Case Name: Jermain v. Denniston
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1852-04
Citations: 6 N.Y. 275
Docket Number: 
Parties: *Jermain v. Denniston.
Judges: 
Reporter: New York Reports
Volume: 6
Pages: 259–262

Head Matter:
*Jermain v. Denniston.
Entries im, banlc-boolcs.
Entries in the hooks of a hank, and in the pass-hook of a customer, who was the maker of a note held hy it, whilst the hank was the holder of the note, are competent evidence to prove payment thereof, in a suit hy a subsequent transferree of the note.
Jermain v. Worth et al., 5 Den. 342, reversed.
Appeal from the final judgment of the Supreme Court, in favor of the plaintiff, entered upon the report of a referee. (Reported below, 5 Den. 342.)
This was an action of assumpsit by the indorsee of a promissory note against the maker and indorser. The maker, William J. Worth, died, after judgment below, and this appeal was taken by Denniston, the indorser.
On the trial of the case, before a referee, it appeared, that the defendant, Denniston, was the indorser of William J. Worth’s note for $7000, dated February 17th, 1840, payable to Denniston’s order, three months after date, at the Watervliet Bank. The note belonged to the bank; it was protested for non-payment at maturity., and continued to be held by the bank, until after its failure, when it passed into the hands of the plaintiff, but in what manner, or for what consideration, was not shown. The action was brought, in pursuance of the statute, against the maker and indorser; the plaintiff sought to charge the defendant as indorser. The case was tried before a referee; after proof of the note, indorsement and protest, the plaintiff rested. The defendant offered to produce in evidence the books of the bank and the pass-book of the defendant Worth, kept with the bank, and by the bank — the entries in the books and pass-book all made while the bank owned the note:
1. To prove actual payment of the note to the bank, before it was transferred, and after it was due.
t *2. To prove that, at the time the note was -I due, Worth had a balance in his favor, sufficient to pay the note, on the books of the bank, and in the hands of the bank.
3. That when the note became due, it was actually charged to Worth, in his account with the bank, in part payment of a balance due from the bank to Worth, on his deposit account, and the note retained merely as evidence of such charge.
4. That at the time the bank parted with the note, it was actually indebted to Worth for money deposited, to an amount greater than the note.
5. That on a settlement between the bank and Worth, before the transfer of the note to the plaintiff, the account of Worth with the bank, including the note in question, was settled, and a balance struck in favor of Worth, on the books of the bank, and on his pass-book, of $150.46.
The counsel of the plaintiff objected to the admission of the books in evidence, and the referee excluded the evidence; "to which decision the defendants excepted. The referee reported a judgment in favor of the plaintiff, for the amount of the note; and the supreme court having denied a motion to set aside the report, and judgment having been perfected thereon, the defendant took this appeal.
Reynolds, for the appellant.
Taber, for the respondent.
See Foster v. Beals, 21 N. Y. 250-51.

Opinion:
Ruggles, C. J.
(after stating the facts.) — The referee erred in excluding this evidence. Conceding it to be settled in this state, that mere declarations made by the holder of a promissory note, while he is the holder and owner, are not admissible against one to whom it is subsequently transferred for value, after due, yet the evidence offered should have been admitted. The evidence was more than the declaration of the holder and owner; the entries offered were his act, and operated as an actual acquittance and discharge of the debt due on the note. The learned judge who delivered the opinion of the supreme court, affirming the decision of the referee (Whittlesey, J.), thought the offer was ambiguous; and that no evidence was offered to prove the time of making the entries, except the books themselves. But this does not seem to be the true meaning of the defendant's proposition; it should be understood, as an offer to prove, by some competent evidence, that the entries were made, while the bank held and owned the note. It is not necessary, therefore, upon this construction of the offer, to say, whether the pass-book, when produced, may or *may not have been prima facie evidence that the entries were made, *- at the time of their date. The offer, according to a fair construction of it, was to show that they were made while the bank owned the note.
The entries made by the officers of the bank in the pass-book kept between the bank and its customer, are the customer's vouchers for payments, deposits and other transactions with the bank; they are made by the bank, and delivered to the customer, for his safety, and as written evidence of the facts appearing by the entries. When a customer, having deposits in a bank, credited on his pass-book, is charged with his note, the charge is an appropriation by the bank of so much of its customer's money in payment and satisfaction of the note; it extinguishes the debt; and the note is, thenceforth, fundus officio. As against a subsequent holder of the note, who acquires it after due, it is equivalent to a receipt in full by the bank, indorsed on the note, such subsequent holder being chargeable with notice of the equities existing between the bank and the previous parties. The case of Paige v. Cagwin (7 Hill 361) went, to say the least, quite far enough, in rejecting the paroi declarations of the previous holder against one who subsequently acquired the note after due. But admitting that doctrine to its fullest extent, it cannot apply to this case, nor to any, where the previous holder, while he owned the note, put into the hands of the maker, in the usual course of business, written evidence of its payment and discharge. Such written evidence may, it is true, be impeached or contradicted by the subsequent holder, but the burden of impeaching or contradicting it rests upon him.
If, therefore, the offer is to be understood here, as it was by the court below, I am of opinion, that the referee erred in rejecting it as evidence; and that, if no suspicious circumstance appeared on its face, leading to a belief that the entries were not made at the time of their date, it should be regarded as primd facie evidence that the note was paid, before it went out of the hands of the bank. It is unnecessary to notice the other points made * ova i by the appellant. *The judgment against the J appellant in the supreme court must be reversed, and a new trial ordered as to him.
Judgment reversed, and new trial awarded
Gridley, J., dissented.