, arose on the notes deposited with the plaintiffs, the amount paid could not be considered as a mere deposit, but should be applied to that account, and the plaintiffs were only per - milted to recover the balance due an the notes, after deducting the amount paid; which is not like this case; there money was advanced to Jefferys on the frith of certain notes deposited as a security, the amount, of which was charged to him in account, and constituted the only debit; and from his saying, when he made a payment into the bouse, that he would pay the balance when lie received certain money which lie expected, it is obvious that he intended it as a payment in part of the debt he than owed, the plaintiffs, as by balance he could only have meant, the amount remaining due. after deducting; the sum paid; and as the only debt he then owed them arose oil the notes deposited, he must have intended it as a payment on that account, and in part discharge of those notes. But here no money was loaned or advanced by the appellees on che accepted hill to the Messrs. Woods, nor is there the remotest ground for supposing, that any of the different sums of money, occasionally lodged by them in Bank, were either paid or received on that account. On the contrary, it is manifest that they were not. The principle that where a tarn indebted on several accounts, makes a partial payment, without applying it particularly to,either, the creditor may make the appropriation, docs not affect this case. The nature of a transaction may bo such, as to show how a pay-merit was applied, without any express appropriation at tl«i time by the. party making it; and the circumstance that the. bill ip question was neither taken up by the Messrs. Woods, nor cancelled, which should have been done by the proper officer of the bank, if the monies placed there by them were either paid or received on that account, shows that it was not so intended or understood by either.party. But the proof is, that for a. long time before' and after the bill became due, the Messrs. JWoods kept an account with the plaintiffs at their banking house, by depositing, and from time to time checking out money, and that on a balance being struck upon that account, on the 20th of June, (some time after the bill was. due,) the Messrs. T'Foods then had in bank the sum of grOOj but that on the day the bill became, due they had no money in bank. Not that the account had then been glosed, and anew account afterwards opened, on which the balance of gfOQ appeared ori the 20tla, of June, but that on examination th.e. sums deposited were found not to exceed in amount, on the day the bill.became, due, the checks that had been issued* though no settlement appears to have been made, nor any balance struck; but it remained an open^ running account, consisting, entirely of monies lodged in and checked out of bank, on which the sums placed in bank, after the bill was due, produced, the balance that was afterwards struck on the 20th of.June^ the amount of the bill not constituting an item in that account, nor entering at all into the.contemplation of the parties. And being a continuing unsettled account, all the. monies lodged in bank, after the bill became due, must be. understood, (nothing appearing to the contrary-,) as having been so. placed there, on the same terms., and with the same understanding between the parties, that accompanied the. antecedent transactions composing that account; and it as clearly appears how they were applied, as if there had been an express appropriation of them, at the time; that is, they were applied to the account of deposits and checks, in the language of the bill of exceptions, and the application being thus made by the. parties themselves, the law will-not make a different appropriation, which could not be done without violating the manifest understanding and intention of the parties. It is not the. case of a general payment, of which no application was made at the time by either party, hut a particular application by the respective patties, for their mutual benefit anil convenience, according to the common course of business in our monied iusiitutions, of funds placed in bank for that especial purpose, Which they had a right to make; and the transactions between them, in relation to the monies so placed in bank; did not by operation of law, amount to a payment and discharge of the bill, under the circumstances marking the character of the case.

The other position, “that the transactions between the appellees and TF. and A. II. ¡Foods, amounted in law to á waiver of their right of action, or to an exoneration of the appellant from ail liability on account of his endorsement,” Is equally unsustained.

The holder of a bill may forbear to Sue , the acceptor as long as he pleases, and will not thereby discharge the other parties from their liability, provided lie does not agree to give time to the acceptor, without their concurrence.

And if there was no obligation of active diligence on the plaintiffs, as holders of the bill, to sue IP. and A. ÍL Woods-, the acceptors, for the benefit of the' endorsors, they were under no obligation to violate the terms on which the money was obviously placed in bank, and apply it to the payment of the bill for the benefit of the endorsors. It Would have been an abuse of the confidence reposed in them by W. and A. 11. floods} for whom the bill was not. discounted, and there was no greater obligation of active diligence in one case than the oilier.

The mere placing money in bank on deposit by the Messrs. Woods, had not of itself the effect to discharge the appellant from his liability as endorsor of the bill; and the not diverting, by the plaintiffs, the money from the purpose for which it was so placed, and received by them in bank, and applying it to the payment of the bill, was not more to the prejudice of the endorsors, than their forbearing to sue the acceptors, and did not amount in law to a waiver of their right of action against either of the par-lies.

judgment ArrxaMfiOo