Clews v. Bank of New York National Banking Ass'n , 8 Daly 476 ( 1880 )

Joseph F. Daly, J.

The order and judgment should be reversed. A liability on the pari, of defendant to plaintiffs was created by the neglect of the bank, through its paying-teller, to inform plaintiffs, when the check was presented with an inquiry as to the certification, that payment of the check had been stopped ; and to communicate the other facts within its knowledge affecting the validitA^ of the check.

The ordinary rule as to the liability of a bank upon its certification of a check, and upon declarations of its teller as •to such a certification, only apply where the bank has no special knowledge of the history of the instrument and of facts connected with the drawing, delivery, indorsement, validity, &c. (Marine National Bank v. National City Bank, 59 N. Y. 67.)

Where the bank and its officers are in possession of special knowledge they are under the same obligation as natural persons to disclose it when an omission to do so must result in injury to the person applying to them for any information on the subject, with an evident purpose of acting upon information so obtained. It" is urged that the only question put to the paying-teller related to his certification, and that he waa not bound to answer, except as to that. Under no view oi legal obligation would the-drawer of the check be justified in omitting to state that he had stopped pajnnent of his check to a person applying merely to know if his signature were genuine. It is difficult to understand on what ground the drawee (the bank) is excusable in withholding the fact that payment has been stopped because the only information expressly desired related to the certification. As drawee, the bank was not justified in omitting to state the important circumstance that the check would not be paid.

If it Avere the duty of the bank to impart the information that the check had been stopped, the paying-teller Avas the officer chargeable Avith such duty Avhen applied to for any information respecting the instrument. He is the officer to whom all checks in the regular course of business are presented for payment, and is the person to Avhom, in the ordinary course of business, the superior officers of the bank would and should communicate the intelligence that payment of a check has been stopped for the protection of innocent holders as well as dealers. All persons applying to the paying-teller have the right to rely upon so plain a course of business. If the paying-teller is not informed by the cashier, or other officer, receiving notice to stop payment, there is an omission of a plain duty on the part of those officials. While the person making inquiries of the paying-teller is justified in assuming that the latter must know if the payment is stopped, and in assuming that the bank has no knowledge nor information affecting the validity of the check if nothing is imparted to him on that head, the paying-teller on the other hand, is bound to assume that where a check is presented and inquiries made respecting the certification, in the ordinary course, the party requiring information contemplates a business transaction with the instrument, in which he will treat it as of value, or of no value, according to the information he receives. As paying-teller of the drawee, therefore, the officer is not justified in omitting to state facts in his knowledge affecting the value of the instrument as a genuine check, especially (as before remarked) the fact that it is not to be paid; and the parties applying have a right to expect that he will state such facts, and also‘that if payment has been stopped he, as pajdng-teller, will know it.

The notice which the bank had in its possession when plaintiffs made their inquiries was of a specific fact, viz.: that the draft had not been received by the payee; that a duplicate had been drawn, and that payment on the original must be stopped. The notice also called the defendant’s attention to the fact that it had certified the original draft. The number was specified 73,436, and the draft as raised and altered still bore that number, affording unerring means of identification. It may be that the bank can consistently with ordinary care explain the reason why a draft with this number was suffered by it to be circulated as an instrument which it had no reason to know was not good when payment of that number had been stopped. It will be for a jury to consider the circumstances and to decide.

The fact that the notice from the drawer stated to defendant that the payee of the draft was Augusta H. D. Goodman, and that she had not received it, and their silence upon this point when they must have known that the draft presented had been altered as to the payee, and was not indorsed so as to transfer title, relieves the case from embarrassment on the question of want of title in plaintiffs. With knowledge of all the facts the defendant suffered the plaintiffs to consider and deal with the paper as genuine in all respects, and is estopped from denying it.

Chables P. Daly, Ch. J., and Labbemoee, J., concurred.