Griffin v. Rice — 1 Hilt. 184

Majority

p. 184

Phillip N. Griffin, assignee, &c., v. John Rice, President of the Atlantic Bank in the city of New York.

Headnote

it is not necessary that a witness should be an expert in tanking in order to prove a usage of banks. If he knows tbe usage be is competent to testify to it. whether he is a banker or employed in a bank, or is accustomed to deal with banks.

1 bank has a right to pay notes or checks for a dealer at his request, even after he has made a general assignment for the benefit of his creditors, until notice of such assignment is given to it.

And such a payment is good as a set-off in. an action by the assignee against the bank, for a balance of account due the assignors at the time of the assignment, upon collaterals left with notes for discount.

A direction in a note, making it payable at a given bank, is equivalent to a request ' fp the bank to pay it.

Appeal by defendant from a judgment of tbe Marine Court. This action was brought by tbe plaintiff, as assignee of C. S. Benedict & Co., to recover $337.92 from tbe Atlantic Bank, being a balance of account of tbeirs witb tbe bank. C. S. Benedict & Co. left for discount witb tbe bank, in tbe spring of 1854, two notes for tbe aggregate amount of a little over $1,500, leaving, as collateral, notes for about $1,900. In September, 1854, C. S. Benedict & Co. failed, and made an assignment for tbe benefit of creditors to tbe plaintiff. On tbe 4tb of October, and before notice of tbe assignment bad been given to the bank, a note of Benedict & Co.’s for $612.58, payable at tbe bank on that clay, was presented there for payment, and was paid by tbe bank. Benedict & Co. bad, at tbe time, a balance of only some $5 or $6 on tbeir account, beside tbe collaterals. Tbe bank after-wards collected the entire amount of tbe collaterals, and after repaying themselves tbe amount of tbe discounted notes, bad an admitted balance in Benedict & Co.’s favor of $370.50, for which this action was brought. To this action they claimed, as an offset, tbeir payment of Benedict & Co.’s note on the 4th of October. This claim was disallowed by tbe court below, who rendered judgment for tbe plaintiff, from which tbe defendant appealed.

p. 185

Charles Tracy, fox tbe appellant.

Horace Dresser, for tbe respondent.

Tbe plaintiff’s claim is for moneys received by tbe bank upon collateral notes, deposited as security for other notes discounted by tbe bank for tbe firm of C. S. Benedict & Co. Before tbe notes were paid tbis firm' bad failed, and made an assignment to tbe plaintiff. After tbe assignment, tbe bank, without notice, paid a note .of Benedict & Co., wbicb was made payable at tbe bank, and tbey claim to be allowed, as an off-set, tbe amount of sucb note.

Upon tbe trial of tbe case, tbe plaintiff was permitted to call as witnesses, as to tbe custom of tbe banks in New York in payifif; tbe checks of dealers, persoDS who were not employed in banks. Although not employed in banking business, the witnesses were dealers with tbe banks, and bad knowledge of tbe ordinary course of dealing with them. There is no necessity for showing a man to be an expert in banking, in'order to prove a usage. He should know what tbe usage is, and then be is competent to testify, whether be be a banker, or employed in a bank, or a dealer with banks. There is no reason why a dealer should not have as much knowledge on sucb a subject as a person employed in a bank.

Tbe main question in this cause is, whether tbe bank is entitled to credit for tbe amount of tbe note of Benedict & Co. paid by tbe bank.

As between Benedict & Co. and tbe bank, I think there could' be no doubt that tbe defendants should succeed in tbe defence set up by them.' Tbe payment of - tbe note was by direction of tbe firm, inasmuch as tbey made it payable at tbe bank. Such a direction as to tbe place of payment, where tbe firm’s account was kept in tbe bank, was equivalent to a direction or request for tbe bank to pay tbe same. Even conceding that tbe collaterals were not pledged as security for sucb payments, and that the bank could not have retained the notes after those to wbicb tbey were

p. 186

collateral bad been paid, still wben tbe collaterals are paid, and tbe claim is for money bad and received, a set-off is always proper. While tbe money was remaining with tbe bank, and before any notice of the transfer of interest to tbe plaintiff was given to the bank, they, at tbe request of Benedict & Co., paid tbe note of that firm. Such payment was a good defence to any claim for money collected by them on tbe collaterals, either as a payment for tbe firm out of those funds by their request, or as a set-off of tbe amount of tbe note for moneys paid for them at their request.

Is there anything, then, in tbe fact of tbe assignment to tbe plaintiff to alter tbe rights of tbe defendants to this defence.

Had notice of tbe assignment been given to tbe bank, a different question would arise, but without such notice tbe bank was justified in making tbe payment, just as much as they would have been in paying a check drawn by tbe firm upon tbe bank.

I do not think it necessary to examine tbe question as to tbe right of. tbe bank to bold collaterals for other debts than those for which such securities were specially pledged. I am disposed to put this case on the broader ground of tbe right of tbe bank to pay notes and checks for tbe dealer, at bis request, even after be has made an assignment, until notice of such assignment is given to tbe bank.

Tbe proposition is a monstrous one, that banks, receiving money of and for their dealers, to be paid out .on their checks and notes, are not to be protected as to payments made by them in tbe ordinary course of dealing of such banks, wben tbe dealer Sees fit privately to make an assignment of bis effects, and tbe notice of such assignment is withheld from tbe bank.

The judgment for tbe plaintiff was erroneous, and should be reversed