First National Bank v. Fourth National Bank , 1882 N.Y. LEXIS 237 ( 1882 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This court held on the former appeal (77 N.Y. 320) that the whole duty of the defendant to the plaintiff, was not discharged by the presentment, demand and protest of the draft, within such time as is required by the general rule of law, in order to preserve the liability of the drawer, but that having on March 26, 1866, taken the check of the drawees for the draft, it was bound to make immediate presentment, and having delayed the presentment until the 27th, whereby the collection of the check was prevented, in consequence of the failure of Culver, Penn Co. on that day, the defendant was chargeable with negligence, and a right of action therefor accrued to the plaintiff.

But the court reversed the judgment rendered for the amount of the draft, on the ground that it did not appear that the plaintiff had sustained damages to that extent through the defendant's negligence. The complaint, in one aspect, proceeds on the theory that the drawers had not been legally charged by due presentment and protest, and it averred that if legally charged the draft could have been collected from the drawer. This court held the presentment and demand on the 27th, and the service of notice of protest on the 28th, was sufficient within the law merchant to charge the drawer, and that as it appeared that the remedy of the plaintiff against the drawer of the draft was preserved, and that the drawer was solvent, the plaintiff was only entitled to recover the actual damages sustained. The cause was, therefore, sent back for error in the rule of damages.

On the second trial, from the judgment on which, this appeal is taken, the plaintiff for the purpose of showing that it had sustained damages from the defendant's negligence to the full amount of the draft, produced in evidence the record of a judgment rendered in the Court of Common Pleas of Crawford County, Pa., in an action by the present plaintiff against the National Bank of Crawford county, a Pennsylvania corporation, the drawer of the draft, whereby it was adjudged that the transaction of March 26, 1866, constituted, as between the defendant, the drawer, and the plaintiff, the payee, a payment of the bill, and judgment passed on that ground for the defendant. This judgment rendered by a court of competent jurisdiction in an action presenting all the material facts conclusively established, as between the parties thereto, that the receipt of the check of Culver, Penn Co., and the omission to make due presentment thereof, discharged the drawer's liability on the draft. The record was, we think, competent evidence in this case upon the question of damages. It seems to us to be quite immaterial to inquire, whether the same judgment would have been rendered if the action had been brought in this State. The plaintiff was compelled to resort to the courts of Pennsylvania, to bring its action against the drawer. No fraud or collusion is shown. The defendant in this action, by its failure to discharge its duty as collecting agent of the plaintiff, made itself liable for the damages the plaintiff has sustained through such neglect of duty. The practical effect of the Pennsylvania judgment, is to deprive the plaintiff of any remedy against the Crawford County Bank. It does not lie with the defendant to say that if the question had been tested in another jurisdiction, the result would have been different. We think, therefore, that the plaintiff was entitled to recover, under the proof on the second trial, the full amount of the draft as damages for the defendant's negligence.

The referee found, upon sufficient evidence, that no uniform custom in regard to accepting checks from the drawees of sight bills in payment of drafts sent to collecting banks in the city of New York, was proved. The evidence shows that the practice varies with the credit of the drawee, the condition of the money market and other circumstances, and among different banks, and the plaintiff had no knowledge of any such custom or practice. So also as to the alleged custom of collecting checks through the clearing-house, by which they are not presented to the bank on which they are drawn until the next day after they are received. This practice prevailed only among banks making exchanges through the clearing-house. It did not prevail among other banks, or with savings banks, or trust companies, or with respect to checks on private bankers. The evidence failed to establish a certain, uniform or general custom, in respect either to accepting checks for drafts or collecting them through the clearing-house. It is unnecessary therefore to consider whether the alleged custom to receive uncertified checks in payment of bills, and to defer presentation until the next day after their receipt, if established, would regulate and define the rule of diligence, as between a collecting agent and his foreign principal. It was not, we think, incumbent upon the plaintiff to tender the draft to the defendant as a condition of recovery.

The judgment should therefore be affirmed with a modification in respect to the allowance of interest, which should be at the rate of six per cent for the whole period after the right of action accrued, according to the principle settled in Salter v.Utica, etc., R.R. Co. (86 N.Y. 401).

The judgment should be, therefore, affirmed as modified, but without costs of this appeal.

All concur.

Judgment accordingly.