Court Opinion

ID: 3625905
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:06:30.62986+00
Date Added: 2024-06-11T09:22:03.235842
License: Public Domain

The set-off claimed by the defendants was properly disallowed by the court. This was for a credit *Page 85 
given by the Hollister Bank to Monteath, upon the discount by the bank for him of his draft payable at sight, drawn upon Grant, Sayles  Ford of New York. The draft was duly presented to the payees, and payment refused, pursuant to the advice of Monteath to Messrs. Grant, Sayles  Ford. This gave the bank the right to balance the credit by charging Monteath with the draft in his account. The defendants, as assignees of Monteath, had no greater rights than his assignor. Monteath, upon the discount of the draft by the bank, had a right at once to the proceeds, but not having drawn the money from the bank prior to the protest of the draft for non-payment, the bank could at once return the draft to him, and cancel the credit, or avail itself of the draft as a set-off against the demand of Monteath for the proceeds.
It is claimed by the defendants that the plaintiff is precluded from canceling the credit given to Monteath for the proceeds of the draft in this way, because at the time of the assignment of this credit by Monteath to him, the draft was in the possession of the Corn Exchange Bank, that bank having a lien upon it, with other paper of the Hollister Bank, for whatever balance might be due from the latter to the former. While the Corn Exchange Bank so held the draft, the Hollister Bank or the plaintiff could not charge the same to the debit account of Monteath, and thus cancel the credit given for the proceeds, or use it as a set off in an action brought by Monteath for the money. To enable the Hollister Bank or the plaintiff to do either, the title to the draft must be absolute, and the holder able to discharge Monteath from all liability as drawer. This could not be done while the Corn Exchange Bank had a lien upon the draft for a general balance against the Hollister Bank. When the lien of the Corn Exchange Bank was satisfied by the plaintiff, he acquired the same title to the draft he would have had, had no such lien ever existed, with the same right to use it against Monteath. The defendants gave no notice of the transfer of the credit for the proceeds of the bill by Monteath to them, and, upon well settled principles, the claim of the defendants for that credit, whether they sought to enforce *Page 86 
it by action or by way of set-off, was subject to any defence that existed against Monteath at the time the bank or plaintiff had notice of the transfer. (Code, § 112, clause 8, § 18; 2R.S., 354.) No question was made upon the trial as to the surrender of the draft by the plaintiff to Monteath. I do not see how any could be made. When the plaintiff elected to use the draft to cancel the credit given to Monteath upon its discount in the way above stated, and did so use it, the liability of Monteath as drawer became extinguished. The judgment should be affirmed.