Case Name: The Citizens' National Bank of Davenport, Iowa, Appl't, v. The Importers' and Traders' National Bank of New York, Resp't
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1887-05-13
Citations: 9 N.Y. St. Rep. 201
Docket Number: 
Parties: The Citizens’ National Bank of Davenport, Iowa, Appl’t, v. The Importers’ and Traders’ National Bank of New York, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 9
Pages: 201–207

Head Matter:
The Citizens’ National Bank of Davenport, Iowa, Appl’t, v. The Importers’ and Traders’ National Bank of New York, Resp’t.
(Supreme Court, General Term, First Department,
Filed May 13, 1887,)
1. Checks and drafts—Transferable without endorsement.
This defendant was the depository and correspondent of the plaintiffs. Several drafts drawn by the plaintiff in favor of another it was alleged were not paid, and this action was brought to enforce their payment. Held, that a check or draft on a bank, payable to a person named or order, was transferable by manual delivery without endorsement, although the only right then acquired by the transferee is that which the payee had in it at the time of transfer .
3. Same—Action for refusal to pay—Dismissal of complaint.
Held. That it having been sufficiently proven that the drafts in the hands of the plaintiffs had been paid and returned to them as vouchers; relating to the fund on deposit the complaint was properly dismissed. Van Brunt, P. J., dissenting.
3. Same—Evidence—Competency of.
Held, That the whole of the conversation which took place at the time of the presentation of the note was properly received in evidence. Held, by Van Brunt, P. J., that the fact of the refusal to pay having been proved, the reason therefor assigned by the bank official was incompetent.
4. Same—Right of action accrues on refusal to pay.
Held, by Van Brunt, P. J., That the sum on deposit being liable to-draft by the depositor, on the refusal of payment a right of action accrued in favor of it and that the burden of proof was upon the depositor -to justify such refusal.
The appellant is a foreign corporation and the respondent-is a domestic corporation,
On the divers dates between the 25th of February and the 10th of May, 1884, the plaintiff drew ten certain drafts or bills of exchange, each dated as of the day when drawn,
whereby it directed the respondent to pay to the order of W. 0. Walworth & Co. certain sums of money. W. C. Walworth & Co. endorsed said drafts to the order of George Wadsworth for collection, and on the 6th day of November, 1884, George Wadsworth, having indorsed said .drafts in blank, presented them to the respondents for payment, and demanded payment thereof, which was refused, .and said drafts were protested for non-payment and notice thereof duly given. When the drafts were presented the .appellants had sufficient money or funds on deposit with the respondents to the benefit of the appellant, and subject to its draft, wherewith to pay such drafts in full. At the time of the presentation of these drafts for payment and the declinature of the respondent to pay the same, it was claimed by the respondent that it had previously paid the paper to the Fourth National Bank and that it had returned the checks to the plaintiff as vouchers. At the time of the presentation of the drafts as aforesaid said drafts bore the following endorsements, which were upon the drafts at the time of the endorsements heretofore stated to have been by W, C. Walworth & Co. and George Wadsworth two of the drafts being endorsed as follows:
“Pay to the order of E. S. Bennett.
“ W. 0. WALWORTH & CO.
“Pay to the order of John W. Rumsey & Co.
“E. S. BENNETT.
“JOHN W. RUMSEY & CO.
“Pay Fourth National Bank or order account Corn Exchange" Bank, Chicago.
“ORSON SMITH, Cashier”
The remainder of said drafts bore the following endorsements:
“Pay to the order of John W. Rumsey & Co.
“W. 0. WALWORTH & CO.
“JOHN W. RUMSEY & CO.
“Pay Fourth National Bank or order account Corn Exchange Bank, Chicago.
“0. C. SWINBURNE, Assistant Cashier,
(In some cases; in other cases),
“E. S. CARL, .Cashier”
Upon cross-examination, the witnesses who proved the presentation of the drafts to the bank being asked as to the genuineness, “ W. C. Walworth & Co.,” whereby said paper was indorsed to Bennett or Rumsey, testified that as to two of the drafts such endorsements were not genuine, and that as to the other indorsements they were genuine.
The plaintiff having closed its case upon the foregoing facts, a motion to dismiss the complaint was made upon the ground that it appears as part of the plaintiff’s case that when these drafts were presented by him the reason assigned for the refusal to pay was that the defendant had already paid these drafts, and that it is conceded that they were at time indorsed, as appears on the drafts.
And also because the complaint simply stated that the depositor drew his draft upon the depositary, to the order of Wadsworth, that Wadsworth indorsed it, and Wads-worth, the payee, demanded payment from the defendant, that the defendant refused to pay it, that it was protested, notice given to the plaintiff, and thereupon the plaintiff was obliged to pay it, and now claims damages to the amount of the check.
This motion was granted, and from the judgment thereupon entered this appeal is taken.
George Wadsworth, for app’lt; Anthony E. Dyett, for resp’t.

Opinion:
Van Brunt, P. J.
The right of the plaintiff as drawer of the checks in question upon the refusal to pay, if such refusal was not justifiable, to bring an action against its depository for the amount of the check seems to be supported by the case of Viets v. The Union National Bank of Troy (101 N. Y., 563), where it is held that while a check drawn by a depositor against a bank account does not operate as an assignment of so much of the account, it authorizes the payee, or one to whom he has indorsed and delivered it, to make a demand, and the refusal of the bank to pay on presentation gives the drawer a right of action, in case he has funds in bank to meet the check and the refusal was without his authority. It is admitted in the case at bar that at the time of the demand for the payment of these checks the defendant had sufficient funds of the plaintiffs to pay the same, and that the refusal to pay was not by the authority of the plaintiff. The ground upon which the defendant seeks to support the ruling of the learned court below in dismissing the complaint, seems to be founded upon a misapprehension of the rules of law in reference to admissions.
The rule stated by the counsel is undoubtedly well settled by authority and has been frequently applied in reference to the construction of admissions not only in conversations, but also in pleadings, and it. is to the effect that where one party proves an admission of the other against, him, the latter has a right to insist that the whole of the conversation be taken together and he may prove all that was said at the time, as well what makes in his favor as what is against him and that the whole admission is presumably true until some part of it is impeached by evidence. Tnis rule is established by the case of Rouse v. Whited (25 N. Y., 170), and cases there cited; but it has no application to the case at bar. The plaintiff attempted to, prove no' admission of the defendant. It proved an act, namely, the refusal to pay; and although under the authoity of Bennett & Hall v. Birch (1 Denio, 141), the defendant had a right to prove by the evidence establishing the demand and refusal, the reasons given for the refusal, there is no principle or law which justifies the assumption without evidence that the reason given is true. If such a rule were to prevail it would be a dangerous fact for a holder of commercial paper to present it for payment, because if in refusing such payment the reason assigned was that the paper had already been paid, the holder although in possession of the paper would be required to prove that such was not the fact, thus reversing the whole order of proof. If the plaintiff had sought to prove a demand and refusal by a conversation with one of the officers of the bank, had after the refusal, in which such officer admitted that such demand had been made and such refusal had taken place, and in connection therewith had stated that they refused upon the ground that they had already paid the draft, then the rule in respect to admission would apply. But in the case at bar the act of refusal itself was proved and by no assertion which the party upon whom the demand had been made may make, can he change the burden of proof as to payment.
It appears that as to two of the drafts, although bearing a number of indorsements they were never indorsed by the payee until they were indorsed to George Wadsworth for collection, who presented the same for payment; the pre vious indorsement of W. C. Walworth & Co., being proved not to be genuine. It is clear, therefore, that notwithstanding all the other indorsements upon the drafts, the title was in George Wadsworth for the purpose of collection, and he had a right to demand-the same of the bank, and that the payment to any of the other indorsees even if proved would be no defense to the action, because no title in the drafts existed in any of them so far as appears by the evidence.
As to the other drafts which bore the genuine endorsement of W. C. Walworth & Co. to other persons, without, some proof the presumption would be that W. C. Wal worth & Co. had parted with their title to those drafts prior to the time of affixing the subsequent endorsement to George Wadsworth for collection, and no recovery could be had without some explanation in respect to the endorsements.
It is claimed, however, that as the title to a check on a bank payable to a payee named or .order may be transferred by mere delivery without the endorsement of the payee, the proof that the endorsements upon two of the checks of W. C. Walworth & Co., the payee, were not genuine, does not affect the position of the defendant, because the Fourth National Bank when it presented the checks to the defendant for payment was presumably the holder of the checks and entitled to their payment. This proposition assumes that' there is proof that those'checks were in possession of the Fourth National Bank, arid that it presented the checks to the defendant for payment, and that the defendant paid the same. But, as has been seen, no such evidence exists in the case, it not having been proved, and the statement accompanying the refusal to pay the checks not being evidence of the truth of the facts stated in the refusal. If a bank pays a check drawn to order without the endorsement of the payee, it is bound to prove that the payee has parted with title before it can defend a refusal to pay upon demand by the payee having possession of the paper. There is no presumption that the holder of commercial paper payable to order unindorsed has any title to the same whatever, the presumption may be where genuine endorsements are established.
It is claimed upon the part of the respondent, that the plaintiff, before it could recover of the defendant, was clearly bound to tender back to the defendant the checks with their endorsements.
It is sufficient to say in answer to this proposition that the checks were tendered at the time of the demand and refusal, and that no such point was made upon the trial, or upon the pleadings, and if any motion had been based upon those grounds, the plaintiffs had the checks in court, and would undoubtedly have offered to surrender them to the defendants.
It would appear, therefore, that certainly as to two of the checks in question, it was error to dismiss the complaint and for such error, the judgment must, be reversed and a new trial ordered, with costs to appellant, to abide event.
Brady, J.
The plaintiff is a foreign corporation as appears from its title and the defendant was its correspondent and depository here. Several drafts or checks drawn in favor of William C. Walworth & Co., were not paid it was alleged, and which having reached the plaintiff, this action was commenced to enforce their payment. The defence interposed was payment and upon this issue the trial proceeded. The drafts and their endorsement by the payees.. were put in evidence and proved except three or four of the latter which were said not to have been made by any one of the payees firm but by whom the witness knew not. The same person was called to show presentment and demand of the drafts after they had been returned to the plaintiff, and that payment was refused because it was claimed to have been made, and it sufficiently appeared that they had been returned to the plaintiffs by the defendant, as vouchers relating to the fund on deposit. The complaint on these facts was dismissed.
It does not seem to be questioned that the whole conversation which took place at the time of presentation was properly received in evidence, and it could not well be. The rule is established by a series of cases. Bearss v. Copley (10 N. Y., 93); Perego v. Purdy (1 Hilton, 269); Rouse v. Whited (25 N. Y., 170), and cases cited, and payment hav ing thus been asserted it was deemed therefore to have been proved prima facie.
The. appellant is understood to contend however, that the defendant being a depository and having confessed to money enough to pay the drafts, the right of action existed and the burden of proof of payment therefore rested upon the defendant. This would convert the action into one for money had and received and not for the non-payment of drafts duly issued and presented. This is regarded as an erroneous proposition. If the action had been as suggested, the proof would have been different and undoubtedly forced the defendant to show why the claim urged was not satisfied.
The plaintiff would establish a demand by showing the deposit and vesting, and the evidence of what took place at the presentation of the drafts would not have appeared on the plaintiff's case The defendant would then have been called upon to establish the proper appropriation of the fund in its possession, which had belonged to the plaintiff, and would not have been relieved by the statement mentioned. The plaintiff, by adopting a different course, exposed its rights to such defeat as the statement would accomplish and assumed the duty of showing it to be untrue. This obligation was not discharged, and the result was prejudicial. The evidence amounted to the plea of confession and avoidance.
It is said, however, that the drafts which were shown not to have been endorsed by the payees were not valid vouch ers, or properly paid, and as to these the right to recover was clear, but this does not seem to be a good legal proposition. It has been declared that a check or draft on a bank, payable to a person named or order, may be transferred by parol with manual delivery and without endorsement (Freund et al. v. Imp. and Trad. Nat. Bank, 76 N. Y. Rep., 352), although the transferee acquires only the rights he would have had, had the check been non-negotiable, that is, the right which the payee had in it at the time of the transfer. The payees on these drafts had an undisputed right to the sums named on them for they are alleged in the-complaint to have been drawn for value received. There is no evidence, except such as might be inferred from the manner of the endorsement that they were improperly transferred, no testimony showing that they were not in fact transferred by parol and manual delivery. The presumption is that they were.
The witness mentioned did not regard the endorsements as made by either of the persons constituting the firm of the payees; he did not know in whose handwriting the endorsements were made.
This is the extent of the evidence of the subject, and it does not touch the integrity of a parol transfer with manual delivery. They have been endorsed by the rightful owner on authority given for that purpose or by some authorized person in order to give them purer currency. There was no right of action based upon the improper endorsement asserted in the complaint or developed by the evidence of the payees that wrong had been done them, assuming the endorsement not to have been made, the fact is immaterial. In addition to this it may be said that the plaintiff substantially asserted the validity of the transfers made by asking for the payment of the drafts, and predicating its action upon their soundness as choses an action. For these reasons it becomes our duty to affirm the judgment.
Ordered accordingly, with costs.