Weedsport Bank v. Park Bank — 25 N.Y. Super. Ct. 418

Majority

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The Weedsport Bank, plaintiffs and appellants, vs. The Park Bank, defendants and respondents.

Headnote

1. A bank is discharged from all liahility to a person for whom they have collected a sum of money, after they have paid it upon the checks of a third person to whom their original employer had directed them, hy letter, to “ deliver ” such sum.

2. Such right is unaffected by the purposes for which the money was collected, or any orders for the disposition of the money after it had been paid away.

(Before Moncrief, Barbour and Garvin, JJ.)

Heard June 15, 1864;

decided July 2, 1864.

On the 23d and 28th April, 1861, the Weedsport Bank sent to the Park Bank two drafts on the Mercantile Bank, N. Y.; one for $2000, the other for $3000, for the purpose of paying two notes of Cook, Evarts & Co. for those amounts, falling due at the Park Bank. The drafts were accordingly collected by the Park Bank, but the notes were either paid by the makers or protested and returned. The proceeds of the drafts ($5000) were therefore credited by the Park Bank to the Weedsport' Bank. On the 2d of May, 1861, the Weedsport Bank, by its cashier, wrote to the Park Bank a letter or order of that date, the body of which was as follows :

“Please deliver to C. W. Kellogg, Escp or order,

. Cook, Everts & Co/s note, 23d April, paid, - - $2,000

£$ « « « “ - - 2,000

Also:

Our draft on Mercantile Bank, 2146, - - - - $2,000

" “ “■ “ 2168, - - - - 3,000

If the two drafts are to our credit, then deliver to Mr. Kellogg the cash, and oblige.”

The Park Bank obeyed the directions contained in said letter . or order, and immediately, on the 4th May, 1861, delivered to C. W. Kellogg the two paid notes therein mentioned, and

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placed to the credit of said 0. W. Kellogg the $5000, which were the aforesaid proceeds of the two drafts. Kellogg was then a dealer and depositor with the Park Bank, and so continued to be until the 6th of June, 1861, when his account was closed. Kellogg checked or drew against this credit, and against his deposits, so that on the 7th of May, 1861, the entire amount of all the $5000 was drawn out by and paid to him. On the 9th of May, 1861, the cashier of the Weedsport Bank wrote to the cashier of the Park Bank as follows : “ I have drawn on you this day for the amount of the drafts, $5000, in favor of E. J. Blake, Esq. cashier, which please honor, unless you have already paid the amount on our order to O. W. Kellogg.” This letter was received by the Park Bank, on the 11th May, 1861. On the 15th May, 1861, the cashier of the Weedsport Bank wrote to the cashier of the Park Bank, thus: “ Please inform me whether you have paid our draft for $5000 to O. W. Kellogg, and oblige.” The latter cashier, on the 17th May, 1861, answered thus : “ We gave credit, 4th inst. to O. W. Kellogg, $5000, upon your order, of course.”

In March, 1863, this action was brought. The complaint alleged a demand for the money on the 18th May, 1861. At that time Kellogg had not only drawn out all of said $5000, but also all his other deposits, except $1716.64, as appeared by his account. On the 31st of May, when his book was balanced, he had a credit of $326.70, and this he drew out, so that his account was closed 6th June, 1861.

The defendants, for answer, set up that Kellogg was one of their depositors, and aver payment of the $5000 to the plaintiff, by the above credit to Kellogg, in account, on the 4th of May, “ and by paying out the said sum within a short time thereafter to the said Kellogg, upon his checks drawn upon the defendants therefor.”

The referee found, as conclusions of law, that the credit given by the defendants and the withdrawal of the amount by means of checks or notes charged as aforesaid, was a compliance with the order of the 2d day of May, 1861, and the same was delivery or payment of the proceeds of the drafts to said

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Kellogg. He accordingly directed that the complaint should be dismissed with costs, and judgment having been entered accordingly, the plaintiff appealed.

B. W. Huntington, for the appellants.

E. L. Fancher, for the respondents.

By the Court,

The order of May 2d, 1861, is sufficient, it appears to me, to establish the fact that the §5000 which is the subject matter of this controversy, was not then in the hands of the defendants as mere custodians of a fund belonging to the plaintiffs as owners, but that, on the contrary, such sum had been received by the defendants in the ordinary course of their banking business and passed to the plaintiffs’ credit, prior to the transaction with Kellogg; for that order directs the delivery of the cash to the latter, “ if the two drafts are to our credit,” and only in that case.

This view of the case is also sustained and strengthened by the plaintiffs’ letters of the 9th and 15th of May, in which they speak of the delivery of cash contemplated in the order of May 2d, not as a mere handing over to Kellogg of §5000, but as a payment.

The question for consideration then is, whether the acceptance by the defendants of the order of May 2d, and their transfer of the credit from the plaintiffs’ account to that of Kellogg, was an extinguishment of the debt as between the parties to this action.

Kellogg was not the mere agent of the plaintiffs, even to receive the notes and the drafts; but, as to them, he was clothed with power to direct their delivery, by his indorsement, to such person as he should appoint. If he had, upon the face of the order of the 2d of May, been vested with like authority in respect to the money, it could hardly be claimed that the direction to deliver to Kellogg or to his order, the cash which the defendants owed to the plaintiffs, was not, substantially, a requisition to pay the debt to him or to his indorsee, whoever

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that might he ; and that the acceptance of the order and such a transfer of credits as was made by the defendants, would have operated as a payment of their indebtedness to the plaintiffs. The word deliver, in the case supposed, would be fully equivalent to the word pay ; and would, I think, have authorized the defendants to treat Kellogg, or his or any subsequent indorsee, as the person entitled to have payment of the debt. The intention of the drawer, in that case, to have the money paid to whomsoever should present the paper, would have been quite clear.

I can perceive no substantial distinction between the case supposed and the facts as they existed. The order, as we have seen, did not direct the delivery of moneys belonging to the plaintiffs, and held by the defendants, but, in-effect, required the latter to pay over to Kellogg a sum which they had received in a certain transaction and passed to the credit of, and for which they then had stood indebted to, the plaintiffs. Kellogg was simply the payee of an order directing the payment of a debt; and so, manifestly, the plaintiffs themselves understood it. For in their letter of May 9th, they inform the defendants that they have drawn for the $5000 in favor of E. J. Blake, and request them to honor such draft, “ unless you have already paid the amount on our order to C. W. Kellogg and on the 15th they say, by their cashier’s letter, “ Please inform me whether you have paid our draft for $5000 to C. W. Kellogg.” The cognomen “draft,” thus given to the order by the plaintiffs, coupled with the word “paid,” instead of “ delivered,” clearly shows, it appears to me, a design on their part to place Kellogg, by the order in question, precisely in the condition of a payee of a draft for money, and warranted the transaction had with him by the defendants in regard thereto ; and I am, therefore, of opinion that the acceptance of such order, and so far as the plaintiffs were concerned, its payment by a transfer of credits, was an extinguishment of the debt.

The judgment should be arffirmed, with costs.