#### Joseph Balsam, Respondent, *v.*The Mutual Alliance Trust Company, Appellant.

(Supreme Court, Appellate Term,

December, 1911.)

Banking: Deposits — In general — Effect of crediting check to depositor’s account as payment: Checks, drafts and notes payable at bank — In general — Liability of bank to payee or holder of check.

Negotiable instruments: Acceptance — Necessity of acceptance to bind drawee: Payment — Payment generally — What amounts to payment: Actions — Defenses — Payment.

The payee of a check has no cause of action against the drawee for nonpayment thereof before acceptance or certification.

Where a check upon a trust company is deposited by the endorsee at one of the company’s branch offices and credited in her pass-book and marked “Paid,” it seems the transaction operates as a payment of the check.

But in such a case, where the check is afterwards returned to the depositor on the ground that there were not funds to meet it, and she takes up the check and gives her own check to the company for the same amount in its place, the depositor, having been previously absolved from all liability as endorser upon the check by its payment, could not properly have had anything further to do with it and can maintain no action upon it.

Appeal by the defendant from a judgment of the Municipal Court of the city of Mew York, borough of Manhattan, second district, in favor of the plaintiff, rendered after a trial by the court without a jury.

*466Mortimer W. Solomon (Harry A. Gordon, of counsel), for appellant.

William Babinowich, for respondent.

Giegebich, J.

Plaintiff alleges that,- on a day named, the firm of Wachtel Bros, drew and delivered to him a check upon the defendant for the sum of $200 which he indorsed to the order of a third person who presented it for payment, which was refused, although the drawers had funds on deposit: with the defendant more than sufficient to meet the check.

• The payee of a check has no cause of action against the drawee for non-payment thereof before acceptance or certification (Heg. Inst. Law, § 325; Duncan v. Berlin, 60 N. Y. 151; Attorney-General v. Continental Life Ins. Co., 71 id. 325) ; and, in the present case, acceptance or certification was neither pleaded nor proved.

It appeared upon the trial that the check was deposited by the indorsee at one of the branch offices of the defendant institution and was credited in her pass-book and marked “ paid.” It was further shown that the check was afterward returned to the depositor, on the ground that there were not funds to meet it, and that she took up the check and gave her own check to the defendant for the same amount in its place.

The plaintiff seems to argue that the check was, in effect, paid when it was received by the defendant at one of its branches, credited in the pass-book of the depositor and marked paid. This may be so (Iron Clad Mfg. Co. v. Sackin, 59 Misc. Rep. 281) and the trial seems to have been conducted on that theory, in spite of thé pleadings. But, assuming this position to be sound, it is clear that, when the check was paid, the plaintiff was absolved from all liability as indorser upon the check and could not properly have had anything further to do with it.

If the check was paid and the defendant nevertheless afterward refused to allow. the credit to stand in the depositor’s account, the controversy was one between the depositor and the defendant. The depositor could doubtless *467have assigned her claim against the defendant, not upon the check for that had been paid, but for the balance of her account. If any such assignment to the plaintiff had been pleaded or proved, it might be necessary to determine whether or not the depositor had lost her right to recover by voluntarily taking up the chéek after payment and giving her own check in its place. As the record does not present this question and as' the plaintiff has no right of action against the defendant upon the check on any theory, the judgment must be reversed and a new trial ordered, with costs to the appellant to abide the event.

Lehman and Pendleton, JJ., concur.

Judgment reversed and new trial ordered, with costs to appellant to abide event. .