
    Union Bank of Tennessee vs. A. J. Smiser.
    1. Payment. Acceptance by creditor of a bill or note of a third person in pay* ment. Proof of the acceptance by the creditor, of a promissory note or bill of a third person, if it appear to be the voluntary act and choice of the creditor, and not a measure forced upon him by necessity when nothing else could be obtained, will support the defense of payment.
    2. Same. Same. Certificate of deposit. Where a creditor having the option of taking cash elects to take a bill, which is dishonored, the original debtor is thereby discharged. So where an agent having a note to collect voluntarily receives from the debtor, without his guaranty or assignment, a certificate of deposit in payment thereof, which was good and available at the time, and said certificate' is afterwards protested for non-payment, the amoynt of said certificate cannot be recovered from said debtor.
    3. Same. Same. Evidence. When a creditor takes notes from his debtor in payment of the debt, and omits to require his endorsement thereon, such omission is prima fade evidence of an agreement to take the notes at his own risk. And whether a security was accepted in satisfaction of the original claim, is a question of fact for the jury.
    PEOM HATJKY.
    The plaintiff in error instituted this action of as-sumpsit against tbe defendants in tbe circuit court of Maury county, to recover the amount of a certificate of , deposit which had been transferred to the plaintiff by the defendants, under the following circumstances: In June, 1847, the defendants in error gave their note to one Carrington for $2,000. The note was deposited by Carrington in the branch of the Union Bank at Columbia for collection. On the 25th of August, 1847, the defendants, or one of them, called at the bank, said note being then over ckie, to pay the same, and asked the cashier, Hamner, “ if he would take a certificate of deposite on the Merchants’ Insurance office at Nashville, for $1,000 as cash, in part payment of said note, to which the cashier replied that “ he would,” and did take said certificate for $1,000; and the balance was paid in cash, and said note was given up to the defendants. There was nothing said about taking the certificate absolutely m payment of said note, and without recourse on the defendants. The cashier, in his testimony, states that “ he did not agree so to take it, and had he been asked so to take it, absolutely and without recourse, lie would have refused; ” but that “he took it in payment of so much of Carrington’s note, and the balance was paid in money; that as the certificate was payable in cash on presentation, and the Insurance was at that time, believed to be in good credit, he agreed to take it as cash.” That as cashier, “ he had no authority to take, nor was he in the habit of taking checks, drafts, or any thing of the kind, absolutely and without recourse.” “ But he was allowed as cashier, and it was his habit to take checks, drafts, or any thing purporting to be payable on presentation in cash, and as this certificate was payable in cash he agreed to take it as cash.” He advanced tbe money of tbe bank to Carrington, by giving credit on tbe books of the bank for tbe full amount due upon the note as paid in cash, and 'afterwards remitted tbe amount to Carrington in a check on tbe north. But neither of tbe defendants at that time, or at any other time, ever requested tbe cashier or tbe plaintiffs to advance this money in payment of said note to Carring-ton. Tbe certificate was endorsed to J. Smiser by Jane G-reenfield, executrix of tbe original payee, and by him endorsed to tbe plaintiff with tbe express understanding that it was done as a mere matter of form, to pass tbe title, and be was in no way held responsible for the same. It was immediately sent to Nashville for payment, and on presentation at tbe insurance office payment was refused on tbe ground that tbe office bad no sufficient evidence that Jane Greenfield was tbe legal representative of tbe original payee, of which the defendants were informed; and before tbe letters testamentary could be forwarded the insurance company failed; and tbe certificate, accompanied by tbe letters testamentary, being afterward forwarded, was presented for payment, dishonored and protested, but no notice given to tbe endorsers. Thereupon tbe suit was brought, which resulted in the court below, (Hon. W. R.. MaRtiN presiding,) in a verdict and judgment for tbe defendants.; from which tbe plaintiff appealed in error to this court.
    S. D. FkieesoN, for tbe plaintiff in error.
    Eor tbe plaintiffs in error, it is insisted that tbe verdict by tbe jury is contrary to tbe evidence, and the law as applicable to the facts shown by the proof. When payment is made by a draft on a banker, if the person receiving it uses due diligence to get it paid, the person from whom he received it will not be discharged unless the holder expressly agreed to run all risks. Ohitty on Bills, 9 Am. ed., marginal, p. 434.
    A check upon a bank, given in the ordinary course of business, is not presumed to be received as an absolute payment, even if the drawer have funds in the bank, but as the means whereby the holder may procure the money. 1 Hall’s Rep., 56.
    The holder of the check, in such cases, becomes the agent of the drawer to collect the money, and if guilty of no negligence, whereby an actual injury is sustained by the drawer, he will not be answerable, if from any peculiar circumstances attending the bank the check is not paid. Ib.
    
    In a suit against the drawer for the consideration of such a check, the holder may treat the check as a nullity, and resort to the original consideration. Ib.
    
    Bor the plaintiffs in error it is further insisted that there is manifest error in the charge of the court in several particulars.
    Much of this charge is in no, way applicable to the merits of this case. The judge has, in all his charge, or most of it, treated the case as if this suit was brought on the $2,000 note. The bank was the agent-of Carrington to collect the note ; she was, to all purposes, the holder of the note; as between herself and Carrington she could receive payment only in cash. As the holder, she could take in payment from the maker any thing she pleased. The question is not, then, whether the Carrington note was paid in the arrangement between the cashier and the defendants. It is admitted that the note was paid as between Carrington and the defendants, or as between the plaintiffs, as holder, and the defendants; but it was paid (to the extent of the amount of the certificate of deposite) with the money of the plaintiff, and that at the express request of the defendants. The plaintiffs advanced $1,000 of their money, through the officer of their branch, to enable the defendants to pay their note, and toot the certificate of deposite to forward and collect, and then reimburse themselves for this advance. This is the nature and essence of the transaction. The true question then is, if the iffaintiffs exercised due diligence in presenting the certificate of deposite for payment, and payment was refused, and notice of this fact given in due and reasonable time to the defendants, or either of them, are the defendants liable for the amount advanced for them? The defendants are clearly liable, unless they show that Ilamner agreed at the time to take' the certificate and run all risks. The proof is by Ilamner that he did not so agree; that he was not asked to take it in this way, and that if he had been he would have refused; because, in the first place, he was not allowed by his principals, the plaintiffs, to take this kind of paper, or any other, unless upon, the responsibility of the person or persons from whom he received it; and for the further reason that he is not in the habit of taking such paper without recourse. A receipt, of a note as cash, is not evidence that it is received as an absolute payment. 5 Johns. E., 68. 8 Johns. E., 389.
    
      If a note “is received by the party to whom it is delivered, as conditional payment of a precedent debt due to bim, or as a conditional satisfaction for any other valuable consideration, then paid by him, the holder, who delivered it, will, if the note be duly presented and dishonored, and due notice thereof be given to him, be responsible to pay back the full amount of the precedent debt, or valuable consideration, although he is not directly liable, or a party to the note.” Story on Prom. Notes, § 117.
    “A transfer by mere delivery, without endorsement, when made on account of a pre-existing debt, or for a valuable consideration, passing to the assignor at the time of the assignment, (and not merely by way of sale or exchange of paper, as when goods are sold to him,) imposes an obligation on the person making it to the immediate person in whose favor it is made, equivalent to that of a transfer by formal endorsement.” Chitty on Bills, 9 American from 8 London ed., p. 268.
    He is not liable' as an endorser upon the note, but he is liable if the instrument should be dishonored, to pay. the debt, in respect of which he transferred it; provided the instrument has been presented for payment in due time, and due notice be given to him of the dishonor, lb. Baily, on Bills, ch. 5, § 3, p. 169.
    The holder is not bound to give notice of the dishonor to any more than his immediate endorser; and each party to a bill has the same time after notice to himself, for giving notice to other parties beyond, that was allowed to holder after the default. 4 Hill N. Y., 129, 133. 5 Metcalf, 213.
    
      Anri when a bill or note is sent to an agent for collection, tbe agent is required, simply to give notice of the dishonor in cine time to his principal, and the principal then, has the same time for giving notice to the endorsers, after such notice from his agent, as if he had been himself an endorser, receiving notice from a holder. 2 Hill N. Y. R., 452. 9 Pick, 547.
    The plaintiff in error insists farther, that there is error in that part of the charge of the judge below, which is as follows: “ If the bank, by its officers, accepted the 'certificate in part payment of the Carrington note, and no fraud being practised by the defendants at the time, it will be a good payment and extin-guishment of the note to that amount; and if the plaintiffs afterwards, and before the collection of the certificate, advanced the amount thereof to Carrington, they cannot charge the defendants therewith.” The Court, in a former part of the charge, charged that “it was competent for the bank to receive in payment of the note; a note or claim upon another, and when .paid and received, it will, to that extent, be an extinguishment of the debt. Why then may not the bank advance the amount to Carrington before the payment of the certificate.
    The fact of taking the certificate as a part payment of the note, is an extinguishment of the liability of the defendants to Carrington, and is money advanced by the bank to Carrington at the instance of defendants.
    Again, the judge in Ms charge, makes a distinction in the responsibility of the defendants, arising from the duty of the bank between the fact whether the certificate was taken by the bank for collection, or in payment. In the one case, that is, if taken for collection, it was the duty of the defendants to furnish the evidence of Mrs. Greenfield’s authority to order the payment of the money to her assignee. In the other case, that is, if taken in payment the bank was bound to procure this evidence, and that the defendants were not bound to furnish it, unless it was exclusively under their control.
    There can be no foundation for this distinction. It is confounding the liability of the defendants to the bank for the amount of the certificate, with the liability of defendants on the note to Carrington.
    In another part of the charge, the Court charged the j ury “ that if the defendants were not endorsers on the certificate, it was the duty of the bank to give notice of non-payment to Mrs. Greenfield in such time and in such manner as would hold her liable; and if the bank failed to do this, the defendants would be discharged, and could not be held liable for the amount of the certificate.”
    In this it is insisted there is error. From the authorities referred to, the defendants, although not endorsers, were liable under the facts of the case, as if they were endorsers. They were immediately liable to the bank, and the bank had a right to notify them of the non-paymet of the certificate. The bank was not bound to give notice to Mrs. Greenfield unless she wished to look to her.
    In connection with this, the court charged the jury that merely telling the defendants the certificate was not paid, and the reason why it was not paid, was not sufficient notice of non-payment to hold the defendants liable; tbat the bank must go further in her notice, and inform the defendants that she would look to them for payment. This is error, because the bank was agent of defendants to collect the certificate. She faithfully discharged this duty.
    The whole charge is calculated to confound the jury, in not distinctly stating the plaintiff’s right to recover, and the law as applicable to this right.
    M. S. EreersoN, for the defendant in error.
    1. That it was competent for the bank to accept in payment from her debtors a note or claim upon any third person; and when a claim is taken upon a third person, and it is agreed and understood between the parties that it is taken in payment, the original debt will be extinguished to the extent of the payment. 2 Creen. Ev., § 523. Story’s Notes, §§ 104, 105, 404, 438.
    2. But if the claim upon a third person is taken without any such agreement and understanding, it would not be considered in law a payment, but would be a mere mode to obtain payment; and if not paid, the original debt would not be extinguished. Story’s Notes, §§ 104, 105, 117, 404, 438.
    3. If Hamner, as the agent of Carrington and cashier of the bank, took this certificate as a cash payment of $1,000 on the Carrington note, and afterwards advanced the money of the bank to Carrington on the faith of the certificate, without the request of the defendants, the bank, on failing to collect the certificate, could not sue the defendants and recover the amount advanced. Chitty on Con., 592. 7 Humph. R., 270. 4 New Hamp. R., 138.
    
      4 Again, if tbis certificate was taken for collection, and not in payment of the Carrington note, and the cashier of the bank advanced the money of the bank to pay the Carrington note, without the request of the defendants, the plaintiffs could not recover, unless the defendants subsequently promised to pay the sum; for no one can be made a debtor without his consent. 7 Humph., 270. 5 Cowan, 603. 3 Johns., 434. 15 John., 361. 11 "Wend., 629 et seq.
    
    5. If the jury should believe that the bank advanced to defendants the amount of the certificate, and took the certificate to collect for them, it was the duty of the defendant to furnish the evidence of Mrs. Greenfield’s representative character; and if they did not do so until the insurance office failed, it would be their loss, and the bank could recover the amount advanced.
    6. But if they believed that the certificate was taken in payment of the Carrington note, and as so much cash, it became either the property of Carrington or the bank, and defendants would be under no obligation to furnish the letters testamentary, but the parties must attend to their own debt; and if lost, they could not look to defendants. Story’s Notes, §§ 117, 284.
    7. If the bank advanced the defendants the amount of this certificate, and took it from defendants to collect without their endorsement, it would be the duty of the plaintiffs in that case to have the certificate presented in proper time for payment, and if payment was refused, to notify all those who would bo liable to defendants on the paper; and if they failed to do so, and defendants have sustained loss, they will be discharged to the extent of the loss. Story on Prom., §§ 117, 284, 389. Story on Bills, 372.
    
      8. But if the defendants had endorsed the certificate to the bank, it would be sufficient to hold them responsible if the certificate was presented in proper time, and notice given to them of the non-payment, and that they were looked to for the payment.
    9. But merely informing the defendants that the insurance office would not pay the certificate until they had some evidence of Mrs. Greenfield’s representative capacity, is not such notice as the law requires to fix the liability of the endorser. Story on Notes, §§ 350, 353. Y Bing., 530. 11 M. W., 3Y3. 11 Wheaton, 431, 43Y. But if this charge is erroneous this court will not reverse, because there is no testimony in the record to which it is applicable, the defendants not being endorsers on the certificate. 2 Humph., 518. 3 Humph., 56.
    10. If the evidence of Mrs. Greenfield’s representative character was afterwards furnished, and payment refused, it was the duty of the bank to give notice; and if she did not, the endorsers would be released; and if defendants sustained an injury, they would be released to the extent of the injury. 11 M. & W., 3Y2. Story’s Notes, 11Y, 284.
   Ca’ruthees, J.,

delivered the opinion of the court.

This action of assumpsit was brought to recover $1,000, the amount of a certificate of deposit given by the Merchants’ Insurance Office to G. T. Greenfield, by whose administrator or executor it was assigned to the defendants, and by them it was delivered to the plaintiffs, in part payment of a note of $2,000 in favor of one Carrington against the defendants, held by the Bank for collection. The other $1,000 was paid in cash, the note given up, and the whole amount of $2,000 entered to the credit of Carrington, and paid to him in a check on the North. The certificate was sent to Nashville, to be collected from the office which was then paying all demands against it; but refused to pay this, upon the ground that the authority oí the assignor or representative of the payee, did not accompany the certificate. It was returned, and one of defendants requested to procure the desired evidence, and the matter having been some days delayed, the office failed, and the money lost. Upon the last demand at the office, with the proper evidence of Mrs. Greenfield’s representative character, the certificate was protested for non-payment, but no notice given to any of the parties. The bank received the certificate in payment of the note as cash, and there was no assignment by the defendants. The bank then instituted this action, and the question is, whether the defendants are liable under the circumstances?

They are not liable on the paper, because they did not in any way bind themselves upon it, so as to become guarantors or assignors. It is not pretended that they were guilty of any fraud or misrepresentation. The claim was unquestionably good at the time it was passed to the bank, and would have been paid on demand, if it had been accompanied with the proper evidence of transfer from the original payee. This it was the duty of the bank to have procured, as the certificate had been taken as cash, in payment of a debt in its hands as agent for collection, and was no longer in the powder or under the control of defendants. There was no act to be done by tbe defendants, the neglect of which, would mate them responsible.

There can be no ground on which they should be subjected to a loss, which resulted from the delay or neglect of the plaintiff to make the claim available. This certainly would have been different if the claim had been received as collateral security, or to collect and apply as agents of defendants; or, perhaps, if nothing had been said or agreed upon that subject. But it was taken as cash, and in payment of that amount of the note of Carrington, and the amount was so entered to the credit of Carrington, and paid over to him, and the note given up to defendants as paid off and discharged. It was voluntarily taken as cash by the officers of the bank, by which the defendants were prevented from attending to the collection of it themselves, which doubtless they would have done without delay, in order to pay off the note against them. There can be no principle, under these circumstances, that would throw the loss upon them.

The plaintiff insists that this is a case of money paid out for the use and benefit of defendants, and upon that count a recovery should have been had. But there was no request, either express or implied, to make the payment. Chitty on Con., 591-2.

The certificate was offered and taken in discharge of the note upon them as cash, and there remained no debt due to Carrington from defendants upon which money could have been paid for them. It became the debt of the bank, as it had received the amount in such funds or paper as was acceptable, and voluntarily taken in full discharge.

Proof of tbe acceptance of a promissory note or bill of a third person, if it appear to be tbe voluntary act and choice of tbe creditor, and not a measure forced upon him by necessity, when nothing/else could be obtained, will support the defense of payment. 2 Green-leaf Ev., § 523.

The omission of the creditor to have the notes endorsed by the party from whom he received them, is grima faoie evidence of an agreement to take them at his own risk. Ib., note 4. 11 Johns., 409. 15 Johns., 241. "Whether this security was accepted in satisfaction of the original claim, is a matter of fact for the jury. 9 Johns., 310. 15 Sar. & Raw., 162. If the creditor having the option of taking cash, elects to take a bill which is dishonored, the original debtor is discharged. Byles on Bills, 305.

In this case the makers of the note were good and solvent, and having this certificate of deposit, paid it over to the bank, because upon the suggestion of the defendants that they held it, and would pay it to them as cash if it would suit them, it was readily received, as perhaps it suited the bank better than money, as the funds would be at Nashville where it would probably answer their purposes better than at Columbia.

But let this be as it may, under a proper charge of the law, so far as it is applicable to the facts of this case, it has been found by a jury that the certificate was received as so much cash, in payment of the note held by the plaintiff against the defendants, and not as a means of payment, or an agent to collect and apply to that purpose, and we cannot disturb the verdict.

Let the judgment be affirmed.  