Majority
p. 324COURT OF APPEALS, Charles Burkhalter and others respondents, agt. The Second National Bank of Erie, Pa., appellants. Argued January 15, 1870; decided March 19, 1870,
Headnote
Where a draft on demand, is received, the party receiving it is honnd to use reasonable diligence in demanding payment, and a demand on the same day it is received!, or the next day is, in law a demand within a reasonable time.Where there is no agreement to that effect, a bank check does not operate as payment of a draft, for which it is received.
Where through the usual course of bank business, payment of such check was refused on the next day after it was received, the drawer of it having failed on that day, and the party receiving the check, on that day, returned it to the drawers and received back the original draft, which they again presented through e notary public, for payment to the same party upon whom it was drawn, and payment being refused it was protested for non-payment, and notices sent to the drawers of the draft:
Meld, that the check did not for a moment operate as payment of the draft, and the whole transaction did not show the absence of any diligence which the drawers of the draft had a right to demand of the party to whom it was sent for collection. Although the evidence showed that when the draft was first presented, the party upon whom it was drawn had sufficient funds of the drawers to pay it, and that they continued to make payments on that day, and after they had charged the draft on their hooks to the drawers of it in regular account. (Foster and Lott
Appeal from a judgment entered upon the decision of the general term of the supreme court, in the first judicial district, upon exceptions there heard in the first instance, ordering judgment to be entered upon a verdict in favor of the plaintiffs.
On the 24th day of March, 1866, at Erie, Pa., the defend-" ant drew a draft for SI,166 89, in favor Johnson & Brevillier, who resided at Erie, on Culver, Penn & Co,, of New York; Johnson and Brevillier indorsed and at once for
p. 325
warded the draft to plaintiffs, who received and credited the same on their indebtedness to the plaintiffs. The draft was received by the plaintiffs at the city of New York, by mail, on the morning of the 26th day of March, about nine o’clock, and they presented it soon after to Culver, Penn & Co. for payment, and received their check oc the Third National Bank of New York for the amount of the draft. Culver, Penn & Co, took up the draft, and immediately charged it on their books to the defendant, the drawer of the same, and it was so charged in the account current sent to the defendant the next day by Culver, Penn & Co,
The check was not presented to the Third National Bank to be certified on the 26th of March, nor for payment until the next day, the 27th, when it was presented through the clearing-house, according to the usual course of business in New York in such cases, and payment was then refused, Culver, Penn & Co. having failed on that day. The plaintiffs thereupon returned the check to Culver, Perm & Co,, and received back the original draft, which they again, on the 27th day of March, about three o’clock p. m., caused t© be presented for payment to Culver, Penn & Co. by a notary public. Payment being refused, the draft was then protested for non-payment, and notices of protest were sent off the next day, March the 38th.
The evidence shows, that when the draft was first presented on the 26th of March defendant had funds with Culver, Penn & Co., to an amount more than sufficient to pay the draft; and that Culver, Penn & Co. had currency on hand, during the whole day, to the amount of $12,000 or upward. Culver, Penn & Co. had no funds in the Third National Bank on the 26th or 27th day of March, but on the 26th the bank continued to pay their checks, under the expectation that they would make their account.good. If plaintiffs had demanded the currency on the draft of Culver, Penn & Co. on the 26th, or early in the day of the 27th, it would most probably have been paid; but if all the persons
p. 326
who during the same time presented drafts on them had demanded currency, they could not have paid them all.
After this draft was returned, the defendant took it up and gave in the place of it the one upon which suit is brought, believing that the plaintiffs had taken due diligence as to the first draft, and that it was liable to take it up. It defends this draft on the ground, that it was given under a mistake of facts for the first one from which it had been discharged.
Judgment was rendered for the plaintiffs; and from a judgment of affirmance at a general term of the supreme court, in the city of New York, and appeal has been taken to this court.
Hooper C. Van Vorst, for appellant
Enoch L. Fancher, for respondent
The plaintiffs were bound to demand payment of the first draft on the day they received it (March 26) or the next day (March 27), and they had the right to hold it until the 27th. The draft being payable on demand, they were bound to use reasonable diligence in demanding payment, and a demand on the same day, or the next day, is, in the law, a demand within a reasonable time, (Chitty on Bills, 377, Springfield ed. of 1842; Harker agt. Anderson, 21 Wend., 372 ; Smith agt. Jones, 20 Wend., 192 ; Benton agt. Martin, 31 N. Y., 385 ; Merchants’ Bank agt. Spicer, 6 Wend., 443 ; Hazleton agt. Colburn, 2 Abb., N. S., 199).
It was sufficient to give the notice of demand and refusal on the next day, the 28th of March (Farmers’ Bank of Bridgeport agt. Vail, 21 N. Y., 435 ; Howard agt. Ives, 1 Hill, 263 ).
Therefore, in demanding payment- of this draft on the 26th and mailing notices of non-payment on the 28th, the plaintiffs did all that the law required of them, and the
p. 327
defendant was charged as drawer of the draft, unless it was discharged by what took place on the 26th. On that day the draft was neither paid nor refused to be paid. Culver, Penn & Co. gave their check for it and the check was in due time, the next day, in the ordinary course of business, through the clearing-house, presented for payment and payment refused. There was no agreement to receive the check in payment. It was taken by 'the plaintiffs in the usual course of business, they believing that it would be paid. They then, on the 27th, returned the check and reclaimed the draft, and demanded payment upon it. The check did not for a moment operate as a payment of the draft, and the whole transaction does not show the absence of any diligence which the defendant had a right to demand of the plaintiffs. It is settled that, upon precisely such a state of facts, the drawers and indorser of a draft are not discharged (Johnson agt. Bank of North America, 2 Robertson, 590; Smith agt. Miller, 6 Robt., 157, 413 ; Turner agt. Bank of Fox Lake, 3 Keyes, 425). Without á critical examination of earlier cases, I purpose to rest the decision of this case upon the authority of the case last cited. The facts of the two eases are as nearly alike as they can be, and the principle involved is precisely the same. The judgment must, therefore, be affirmed.
For affirmance, Earl, Ch. J., Grover, Hunt, Ingalls, and Smith, JJ. For reversal, Foster and Lott, JJ.
Judgment affirmed.