Elting v. Brinkerhoff — 2 N.Y. Super. Ct. 459

Majority

p. 459

John Elting, Jun., and Jacob Shook versus Stephen J. Brinkerhoff.

Headnote

The defendant, residing in Dutchess County, drew an order, payable on demand, in favor of the plaintiffs, for 100 dollars, on one Ring, the master of a sloop, by whom he was in the habit of sending his produce to market. The order was not negotiable, nor was it presented until nearly sue years after its date; and in the mean time, various settlements had taken place, between the plaintiffs and the drawee.

Held, that if the draft wore to be considered as an inland bill of exchange, the drawer was discharged by the laches of the holders; but if it were treated as a mere banker’s check, then that a presentation for payment, at any time before suit brought, would be sufficient, unless tire drawer could show injury from the delay. Held also, that the consideration of the order, whether check or bill, could be inquired into, between the original parties ; and as the defendant contended that the order was drawn for the mere accommodation of tire plaintiffs, the court ordered that question to be submitted to a jury.

This was an action of assumpsit against the defendant as the drawer of the following check or order, the plaintiffs being the payees and holders thereof.

“ Capt. Ring,

“ Please to pay Messrs. Elting & Shook, one hundred dol- “ lars, and oblige

Stephen J. Brinkerhoff.”

“ June 3d, 1822.”

The declaration contained a count upon the order, together with the common money counts. Plea the general issue. It appeared, at the trial, that the defendant, at the time of the drawing of the order, was an extensive farmer, residing in Dutchess County, and the drawee was the master of a sloop, who was in the habit of transporting the produce of the defendant’s farm to New-York, and of disposing of it for him there. The order was not presented to Ring, the drawee, until nearly six years after its date, and payment being then refused, the plaintiffs, in May, 1828, caused it to

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be again presented, and this action immediately thereafter to be brought. Between the date of the order and the bringing of the suit, various settlements had taken place between the drawee and the plaintiffs, in some of which, the latter were found indebted to Ring, and, on one occasion, the plaintiffs gave him a promissory note for one hundred and thirty dollars ; but the order in question was not considered in any of the settlements. Brinkerhoff was generally in the habit of drawing the proceeds of his produce out of the hands of Ring as fast as the latter received it, and their dealings were confined to this business. It did not appear, distinctly, whether there were funds in the hands of the drawee at the date of the order, or not, and Ring, who was examined as a witness, could not testify positively on that point, but he had at all times been solvent, down to the day of trial, and if the order had been presented in season, it would have been paid.

Upon this state of facts, the defendant insisted that the bill or order, did not upon its face import a consideration and that as the plaintiffs had not shown any, aliunde, they could not recover. He also insisted, that the drawer was discharged for the want of a timely demand on the drawee, and notice of non-payment.

His honor Judge Hoffman, (before whom the cause was tried,) overruled the objections, and directed the jury to find a verdict for the plaintiffs, which, having been done, the defendant now moved for a new trial.

Mr. D. B. Tallmadge, in support of the motion, contended,

I. that the bill or order, did not import or denote a consideration. Bills or notes, he said, do not import a consideration, unless the words value received are used, or the true consideration is expressed, or the instrument made negotiable.

Every agreement, to be binding in law, must be on a sufficient consideration. This consideration is either expressed or imported. A seal denotes or imports it. So also do the words order or bearer in commercial paper.

Although a bill of exchange is not a specialty, but merely a simple contract, yet a sufficient consideration is implied from the nature of the instrument. The validity of the bill cannot in ge

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neral be disputed, on account of the want of a sufficient consideration, when it is in the hands of a third person.

In this respect, therefore, a bill of exchange, although it is not a specialty, yet it carries with it the same presumption of consideration, as a bond or other specialty, particularly when it is in the hands of a third person. It is not, however, owing to the form of a bill of exchange, nor to the circumstance of its being in writing, that the law gives it this effect, but in order to strengthen and facilitate the commercial intercourse, which is carried on through the medium of this species of security; for, notwithstanding a contract be in writing, it is essential, to the validity of it, that it should in all cases be founded on a sufficient consideration, unless the writing, from its being of the highest solemnity, import a consideration, or unless it be negotiable at law, and the interest of third persons are involved in its efficacy. [Chitty on Bills, 6. 13, 14. 2 Wils. 212.]

II. If this be a valid instrument on the face of it, yet no action can be maintained by the payee against the drawer, because it is an accommodation draft or order, and without consideration in fact.

A bill or note, importing on its face to be for value received, is prima facie evidence of that fact between the parties to the note and third persons, whenever the bill or note is admissible as evidence. But the presumption of value received, arising from the words on the face of the bill, may be rebutted by circumstances, as if the payee should neglect entirely to present it for acceptance. [Bailey on Bills, 317. Grant v. Da Costa, 3 M. and S. 351.]

III. The demand was not made, nor the notice given in time to allow the plaintiff to recover. Bills payable at sight, and notes payable on demand, stand upon the same footing, and to charge the drawer of a bill, or the endorser of a note,- the bills should be presented, or payment demanded within a reasonable time. [Aymar v. Beers, 7 Cowen’s R. p. 705.]

It appears to have been formerly held, [Chitt. on Bills, 251,] that it was incumbent on the person, insisting on the want of notice, to prove, that he had really sustained damage by the laches

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of the holder; but it has been settled by later decisions, that such damage is to be presumed, and that the only excuse for the omission, is the proof of the want of effects in the hands of the drawee; and.it is always presumed, till the contrary appears, that the drawer of a bill has effects in the drawee’s hands, and consequently, that he may have sustained a loss by the neglect to give notice.

But demand and notice are necessary where the party draws the bill with a bona fide and reasonable expectation, that he shall have assets in the hands of the drawee, as where there are fluctuating accounts between the drawer and drawee, or where, at the time of drawing a foreign bill, the drawee has effects of the drawer in his hands, though they are taken out before the bill becomes due, or where the drawee has effects of the drawer in his hands, at any time while the bill is running, [4 Stark. 263. 3 Esp. R. 158. Chitty on Bills, 86. 256. 2 Camp. 503. 15 East. 216. 20 J. R. 146. 11 East. 117. 7 Cowen’s R. 176.]

Mr. R. C. Wheeler and Mr. J. Tallmadge, contra, contended,

I. That the draft or order, imported a sufficient consideration; and that it was evidence, under the common money counts, sufficient to support the action.

II. That demand and notice at any time, before suit brought, were sufficient, the plaintiffs having proved that the drawee had no funds of the defendant in his hands at the date of the draft; that the drawee had been at all times since the making of the draft, and was still solvent, and that the defendant had withdrawn all his funds from the hands of the drawee, leaving this order unpaid.

III. Bank checks are the same as inland bills of exchange, and may be declared on as such, or given in evidence under the money counts; and there is no difference, in principle, between checks on a bank and orders on individuals. The holder never proves the consideration of a check, note or bill; they import consideration in all cases, and even, as between the original parties, the defendant, if he disputes the consideration, must show the want of it. [3 J.

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Cases 5. 259. 6 Cowen’s R. 484. Stark. Pl. 4. 280. 2 Camp. R. 596.]

The defendant, residing in Dutchess County, drew the order in question, in favor of the plaintiffs, on Ring, the captain of a sloop, belonging to the same county, and by whom the defendant was in the habit of sending his produce to the New-York market. The order was not presented to Ring, until nearly six years after its date, and, in the mean time, various settlements of accounts had taken place between Ring and the plaintiffs, in which the plaintiffs were found indebted to Ring; and on one occasion, in a sum larger than the amount of the order for which the plaintiffs gave him their note, which still remains unpaid.

1. If the draft in question is to be considered as an inland bill of exchange, it is very clear, that the lapse of time between the drawing of the bill, and its presentation to the drawee, has been such as to discharge the defendant. Though it does not clearly appear whether the drawer had funds of the defendant, at the time of the drawing of the bill, yet he had a right to expect that his bill would be accepted and paid; and it is in evidence, that it would have been paid, on sight, if it had been presented. Under these circumstances, it" was necessary for the holders of the bill, to present it for acceptance within a reasonable time, and to give due notice of its dishonor to the drawer. [Stark. on Evi. pt. 4. 263.] What is a reasonable time for the presentation of such a bill, is the facts being undisputed, a question of law; [7 Cowen’s R. 705,] and it cannot be doubted, that the bill, in the present case, was not presented in a reasonable time.

2. If the draft in question, is to be considered as a mere banker’s check, (and it seems to me to be nothing more, as it is not negotiable on its face,) then, a presentation of it for payment, at any time before suit brought, is sufficient, unless the drawer has been injured by the delay, [6 Cowen's R. 490. 3 J. Ca. 5. Ibid. 259;] and there is no evidence, in this case, to show, that any such injury has been sustained.

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But, whether it be an inland bill or a check, and whether, in either case a consideration is prima facie, imputed by its terms, it is well settled, that as between the drawer and payee, the consideration is open to inquiry. The defendant here contends, that the circumstances of the case show that the draft in question, was for the accommodation of the plaintiffs ; and I am of opinion that, that fact should have been submitted to the jury. The very long delay in presenting the draft, and the repeated settlements which took place between the plaintiffs and the drawee, without any demand of payment of the draft, are facts from which the jury might well have inferred, that they had no. real interest in it, and that it had been given to them, for their accommodation merely.

The Judge having directed a verdict for the plaintiffs, it ought, in my judgment, to be set aside.

New trial granted.

[R. C. Wheeler, Att’y for the plffs.