Court Opinion

ID: 5208624
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:07:44.714479+00
Date Added: 2024-06-11T08:27:20.169839
License: Public Domain

Ingraham, J. (dissenting) •.
It is not disputed but that if this check had been presented to the plaintiff and paid, the plaintiff could not have recovered the-amount from the defendant, on the ground that the account of the drawer of the check was not good, or that a mistake had been ma(te in paying the check.' The check, however, was presented to the plaintiff through the Clearing House and paid in that way. The plaintiff bases its claim that it is entitled to repayment' upon the ground that a payment through the Clearing House wast not a voluntary payment and, therefore, as the balance due the drawer of the check by the plaintiff did not equal the amount called for by the check, the plaintiff was entitled to recover back from the defendant the amount that the defendant received in payment of the check.
The New York Clearing House Association is a voluntary association organized by the several banks in the city of New York, of which both the plaintiff and defendant are members, the object of the association being “ the effecting at one place of the daily exchanges between the several associated banks, and the payment at the same place of the balances resulting from such exchanges.” The association of banks had thus united to avoid the necessity of presenting at each bank the checks drawn on it, and provided a method whereby all checks drawn on the associated banks should be paid at oné time and place so that each bank could receive for the checks held by it upon associated banks the amount called for by them. It was an entirely voluntary association, and no bank was bound to collect its checks through the association. It was simply a method adopted to save the trouble and expense of the individual presentment of each check to the bank upon which it was drawn.
By section 12 of the constitution of this voluntary association it was provided that the hour for making exchanges at the -Clearing *561House should be ten o’clock, a. m., precisely. The method adopted seems to have been that at that time each bank presented to the manager of the Clearing House the checks upon associated banks that it had received during the preceding day, and a statement was then made up showing the balance due by or to each of the associated banks, which was the difference between the amount of the checks drawn on that particular bank that had been presented to the Clearing House for payment and the credits to which that particular bank was ■ entitled in consequence of the checks drawn on the other associated banks which' it had presented. Between half-past twelve and half-past one of the same day the debtor banks were required to pay to the manager of the Clearing House the balance against them, and at half-past one, or as soon thereafter as the amounts can be made up and proved, the creditor would receive from tlie manager at the same place the respective balances due to them. The manager of the Clearing House Association was by this arrangement made an agent of each associated bank to pay each check upon such presentation, and to pay to each bank any credit balance that was payable to it, and each bank by its payment to the manager was discharged from the obligation for the checks drawn upon it and for which it had paid to the manager of the association the amount called for by them. It seems to me to follow that when any particular bank had been paid the balance due to it for the cheplcs that it had presented to the association drawn upon other banks, in the absence of any regulation as between the banks to the contrary, it would be a voluntary payment as if such check had been presented directly to the drawee bank, and the same rule would apply that would arise from the presentation of a check as- to the drawee bank itself and payment thereof by the drawee. There was no duress or mistake. No bank was compelled to adopt this method in securing payment of the checks drawn upon the other banks, and it was adopted purely as a method of “ payment at the same place of the balances resulting from such, exchanges.” The banks, however, recognized that a bank upon which checks were drawn would have no opportunity of ascertaining whether or not they were good or were to be paid, and they, therefore, adopted a means by which any bank upon which a check was drawn could *562return it to the bank presenting it if for any reason it should decline to pay it. But it seems to me that to avoid the effect of the voluntary payment by the drawee bank the drawee bank must bring itself within the rule' adopted by the associated banks themselves, which would entitle a bank upon which a check had been drawn to return the check. To accomplish that' purpose it was provided -that “all checks, drafts, notes or other items in the exchanges, returned as not good,’ or missent, shall be returned the same day directly to the bank from whom they were received, and the said bank shall immediately refund to the bank returning the same the amount which it had received through the clearing house for the said checks, drafts, notes, or other items so returned to it, in specie or legal tender notes.” . And then by a rule of the Clearing House Association, which it is conceded bound all the associated banks, it was provided that “ Beturn of checks, drafts, etc., for informality, not good, missent, guarantee of endorsement, or for any other cause, should be'made before three o’clock of the same day.” The associated banks having thus provided a rule by which checks could be returned to the banks which had presented them and received payment for them, it seems to me entirely clear that to avoid the effect of a voluntary payment, this rule must be strictly complied with.
It is not disputed but that the banking day closed at three o’clock and that to make a valid presentment of a check or draft drawn upon a bank it must be presented to the bank upon which it was drawn before three o’clock- of the day it was due. Any bank would be justified in refusing to pay a check or draft drawn upon it presented after the close of business on any particular day, and the associated banks, recognizing this fact, had provided that a check which was to be returned must be returned within the business hours of the day upon which it had been presented to the bank which had obtained payment through the Clearing House. There can be no question but that this was a perfectly reasonable regulation voluntarily adopted by the associated banks for their own protection, and a failure to return a check within the time fixed by the constitution and by-laws of the association clearly, it seems to me, left the interested banks in the position of having accepted and paid the check and the rules of law applicable to such a paid *563check applied. It is no answer to this to say that the bank that had received the amount of the check must show itself to be injured by the delay as if the rule was not complied with the drawee bank lost thé right to return the check. It was not a penalty imposed for not returning it, but the waiver of a right to return it. But the bank presenting the check would be affected by its return after the close of business hours of the day upon which it was received and presented for payment in relation to its claim to hold the indorser upon any such instrument for non-payment of the check. To hold such an indorser it was bound to present the check to the bank upon which it was drawn within a reasonable time after its receipt, and in the event that the check was not paid to protest the check for non-payment. There had been no presentment within this rule except the presentment of the Clearing House, and by the rules of the Clearing House that check had been paid by the failure of the bank upon which it was drawn to return it before three o’clock of the day upon which it was presented. Under such circumstances there certainly would be presented a serious question as to 'whether the indorser was not discharged. If defendant had received payment of the check it could not recover for its depositor the amount, because the bank upon which it was drawn had subsequently ascertained that the account was good, and the effect of the plaintiff’s not returning the check before three o’clock was that as between the banks it was paid.
The case relied on in the prevailing opinion is that of Merchants’. National Bank v. National Eagle Bank (101 Mass. 281). The ruling in'that case was that if the plaintiffs delivered the check to a messenger before one o’clock, to be returned to the bank depositing it, in the usual course of their business, and with time sufficient, in the absence of any accident or mistake, to reach the depositing bank 'by one o’clock, it would be a compliance with the vote, especially in view of the language of the vote that the bank should not retain the checks after one; but that irrespective of the peculiar working of the vote, the failure of the bank to return a check by one o’clock¡ could be a defense to the depositing bank only to the extent that such bank was injured by such delay. And the affirmance of that instruction was based upon the fact that the particular check in that case was not returned in *564consequence, of a mistake of fact. The court in discussing the Clearing' House rule said: “ If by any mistake of fact the return, of the check is not so made, then, as between the two banks, it-is to be treated * * * precisely to the same extent, and with the
same right to reclaim, which would have existed if the payment had been made by-the simple act of passing the money across the counter directly to the payee on the presentation of the check. The manifest purpose of the provision is to fix a time at which the creditor bank may be authorized to treat the check as paid, and be able to regulate with safety its relations to other parties.” In this case there was no evidence that there was any mistake of fact in relation to this cheek, and it seems to be conceded that if, under the circumstances here disclosed,- the check had been actually paid over the counter the plaintiff would not be entitled to recover. Here the failure to return the check before three o’clock was, under the rule adopted b_y the Supreme Court of Massachusetts, equivalent to payment over the counter. I think, therefore, even applying the Massachusetts rule, that the payment must be treated as a voluntary payment, and that the plaintiff is not entitled to recover.
I think the judgment appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Judgment affirmed, with costs.