Crouse v. First Nat. B'k — 50 N.Y. St. Rep. 655

Majority

p. 655

Charles E. Crouse, Survivor, App'lt, v. The First Nat. B'k of Penn Yan, Resp't.^[1]

(Court of Appeals,

Filed February 28, 1893.)

Headnote

Banks—Negligence.

Plaintiff’s firm drew a sight draft, " protest waived,” on one D., for a portion of the account due from him, and sent the same to defendant for collection. As D. lived in the country some distance from the hank, defendant according to its custom mailed notice of the draft to him, and some days later he accepted it and agreed to' pay the same in a few days, and shortly afterwards made an assignment. Held, that the hank was not liable, as there was nothing in the relations of plaintiff’s firm with it which made it incumbent upon the hank to exercise other than that usual and ordinary diligence in the performance of the duty of the assumed agency which the circumstances called for.

Appeal from judgment of the supreme court, general term, fourth department, reversing judgment entered upon report of referee in favor of plaintiff.

Dinehart being indebted to the firm of Crouse & Walrath in the sum of $800, for goods sold, the firm made a draft in the following form, viz.:

“ Syracuse, N. Y, February 14, 1886.

“At sight (protest waived), pay to order of G. EL Eapham Esq., cashier, four hundred dollars, value received.

“ (Signed) Crouse & Walrath.

“ To Peter M. Dinehart, Esq.

“Friend, N. Y.”

On the day of its date this draft was mailed to the defendant, a bank at Penn Yan, N. Y., for collection. Dinehart lived in the country at some distance from Penn Yan. Eapham testified that upon the receipt of the draft, on February 15th, he notified Dinehart by mail. On February 21st Dinehart came into the bank, and the draft being presented to him, he said he would pay

p. 656

it next week, and he accepted it across its lace, making it payable at the defendant bank. On the same day Lapham wrote Crouse ■& Walrath, acknowledging their letter and the draft, and stating it was “payable sometime next week. Says this is the best he can do.” Subsequently a clerk was sent by the firm to the bank, who inquired about the draft. He said he was told that “it was all right,” but could not remember being told of Dinehart’s acceptance. Lapham, the cashier, however, testifies that he told him of the acceptance and of Dinehart’s promise to pay it the next week. On March 6th Dinehart made an assignment of his property for the benefit of his creditors. On March 3d Crouse & Walrath wrote to the bank and asked if Dinehart had made arrangements to pay his draft. On March 6th the bank answered,, informing them of Dinehart’s assignment, and as to the assets and i liabilities. On March 7th the draft was returned to the firm, and in September following the present action was commenced to recover damages, measured by the value of the draft, upon the ground of the bank’s negligence in the matter of its collection.

The referee before whom the trial of the action was had reported in favor of the plaintiff, finding the defendant guilty of negligence in failing to present the draft for acceptance in due time, or to make proper efforts to collect it after acceptance and that, by reason of its negligence, the drawers were deprived of the opportunity to collect the draft before the drawee’s assignment. He found that the drawers had sustained damages to the .amount of the draft, with interest, and directed judgment accordingly. Upon appeal to the general term, that court reversed the judgment, and ordered a new trial, and from that order the plaintiff has appealed to this court, with the usual stipulation for judgment absolute.

Thomas Hogan, for app’lt;

John T. Knox, for resp’t.

We think the reversal of the judgment was right. The facts disclosed by the evidence did not make out a case of negligence, nor did they show that the plaintiff’s firm had suffered any damage by reason of anything on the part of the bank. The evidence was wholly insufficient to support the referee’s findings in those respects.

As we read this record, no inference was permissible from the evidence that the bank had failed in any duty towards the plaintiff’s firm. The draft in question was merely a convenient mode adopted by the firm of Crouse & Walrath to collect a portion of a debt due them from Dinehart, and the defendant bank was made their agent for the mere purpose of collection. Dinehart lived in the country, at some distance from Penn Yan, and, as it was testified to without objection, the custom of the bank in that place, where they held drafts upon parties residing in the country, was to notify them by mail, unless especial instructions were given to present the paper, in which case a notary would be employed. Here, the plaintiff’s firm had expressly waived protest of the draft, and there was no requirement for presentment by a notary or for any extraordinary course with respect to it.

p. 657

There was no question in the case of holding other parties, and there was nothing in the relations of plaintiff’s firm, with the defendant which made it incumbent upon the bank to exercise other than that usual and ordinary diligence in the performance of the duty of the assumed agency which the circumstances called for. The plaintiff’s firm were notified by letter of the draft being payable in the following week, as the best that Dinehart could do about it; their clerk was sent to inquire about it, and the draft was not only left with the bank with no further instructions about it, but, on March 3d, they wrote, asking if Dinehart had made arrangements to pay the draft, thus recognizing and tacitly ratifying what the bank had done. Not only was the bank not bound to do more than it had done, but it is difficult to see what more it could have done. It was without especial instructions, and the plaintiff’s firm were sufficiently apprised of the situation to make it incumbent upon them to further instruct the bank, if they de„sired it to do more. Knowing of the nonpayment of the draft, it behooved them to act in the matter for their own interests. The strict rules which usually are applied with respect to commercial paper in matters of presentment, demand and notice, do not apply to such a case as this, as the general term very correctly observe in their opinion. The defendant acted as the plaintiff’s agent to collect a part of a debt, and, in view of the circumstances and with the knowledge chargeable to the principal as to its conduct of the matter, it could not be inferred from the evidence that it was guilty of any negligence in the discharge of its duty.

It may be added that there was an utter lack of evidence to afford a presumption of damage to the plaintiff’s firm from the conduct of the defendant. No inference was possible from the evidence that there was a reasonable probability that the debt would have been paid if Dinehart had been pressed for payment from the time when the draft was presented until he assigned.

The order appealed from should be affirmed, and judgment absolute ordered for the defendant on the stipulation, with costs in all the courts.

All concur.