Cravath v. Esterly , 26 Wis. 675 ( 1870 )

Dixon, C. J.

We need not consider what the rights of the bank, or of the plaintiffs as its assignees, would have been, provided the notes had been paid by the bank on the sole ground that they were made payable there, and because of the implied request or authority in such cases that the bank shall pay and charge the same to the account of the maker of the notes. It appears that the defendant was not a customer of the bank, and had no money on deposit, or account or dealings with it; and it is contended in such case that there exists no request or authority for the bank to pay and charge the maker absolutely with the amount, and that, if it does pay, it becomes a mere purchaser of the notes, holding them subject to any defense which the maker might otherwise have made. But the case is cleared of this and all like questions by the proofs and the findings of the referee. The proof is, that the notes were paid by the direction of S. C. Hall, and the referee so .finds. S. C. Hall was the debtor — one of the parties who ought to have paid the notes, and who- was ultimately liable to pay them or the sums secured by them. As to him, the defendant was a mere surety. The notes were accommodation paper, executed by the defendant to S. C. Hall & Co., to enable them to secure a debt which they owed to E. Corning & Co., to whom the notes were indorsed and delivered as collateral. This the referee also finds. When the notes matured and were presented at the bank for payment, Hall directed the cashier to pay them, and he did so with the money of the bank, charging the amounts to “ bills receivable.” He made no charge to the defendant, nor was the defendant notified that the notes were in the bank for collection, or required to pay them, or informed that the bank had paid them and held them against him for payment. Mr. Hall was the president and one of the principal financial managers of the bank at the time, and the circumstances of payment are inexplicable except upon the hypothesis that the notes were paid by the bank at his request, or in consequence of his direction and upon his credit, and that he became the debtor of the bank for the amounts. This is the most reasonable and only satisfactory explanation of the transaction. Mr. Hall had agreed with the defendant, at the time they were given, to pay the notes at maturity, which is no more than would be implied perhaps from the fact that the notes were given without consideration. He was desirous of performing this agreement, and when the notes were presented he told the cashier to pay them. His relations with the bank were such that he could obtain credit there at any time. Being its highest officer and chief financial manager, the bank was willing to trust him, and he borrowed the money as a temporary expedient. It seems incredible that the notes should have been thus received and paid by the bank without notice tp the defendant, and without demand made of him until after failure and assignment by the bank, unless such was the true history of the transactions; and we believe that it was. We believe that Mr. Hall borrowed the money from the bank to pay the notes, and that he did pay them, intending to reimburse the bank in a few days, or at his earliest convenience. And we think it must have been so understood by the cashier. For he testifies, “ I charged it to bills receivable, because that was the quickest way to get it out of the way. Hall told me to pay the notes. S. C. Hall, after the first note was paid, said, hold it a few days and he would see about it.” This indicates the nature of the transactions between Mr. Hall and the bank with considerable clearness. It shows that he was a borrower of the money, and that the notes were paid. If this was so, then it is clear that the liability of the defendant was extinguished, and that no action can be maintained against him by the plaintiffs or any one else, to enforce payment of the notes.

By the Court. — The judgment of the circuit court is reversed, and the cause remanded with directions that it be dismissed, with costs to the defendant.