Case Name: Richard M. Martin and Others, as Executors, etc., of William Campbell, Deceased, Respondents, v. Home Bank, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1898
Citations: 30 A.D. 498
Docket Number: 
Parties: Richard M. Martin and Others, as Executors, etc., of William Campbell, Deceased, Respondents, v. Home Bank, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 30
Pages: 498–504

Head Matter:
Richard M. Martin and Others, as Executors, etc., of William Campbell, Deceased, Respondents, v. Home Bank, Appellant.
Bills and notes — action against a bank for a failure to present a check deposited with it, to the drawee in due time — an amendment charging that the deposit was as cash instead of for collection does not change the cause of action—presumption of damage arising from the insolvency of the drawee.
The complaint in an action alleged that the plaintiff 'had deposited for collection with the defendant, a bank in New York city, a check drawn upon a banking house in Chicago, under an agreement by the defendant to present the check, with due diligence, to the drawee; that the defendant failed to present the check in accordance with the agreement, and that the drawee, having suspended payment, after such reasonable time had expired and before the check was actually presented, it was dishonored.
The answer alleged that the check was deposited by the plaintiff with the defendant as cash and not for collection, and that after it had been returned dishonored, the plaintiff, with full knowledge of all the facts, paid to the defendant the amount of the check and protést fees.
It appearing upon the trial that the cheek was deposited as cash and not for collection, and that the plaintiff at the time he paid to the defendant- the amount of the check and protest fees had no knowledge of the delay in its presentation, leave to amend the complaint, so as to conform to the proof, was granted.
Held, that the amendment did not change the cause of action from one for negligence to one on contract, as the defendant, whether it received the check from the plaintiff for deposit or collection, was under an implied contract to forward it by mail for presentment to the drawees on the next business day after its receipt, and the basis of the action, under both the original complaint and the amended complaint, was consequently a breach of the contract to present the check in due time;
That, as there was no disputed question of fact in the case, each party at the close of the case moving for the direction of a verdict, and as it was not claimed on the part of the defendant that it was misled by the amendment, and as no objection was taken to any of the proof offered to establish a cause of action as set forth in the amended complaint, except to proof of the fact that neither the plaintiff nor his agents had been told of the failure to present the cheek in time, the amendment was property granted under section 728 of the Code of Civil Procedure;
That, when it appeared that the payment by the plaintiff to the defendant of t-lie amount of the check was made without knowledge on his part of the delay which had occurred in the presentation thereof, until the drawees had become insolvent, his right to recover could not be disputed, and that, under the circumstances, the presumption was that he was damaged.
Appeal by the defendant, the Home Bank, from a judgment of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of New York on the 8th day of May, 1898, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 8th day of March, 1898, denying the defendant’s motion for a new trial made upon the minutes, and granting the plaintiffs’ motion for an extra allowance.
W. C. Beecher, for the appellant.
John W. Boothby, for the respondents.

Opinion:
Rumsey, J.:
In the month of May, 1893, William Campbell, who was doing business under the name of William Campbell & Co., had an account with the defendant, a bank in the city of New York. On that day Mr. Campbell received from one Alfred Peats upon an indebtedness due from him, Peats' cheek, dated that day, drawn upon Herman Scliaffner & Co., of Chicago, 111., for $4,925. This check was payable to the 'order of E. S. Ballou, and was by him indorsed to the order of William Campbell & Co. The twenty-seventh of May was Saturday and the check was given to Campbell after banking hours on that day. On the following Monday, May twenty-ninth, Campbell indorsed the check and deposited it to the credit of William Campbell & Co., and delivered it to the Home Bank, by whom it was received on that day. The day after the check was received by the Home Bank was a holiday, and nothing seems to have been done on that day, but on the thirty-first day of May the ETorne Bank indorsed the check to the order of the Fifth National Bank for collection and put it in the clearing house to the credit of that bank. Just what' was done by the Fifth National Bank with the check does not appear, except that for some reason it was delivered to the National Park Bank of the city of New York and by it indorsed for collection and sent to the Grlobe National Bank of Chicago, Illinois. It was not received by that bank in time to present it for payment on the second day of June. The banking house of Herman Scliaffner & Co., the drawees of the check, was a bank of deposit in the city of Chicago, 111., and up to the close of business on the second day of June paid all checks that were drawn upon it by its depositors in the ordinary course of business. On the second of June the drawers of the check had a sufficient amount on deposit with Scliaffner & Co. so that if the check had been presented on that day it would have been paid, but Scliaffner & Co. ceased to do business at the close of banking hours on that day and became insolvent, and when the check was presented on the third of June, they had stopped payment, and the check was dishonored. After dishonor it-was returned to the Home Bank, which it reached on the eighth of June. On that day the cashier of William Campbell & Co.. received notice Rom the Home Bank that the check had been returned dishonored, and having no other information with regard to it, he drew the check of Campbell & Co. for the amount of Peats' check with the protest fees, and delivered it to the Home Bank and took up the check of Peats which he had previously deposited with that bank. At that time neither Campbell & Co.,, nor liis manager or cashier had information as to the delay with regard to this check and were not aware of the failure to present it in due course of business. After becoming aware of these facts, Campbell brought this action to recover the money which he had paid upon the check. The complaint upon which the parties went to trial alleged the receipt of the check by Campbell & Co.; that it was deposited for collection by Campbell & Co. with the Home Bank, the defendant, on the 29th of May, 1893, and that the defendant agreed with the plaintiff to present the check with due diligence to the drawee in the city of Chicago for payment and demand payment thereof, and to use due diligence for its collection for the plaintiff's account. The complaint then went on to allege the failure to present the check in accordance with the agreement •and the fact that the drawees suspended payment before the check was actually presented; that the check was dishonored and the consequent loss to the plaintiff. The answer admitted the incorporation of the defendant and denied all the other allegations in the complaint, except that the check was deposited with the defendant on the 29 th of May, 1893. The answer then set up as an affirmative defense an allegation that the check was deposited by Campbell & Co. with the defendant as cash and not for collection, and that it was received in that way by the defendant, and that after it had been returned dishonored, the plaintiff, with full knowledge of all the facts, paid to the defendant the amount of the check and the protest fees. Upon this condition of the pleadings the parties went to trial. The facts were proved substantially as they were alleged in the complaint, except that it was clearly shown by the indorsement upon the check that it was deposited with the Home Bank on the twenty-ninth of May to the credit of William Campbell & Co., and not for collection. It was also shown that after the check was returned, Campbell & Co. took it up, giving in return for it a check of Campbell & Co., which was received by the defendant as cash. No objection was made to any of this evidence. After the commencement of this action and before the trial Campbell died, and the action was continued in the name of his executors, the present plaintiffs. The plaintiffs proved hy the cashier and bookkeeper and manager of William Campbell & Co., that when the check of Campbell & Co. was drawn to take up the Peats' check, neither of them had any knowledge as to what had been done with the Peats' check, and that Campbell knew nothing at all of the matter. This evidence was objected to solely upon the ground that it was incompetent, irrelevant and immaterial, but not upon the ground that it was not admissible under the pleadings. It was shown that the Peats' check itself had been destroyed accidentally after it had been taken up by Campbell & Co., and the proof of the check was made by copy. It appeared from that copy that the indorsement of Campbell was upon the check. At the close of the plaintiff's case a motion -was made to dismiss the complaint, and the plaintiff thereupon asked leave to amend his pleading to conform to the proof. That leave was granted against the objection and exception of the defendant, and the complaint was amended by inserting an allegation that the plaintiff deposited the check with the defendant, and the same was thereupon credited to the plaintiffs' testator as cash on his account, and that after the dishonor of the check the defendant obtained the check of Campbell & Co. in the place of the check which was dishonored, and charged Campbell & Co. for the full amount of the money, without knowledge on the part of Campbell that the bank had neglected to charge anybody on the check of Peats. This amendment was objected to upon the ground that thereby the cause of action was changed from a cause of action for negligence to an action upon a contract, and whether the amendment was properly allowed presents the more serious question in the case. As the facts were set up in the complaint, there is no doubt that the cause of action was based upon the contract, which was implied on the part of the defendant, to use due diligence to present this check upon its receipt for collection, and upon its liability for failure to perform that contract. The duty of the defendant bank, when it received the check, was to forward the check by mail for presentment to the drawee on the next business day after its receipt (2 Dan. Neg. Inst. § 1590, 1592, 1594; Taylor v. Sip, 30 N. J. Law, 284, 294; Carroll v. Sweet, 128 N. Y. 19, 22); and if it failed to make such presentment and the check was dishonored, because of such failure, the indorsers of the check, were discharged. Such is the law applicable to the check, whether it was received for deposit or for collection. In either case the contract was implied, and for a failure to perform the contract- in either case the Home Bank became liable- for any damages that accrued to Campbell & Co. The basis of the action, as set out in the complaint, was a breach of the contract to present the check in due time. The basis of the action, as changed by the amendment, was precisely the same thing. In each case the claim arose out of the same transaction. There was no claim on the part of the defendant that it was misled by the amendment, and no objection was taken to any of the proof offered to establish the cause of action as set out in the amended complaint, except to proof of the fact that neither Campbell nor his agents had been told of the failure to present the check in timehut the proof of that fact added nothing to the plaintiff's case as it stood when it was closed, because, evem in the absence of the testimony of the manager and cashier of Campbell & Co., it was almost necessarily to be inferred that Campbell had when this check was taken up by him no knowledge of the failure to present it in time, since then he had received no information about it except the mere fact that the check had been dishonored. So that, as a matter of fact, the amendment of the complaint not only did not change the cause of action from an action for negligence to an action upon contract, but the additional facts must have appeared in the testimony given to establish the complaint as originally set out, and did appear substantially without objection. It is material, too, to consider that there was no disputed question of fact in the case. At the close of the case each party so admitted by moving for the direction of a verdict, thereby conceding that the right of the parties depended purely upon questions of law arising from undisputed facts. (Kirtz v. Peck, 113 N. Y. 222.) The right of amendment in these cases is controlled by section 723 of the Code of Civil Procedure, which authorizes the court where the amendment does not change substantially the claim or defense, to amend the pleading by conforming it to the facts proved. The object of this section was that the court should, in furtherance of justice, disregard immaterial defects and mistakes in the pleadings, and the only limitation imposed as to the making of corrections is that they shall not affect the substantial rights of the adverse party. (Bohlen v. M. E. R. Co., 121 N. Y. 546, 550.) In this particular case there can he no question that no substantial right is affected in the slightest degree. The whole story of the check had been presented to the jury practically without objection; the defend ant knew the purpose for which the check had been deposited and all that had been done with regard to it, and, indeed, almost all the facts had been correctly set out in the answer, thus showing that the defendant relied upon these facts for its defense and these facts were proved substantially as they were alleged in the answer. The only difference was that the answer set up that the payment was made with full knowledge by Campbell of the delay in the presentation of the check, whereas the plaintiff insisted that Campbell had no such knowledge. The facts showed clearly that no information of the facts had been given to Campbell, or to any of his agents. Upon the whole case, therefore, it is quite apparent that the amendment did not vary or affect the substantial rights of the parties, and it is equally apparent that the court at the trial correctly decided the questions of law presented to it. When it appeared that the payment by Campbell was made without knowledge on his part of the delay which had occurred in the presentation of the check until the drawees had become insolvent, his right to recover could not be disputed. (Lake v. Artisans' Bank, 3 Abb. Ct. App. Dec. 10; Talbot v. Nat. Bank of The Commonwealth, 129 Mass. 67.) When it was shown that the payment had been made by Campbell under these circumstances, the presumption is that he was damaged. (2 Dan. Neg. Inst. [4th ed.] § 1278a.) The case, therefore, was properly decided in the court below, and the judgment and order should be affirmed, with costs.
Babbett, Ingbaham and McLaughlin, JJ., concurred.
Judgment and order affirmed, with costs.