Case Name: Chapman v. White
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1852-07
Citations: 6 N.Y. 412
Docket Number: 
Parties: Chapman v. White.
Judges: 
Reporter: New York Reports
Volume: 6
Pages: 392–397

Head Matter:
Chapman v. White.
Bank check.
the holder of a check has no equitable lien upon the funds of the urawer; checks are payable, when presented (if the drawer has funds in the bank), . without regard to priority in the time of drawing.
Appeal from the general term of the. Supreme Court, in the sixth district, where a judgment had been rendered in favor of the plaintiff, in a case submitted pursuant to § 372 of the code. The defendant was the receiver of the Canal Bank at Albany.
The Bank of Geneva, having a general deposit in the Canal Bank .at Albany, upon which the latter paid interest, on the 7th July 1848, drew a draft or check on the' Canal Bank, payable to the order of its cashier, in the following words:
“500. *Bank of Geneva, July 8,1848. * 4131 i j 7 J Canal Bank, Albany. Pay to the order of Theo. Olcott, Esq., Cash’r, five hundred dollars.
C. A. Cook, Pres.”
The draff was dated the 8th July, having been issued after the usual banking-hours on the 7th. It was sold to the plaintiff, by whom it was inclosed in a letter, ad-. dressed to the cashier of the Canal Bank, forwarded by mail, stating that it was sent to pay the plaintiff’s note, due on the 12th July, and requesting that the note should be cancelled and sent to him by mail. The letter and draft were received at the bank, by the cashier, to whom it was addressed, on the 8th of July, after the close of business-hours. The plaintiff’s note was not then in the possession of the bank, and the officers of the bank had no knowledge by whom it was held, until it was presented for payment.
On the 11th July, the defendant commenced an examination of the assets of the bank, under an order of the comptroller, the bank being insolvent. Business was transacted by the bank, until the close of the 10th July, Olcott acting as cashier; on the 12th, the plaintiff’s note was presented, and not paid. The letter, with the draft inclosed, the seal having been broken, was found in the office of the cashier, by the defendant, during his examination, and on the 19th of July, the draft was returned to the plaintiff, at his request. The draft was not indorsed by Olcott, nor accepted by the bank, nor was the amount of it charged to the Bank of Geneva on the books. The deposit of the Bank of Geneva with the Canal Bank continued, up to the time of the insolvency and failure of the latter bank, much larger than the amount of the draft; and such deposit remained to the credit of the Bank of Geneva, on the books of the Canal Bank, when they came to the hands of the defendant, as receiver of its effects. The plaintiff requested the defendant, as such receiver, to pay him the amount of the draft out of such deposit, and he refused to do so.
*The supreme court, at general term, made an _ order, in accordance with the relief prayed, that ^ the defendant, as receiver, should pay the plaintiff the amount of the draft and interest, out of the assets of the bank, in his hands, in preference to the general creditors; whereupon, the receiver took this appeal.
Pruyn and Reynolds, for the appellant.
Quinn, North and Brown, for the respondent.

Opinion:
*Gardiner, J.
— The question upon the facts stated is, whether the draft, under these circumstances, operated as an assignment of the deposit of the Geneva Bank, to the amount of the draft, either at law or in equity. The question has been decided by this court, in Cowperthwaite v. Sheffield (3 N. Y. 243), Harris v. Clark (Id. 93), and in Winter v. Drury (5 Id. 525). The instrument in question was an ordinary bill of exchange; it did not purport to be drawn on a particular fund, even if one existed. But there is nothing to show that any part of the deposit of the Geneva Bank was held by the drawees, at the time when the draft was received, or transmitted, or when the note for the payment of which the proceeds were to be appropriated, matured, and was presented at the banking-house of the depositary.
The Canal Bank paid interest upon, and had the right to use, the deposit, by arrangement, in their own business ; they, probably, availed themselves of all the advantages secured by the agreement. The depositing bank was, therefore, a mere creditor at large of the insolvent corporation, and I do not see how their unaccepted bill of exchange placed the plaintiff in any better situation. The cashier was his agent, for the purpose Of paying the note, and, as it seems to me,-for procuring an acceptance of the bill. As this was not done, there can be no pretence, that he acquired any rights superior to that of his vendor, even if an acceptance would have availed him.
, *It is said, that the instrument is a check; but * 4-171 7 7 J a check is a bill of exchange, payable on demand. (Harker v. Anderson, 21 Wend. 373, and cases cited; Franklin v. Vanderpool, 1 Hall 80.) The drawee owes no duty to the holder, until the check is presented and accepted. Baron Parke remarked, in a case decided in February last, that the holder "could not sue the drawee unless he had accepted the check, a practice not usual." (Bellamy v. Majoribanks, 7 Exch. 389.) And in Harker v. Anderson (supra), it was decided, that no action could be maintained against the drawer, until after presentment and refusal of payment by the drawee, and notice to the former. Money deposited generally with a banker, becomes the property of the depositary; the right of the depositor is a chose in action. It is immaterial, whether the implied engagement upon the part of the banker is to pay the sum in gross, or in parcels, as it shall be required by the depositor. In either case, the draft or check of the latter, would not, of itself, transfer the debt, or a lien upon it, to a third person, without the assent of the depositary. (Dykers v. Leather Manufacturers' Bank, 11 Paige 616.) As Judge Cowen remarked, in Marker v. Anderson, there are dicta of learned judges, taking a distinction between checks and bills of exchange, but the whole current of authority is the other way.
The supreme court, I think, erred, in determining that the plaintiff was entitled to a preference in the payment of his debt, over the other creditors of the bank, and the judgment should be reversed.
That a check upon a bank does not operate as an assignment pro tanto of the fund, against which it is drawn, is well settled, by many decisions. See Ætna Bank v. Fourth National Bank, 46 N. Y. 87 ; Attorney General v. Continental Life Insurance Co., 71 Ibid. 325 ; Lloyd v. Caffrey, 46 Penn. St. 410; Bank of the Republic v. Millard, 10 Wall. 152.