
    James Shipsey, Appellant, v. The Bowery National Bank, Respondent.
    (Argued December 15, 1874;
    decided January 19, 1875.)
    Plaintiff deposited a check drawn by M., upon a bank at P., with defendant for collection, which was credited in plaintiff’s account. Defendant forwarded it by mail on the second of the month. It should have reached P. on the third, and an answer on that day would have reached defendant on the fourth. The check was lost. Defendant did not discover the loss until the sixteenth, and it notified plaintiff on the eighteenth that the check had not arrived at P., and if not found it would require a duplicate. M. had funds with the drawee sufficient to meet the check, until the twentieth, when he became insolvent, and subsequently defendant charged the check back to plaintiff. In an action to recover the amount of the check, held, that defendant was chargeable with negligence in not sooner discovering the loss and notifying plaintiff thereof, and the latter, having sustained damage by reason thereof, was entitled to recover.
    M. left with plaintiff, after the twentieth, a sum more than enough to pay the check. Plaintiff, however, had at that time other checks of M., exceeding the amount paid, which had been forwarded for collection and dishonored, of which latter fact plaintiff was ignorant. No directions were given by M. as to the application of the sum paid. Plaintiff thereafter applied the payment on the checks last mentioned. Held, that there was an existing indebtedness to plaintiff upon the dishonored ■checks at. the time of payment, although he was ignorant of it; that he had a right, within a reasonable time, to elect upon which indebtedness he would apply the payment, and having so elected, the check in question remained unpaid and defendant liable.
    Appeal from order of the General Term of the Superior Court of the city of New York, reversing a judgment in favor of plaintiff entered upon a decision of the court upon trial without a jury and granting a new trial.
    This action was brought to recover the amount of a check alleged to have been deposited with defendant and credited to plaintiff, but afterward, without authority, charged back to him.
    The court found in substance as follows:
    That on the 2d day of November, 1868, plaintiff was the owner and holder, for value, of a check, dated on that day and drawn by one E. D. Merritt on the Portchester National Bank, for the sum of $550. Plaintiff had frequently received from Merritt checks drawn by him, on the said Portchester National Bank and had been in the habit of depositing the same with the defendant, and an agreement had been made between plaintiff and defendant that plaintiff should pay defendant one-eighth of one per cent on the amount of all such checks as aforesaid, deposited by him, to cover the expenses of the collection. On November 2d, 1868, plaintiff indorsed the aforesaid check and deposited the same with the defendant, and at the time paid to the defendant, in cash, in pursuance of the agreement, one-eighth of one per cent on the amount of the cheek, and defendant forthwith credited to plaintiff’s account on their books and in plaintiff’s pass-book, the full amount of said check, in the ordinary form. And thereupon it was found that the check was deposited with defendant for collection. The ordinary course of the defendant’s business with respect to such checks was for defendant’s cashier to send the same to the Portchester National Bank, by mail. The check in question was mailed on November 2d, 1868, by-defendant to the Portchester National Bank for pay-ment. The plaintiff was aware, prior to November 2d, 1868, that the defendant was in the practice of collecting the checks drawn by Merritt on the Portchester National Bank, deposited with it by- plaintiff for collection, through the mails. According to the due and ordinary course of mail, a check mailed as aforesaid, on November second, would reach the Portchester National Bank on the folio wing morning, Nov-ember third, and the defendant, which at that time was nearly every day in correspondence with the Portchester National Bank, would receive from said Portchester National Bank advice of such check on November fourth. The check in question never was received by, nor was it ever presented at, the Portchester National Bank, and no demand for the payment of this check was ever made upon the Portchester National Bank by the defendant. On November sixteenth, defendant discovered for the first time that the check in question had never been received by the Portchester National Bank. On the 18tli day of November, 1868, defendant notified the plaintiff, by letter, that the check liad never been received, and that, if the check ivas not found, defendant would ask plaintiff for a duplicate. This was the first notice that the plaintiff had that said check had not been paid. From November 18th 1868, until January 7th, 1869, the defendant made various requests of the plaintiff to procure a duplicate check, and otherwise assist defendant in obtaining payment of the amount of this check. On November 25th, 1868, defendant demanded a duplicate check from plaintiff. On December 4th, 1868, defendant, by letter, offered to give plaintiff a bond to indemnify Merritt in the premises, if Merritt so desired. On December 22d, 1868, defendant sent plaintiff such a bond unexecuted, which plaintiff returned, and, on December 31st, 1868, defendant again sent plaintiff such a bond duly executed, which plaintiff again returned, and, on that day, the defendant charged the amount of this check to the plaintiff’s account, and, on January 7th, 1869, plaintiff having drawn all moneys due to him from defendant, except an amount equal to the amount of this check, demanded the amount of this check from the defendant, and the defendant refused to pay the same. From the second to the twentieth of November, Merritt had on deposit with the drawee moneys sufficient to pay the check. On November 28th, 1868, Merritt’s property was seized under attachment, and from that time onward he ceased to do business, and soon after filed a petition in bankruptcy. On November 21st and 25th, 1868, Merritt was indebted to plaintiff in the sum of $870, upon several checks of Merritt’s, then owned and held by plaintiff, which had been protested, but of the fact of dishonor plaintiff was then ignorant. On these days Merritt left with plaintiff money and checks to the amount of $575. These were left with plaintiff by Merritt, without any agreement, arrangement or understanding that they were either paid or received on account of the check in question, nor were they left as payments upon any account whatever. The plaintiff, however, thereafter applied the sums received upon the aforesaid indebtedness of $870.
    As matters of law, the court found that defendant became and was the agent of the plaintiff to collect said check, and did not discount the same, and that by reason of the negligence of the defendant in not discovering the loss of the said check prior to November 15th, 1868, and in not notifying the plaintiff thereof until November 18th, 1868, and in not having demanded payment of said check from the Portchester National Bank, as of a lost check, the defendant, upon the facts above found, became liable to the plaintiff for the full amount of the said check ; that the plaintiff had the right to apply the moneys received November 21st and 25th, 1868, to and upon the indebtedness of $870, and was not bound to apply the same to the check in question.
    Judgment was directed for the amount of the check, which was entered accordingly.
    
      John C. Shaw for the appellant.
    A bank becomes the owner of check deposited for collection. (Stuyvesant Bk. v. Nat. M. Bk. Assn., 7 Lans., 197, 202, 203; In re Bk. of Madison, 9 N. B. Reg., 184.) The legal effect of the plaintiff’s indorsement could not be varied by parol evidence. (Jackson v. Richards, 2 Cai., [m. p.] 343, 345 ; Johnson v. McIntosh, 31 Barb., 267, 271; Seabury v. Hunyerford, 2 Hill, 80; Spies v. Gilmore, 1 Comst., 321, 324; Bacon v. Burnham, 37 N. Y., 614, 618.) The loss of the check did not excuse demand of its payment and notice of loss to the indorser. (1 Pars, on Bills and Notes, 448, 530 ; 2 id., 73, 261; Edw. on Bills, [m. p.] 305-308; Chitty on Bills, [m. p.] 288, 289, 291, 297; Jackson v. Richardson, 2 Cai., 343; Smith v. Rockwell, 2 Hill, 482; Rowley v. Ball, 3 Cow., 303.) The collecting agent is responsible for the negligence of his sub-agents. (Mont. Co. Bk. v. Albany City Bk., 3 Seld., 459 ; Walker v. State Bk., 5 id., 582, 584; Com. Bk. v. Union Bk., 1 Kern., 203; Ayrault v. Pac. Bk., 47 N. Y., 573-575; Allen v. Mer. Bk., 22 Wend., 215, 229, 230.) The loss of the check did not discharge defendant from-the performance of its contract as agent for collection. (Edw. on Bills, [m. p.] 493, 494, 305-308; 1 Pars, on Bills and Notes, 448, 530; 2 id., 73, 261; Bigler v.' Hall, 54 N. Y., 167 ; Dexter v. Norton, 47 id., 62; Baker v. Johnson, 42 id., 126; Beebe v. Johnson, 19 Wend., 500; Harmony v. Bingham, 12 N. Y., 115; Inman v. West. Ins. Co., 12 Wend., 460; Van Dorn v. Young, 13 Barb., 294, 295 ; Williams v. Vanderbilt, 29 id., 498; Graves v. Berdan, id., 101; Warfield v. Watkins, 30 id., 402, 403 ; Walker v. Bk. of State of N. Y., 5 Seld., 582-587; Nunnemaker v. Lanier, 48 Barb., 234, 236.) Defendant was not discharged from demanding payment on the ground that the maker’s account was not good for the amount of the check on the day it was drawn. (1 Pars, on Bills and Notes, 352-356 ; Wilkes v. Jacks, Peake, 202; Little v. Phenix Bk., 2 Hill, 425, 429; Harbeck v. Craft, 4 Duer, 129 ; Benedict v. Coffee, 5 id., 232; Mohawk Bk. v. Broderick, 10 Wend., 304; 13 id., 133, 134; Allen v. Suydam, 20 id., 321, 329, 330; Allen v. Mer. Bank, 22 id., 215, 222.) Defendant was not excused by plaintiff’s refusal to procure a duplicate check. (Benton v. Martin, 52 N. Y., 570-575; Chitty on Bills, [m. p.] 289 ; 2 Pars, on Bills and Notes, 261; Bacon v. Burnham, 37 N. Y., 614.) Defendant was negligent in discovering and giving notice of the loss of the check. (Mohawk Bk. v. Broderick, 13 Wend., 133, 138.) Plaintiff is entitled to damages to the full amount of the check. (Mohawk Bk. v. Broderick, 10 Wend., 304; 13 id., 138 ; Allen v. Suydam, 20 id., 321, 329-337; Allen v. Mer. Bk., 22 id., 215, 222; Sedgw. on Dam. [5th ed.], 337; Hoard v. Garner, 3 Sandf., 191; Furniss v. Ferguson, 34 N. Y., 492; Com. Bk. v. Hughes, 17 Wend., 94; Little v. Phenix Bk., 2 Hill, 425; Potter v. Mer. Bk., 28 N. Y., 641; Smith v. Miller, 43 id., 171, 174, 175; Crandall v. Schroeppel, 4 N. Y. S. C. [T. & C.], 78 ; Walker v. Bk. State of N. Y., 5 Seld., 582-587; Nunnemaker v. Lanier, 48 Barb., 234, 236; Robinson v. Howes, 20 N. Y., 84.) The delivery of money and checks by Merritt on November twenty-first and twenty-fifth, did not establish the defence that plaintiff was not damaged. (Tyler v. Stevens, 11 Barb., 489; L. l. Bk. v. Townsend, H. & D. Supp., 204; Gillespie v. Torrance, 25 N. Y., 309-311; Couglan v. Dinsmore, 9 Bosw., 463-465; Lafarge v. Halsey, 1 id., 176 ; Seacord v. Miller, 3 Kern., 55-59 ; Otsego Co. Bk. v. Warren, 18 Barb., 290; 1 Pars. on Bills and Notes, 552, 553; Little v. Phenix Bk., 2 Hill, 425 ; 10 Wend., 304.)
    
      F. G. Salmon for the respondent.
    Defendant as collecting agent is only liable for actual damage suffered by its principal, and may show that he sustained no damage. (Allen v. Suydam, 20 Wend., 321; Elting v. Shook, 2 Hall, 459 ; Conroy v. Warren, 3 J. Cas., 259; Johnson v. B. R. N. Am., 5 Robt., 294, 295.) The law appropriated the money left Movember twenty-first and twenty-sixth with plaintiff to pay the lost check. (2 Pars, on Cont., 143-145, and notes; Nia. Bk. v. Rosevelt, 9 Cow., 412; Devaynes v. Noble, 1 Mer., 584-610; Baker v. Stackpoole, 9 Cow., 435 ; Stone v. Seymour, 15 Wend., 24.)
   Folger, J.

From the findings and the testimony, the agreement of the parties was this: The plaintiff, upon depositing the check with the defendant and paying the one-eighth of one per cent, was to have immediate credit for the amount of it, liable to have that amount charged against him if the check should not be paid if duly presented. The defendant received the check from the plaintiff, not as becoming the owner of it (Dickerson v. Wason, 47 N. Y., 439), but as his agent, for a compensation, to collect it. For this compensation, and the further consideration that he was one of its customers, the defendant agreed that it would, in a reasonable time, take the check to the banking house of the drawee at Portchester, and there demand the money to be paid upon it, which, if paid, it would bring back to its own counter, in discharge of the plaintiff’s liability; or, if it -was not then paid, that it would, in a reasonable time, inform him thereof. It did neither. It employed the means of the public mails. It was not negligent in so doing. They are the customary agency in such matters, and are mostly efficient. Hence the loss of the cheek was not chargeable to the defendant, as the result of its careless act. But it was negligent in not sooner knowing that the check had been lost, and in not sooner notifying the plaintiff thereof. It is shown that if the letter mailed on the second of the month had reached Portchester on that day, as it should have done, an answer should have been mailed from there on the third, and should have reached the defendant on the fourth. It did not so turn out. The defendant was without information from the fourth until the sixteenth of the fate of this check, and it made no effort at specific information concerning it during that time. As a consequence it gave no notice to the plaintiff.

It is not necessary to decide in this case whether, after the loss of the check was discovered, the defendant had not the further duty of making presentment of the check as a lost instrument, with a tender of indemnity, and thus demanding payment and giving notice of non-payment. There was negligence, as we have shown. If the plaintiff sustained loss thereby, the defendant is liable to him, and must respond if not excused in some way known to the law. It cannot be questioned that the plaintiff sustained damage from the negligence of the defendant. Had he known, on the fourth of the month, of the loss of the check and of its non-payment, he could have taken steps to avoid loss; and from the condition of the drawer of the check and the state of his bank account about that time, the presumption is that the plaintiff could have obtained payment of the check. If the defendant had learned of the loss on the fourth, and given the plaintiff at once an unconditional notice thereof, he would have been in a position to have averted loss; but it gave him no notice until the eighteenth, and then in such manner as to induce belief on his part, that it was still proceeding to perform its agreement to collect, and to warrant reliance by him thereon. It is possible, that had the plaintiff been informed by the defendant on the eighteenth that he must protect himself, he might then have done it. The drawer of the check had with the drawee, until the morning of the twentieth, funds enough to meet it. But the credit of the plaintiff with the defendant for the amount of the check was still kept up, and he allowed to draw down his account below that amount; and the intimation to him, of a resort to his liability for the reimbursement of the defendant, was th,at in a reasonable time after the eighteenth it should ask him for a duplicate of the check. The presumption is from the testimony, that at no time after the twentieth was the drawer of the check solvent.

But it is claimed that the plaintiff suffered no loss, for the reason that the drawer of the check paid him the amount of it. The drawer did, after the loss of the check was known to the plaintiff, place in his hands enough to pay it. The drawer gave no direction for the application, further than that it should be for the benefit of the plaintiff. It was a matter of indifference to the drawer what application was made, if it diminished any indebtedness from him. The plaintiff, when the money was received, made no specific appropriation. If he had distinct causes of indebtedness, he was not obliged immediately to designate where it should be applied. He then would have a reasonable time in which to elect. (Sheppard v. Steele, 43 N. Y., 52.) He did, in a reasonable time, make an election to apply it toward payment of other unpaid and protested checks drawn by Merritt, and held by plaintiff. But this it is claimed that he could not do, because Merritt was not then indebted to him thereon; that the only indebtedness was on the lost check ; and that where there is but a single indebtedness, by operation of law, any payment is at once applied upon that. This conclusion would follow if the premises were correct. To maintain that Merritt was not indebted to the plaintiff on these latter checks, it is asserted, that they had not yet been presented to the drawee and returned unpaid, and it is claimed that until the occurrence of these facts no liability arose against Merritt upon them. This puts out of sight the fact, that neither had the lost check been presented and returned unpaid. If it was an indebtedness, it was because it had been made and delivered, and had not been paid. The other cheeks were its equals in these respects, and if the law was to make application only upon indebtedness, they had equal claim upon its consideration. Moreover, it appears as fact, that the liability of the drawer upon the latter checks had been fixed. It is found that they had been protested; that Merritt was liable upon them, and that the plaintiff held them. It is also found that the plaintiff had not received notice of their dishonor. But this negative does not avail against that affirmative. Merritt was legally liable. When a wrong has been committed, or a breach of duty has occurred, the cause of action has accrued, though the claimant may be ignorant of it. (Battley v. Faulkner, 3 B. & Ald., 288; Howell v. Young, 5 B. & C., 259.) The plaintiff held an enforceable demand against him. Though plaintiff was ignorant of it, the facts and the law made an existing indebtness upon these latter checks. ■ The defendant claims that the law made an appropriation on the lost check. And why? Because that was an indebtedness, and the only one. But the facts show an indebtedness from a different cause, equally entitled to the appropriation from the operation of law. And though the plaintiff may not, at the instant, have known them, yet the law took cognizance of them, and so made no appropriation. It was the right of the plaintiff to make it.

The next position taken is, that though the lost check has never been presented, yet Merritt has never been discharged from his liability upon it, and that the plaintiff, at any time after notice of the loss, might have made presentment of it as a lost instrument, and on refusal of payment, have had his action. As Merritt, very soon after the notice was given to the plaintiff, became insolvent, an action would have been bootless. Besides, as has been already noticed, the action of the defendant toward the plaintiff was such as to induce in him inaction and a reliance upon the- measures for collection which it was taking and a belief that it did not look to the plaintiff for reimbursement. It is true, the lack of presentment and protest did not discharge Merritt, he having withdrawn all his funds from the drawer. His liability still remained, and so far the plaintiff was not harmed. But the relations of the plaintiff and defendant were such as that more prompt notice and a more decided position was due from the latter, if the former was to be charged with the duty of affirmative action. And the plaintiff was harmed by the want of it, if he is now to be held liable for the check.

It is next argued that Merritt was solvent for some time after the notice to the plaintiff, and that the latter did nothing to protect himself. The considerations stated, in treating of the last point, afford an answer to this.

The claim that the plaintiff waived the negligence of the defendant by concerting with its cashier to get from Merritt a duplicate check, and by agreeing to a dilatory course proposed by the cashier, has no basis in the findings of fact. This court cannot look into the testimony for facts on which to reverse, or on which to affirm a judgment of reversal. A request was made of the trial court, to make a finding on the subject. But it was a request to find such action by the plaintiff on a specific day. The court declined to find. It did not commit an error. There was not conclusive and uncontradicted testimony" to that end.

The order of the General Term should be reversed, and the judgment for the plaintiff entered on the decision of the trial justice should be affirmed, with costs.

All concur.

Judgment affirmed.  