
    CROFT C. CARROLL, Appellant, v. CLAYTON E. SWEET, Respondent.
    
      Payment of debt pleaded, must be proved.—Receipt for indebtedness subject to parol proof in explanation of its real import~Pleadihgs should not be submitted to jury without proper instruction.
    
    In this action to recover a balance of indebtedness for service, &c., one of the defences was payment, and it appeared in evidence that plaintiff rendered his bill for services to defendant in the sum of $439, on account of which defendant paid his own check for $165.55 and the check of one Wood-ruff, endorsed by defendant, for $273.45, and plaintiff receipted the bill. The only evidence on this point was the uncontradicted evidence of the plaintiff, who testified that, when he presented the bill, defendant handed him the Woodruff check saying, “ I have Mr. Woodruff’s ■ check, will you take that?” and plaintiff replied, “Ves, with your endorsement,” and thereupon the defendant endorsed the Woodruff check and handed it to the plaintiff. Nothing was said about the checks being taken in payment of the account. The Woodruff check was not paid on presentation, and plaintiff brought this action to recover the balance of the original indebtedness. Held, that this evidence did not warrant the jury in finding that the Woodruff check was given to the plaintiff in payment, and the verdict should have been set aside and a new trial granted.
    Another defence was, that the Woodruff check was not presented for payment for nine days after it was given to plaintiff, and by reason of such failure to present the check there was a loss to defendant. Held, that there was not the slightest evidence to warrant the jury in finding that there was any loss to defendant by reason of the failure of plaintiff to present the check. The uncontradicted evidence being that at no time did the drawer of the check have enough funds in the bank, upon which . the check was drawn, to pay the check ; that the place of payment was the bank, and it was the duty of the drawer to have funds at the place named in the check. The plaintiff fulfilled all the obligations that the law placed upon him. when he presented the check for payment at the place named therein. Held, also, that in an action for the collection of a pre-existing debt, the onus of proving payment is upon the defendant, and proof of the delivery to, and receipt by, the plaintiff of a check on account of the indebtedness, is not sufficient proof of payment. The defendant must go further and show that the check has been paid or that by the laches of the plaintiff he has incurred a loss. The delivery of a check does not operate as payment of a previous debt, and a receipt given upon delivery of a check acknowledging the receipt of money, adds nothing to the effect of such delivery, and is subject to parol proof as to its real import.
    The court, at the close of this case, allowed the jury to take the pleadings into the jury-room, instructing the jury “ that the pleadings may be regarded as in evidence, but only so far as they relate to questions at issue and presented at the trial, and as to which evidence has been taken, or where the facts are admitted.” The counsel for plaintiff' requested the court to instruct the jury “ that the matters alleged in the answer are not to betaken as admitted, because there is no pleading on the part of the plaintiff in reply.” The court refused the request of counsel, and he excepted. Held, that it was error to submit the pleadings to the jury with the instructions given by the court and without the modification asked for by the counsel for plaintiff.
    Before Sedgwick, Ch. J., Truax and Dugro, JJ.
    
      Decided June 3, 1889.
    Appeal from a judgment, entered upon the verdict of a jury, and from an order denying a motion for a new trial upon the minutes.
    
      Carter, Hughes & Cravath, attorneys, and Charles E. Hughes, of counsel, for appellant, argued :—
    I. The check of a third party, delivered by a debtor to his creditor, is, in the absence of an express agreement, presumed to be given simply as a means of obtaining payment of the debt, and not as absolute payment. This principle is not varied by the fact that the creditor, upon receiving the check, gives a receipt in full. It is a rule well set-tied and repeatedly recognized in this court that taking a note either of the debtor or of a third person for a pre-existing debt is no payment, unless it be expressly agreed to take the note as payment and to run the risk of its being paid, or unless a creditor . parts with a note, or is guilty of laches in not presenting it for payment in due time. He is not obliged to sue upon it. He may return it when dishonored, and resort to his original demand. It only postpones the time of payment of the old debt until a default be made in the payment of the note. Tobey v. Barber, 5 Johns. 68. In Bradford v. Fox, 38 N. Y. 290, where the action was brought on an account for goods sold, and it was alleged that a check had been received in payment, the court said : “ The delivery of the check did not operate as payment of the previous debt. (Hill v. Beebe, 13 N. Y. 566.) The receipt given by the plaintiff’s attorney, therefore, although it did not refer to the check, but acknowledges the receipt of $75, as per account rendered, added nothing to the effect of a mere delivery of the check to them. The receipt, although, prima facie, importing the receipt of the money, was subject to explanation by parol proof, and the defendant himself proved that no money was paid, but the check only delivered. * * * Here the action is for the collection of a pre-existing debt, and the onus of proving payment was upon the defendant. To effect this, proof of the delivery to and receipt of the check by the plaintiff not being sufficient, the defendant was bound to go further and show that, by the laches of the plaintiff, a loss had accrued, to be borne by some one, and when this appeared, the law would cast the loss upon the plaintiff, and would work out such result, by making the check operate as payment of the debt. Retaining the check after giving notice did not affect the question. It was held subject to the order of the defendant, and surrendering it upon the trial was sufficient. Nichols v. Michael, 23 N. Y. 567. See also Porter v. Talcott, 1 Cow. 359, 383 ; Vail v. Foster, 4 N. Y. 312 ; Turner v. Bank, 4 Abb. Ct. App. Dec. 434 ; Buswell v. Pioneer, 37 N. Y. 312 ; Syracuse R. R. Co. v. Collins, 3 Lans. 31 ; S. C. on appeal, 1 Abb. N. C. 47. When, however, a note or check, either of the debtor or of a third person, is given for the purchase price of goods, at the time of the sale, a different rule applies, and, in the absence of an express agreement, the note or check is presumed to be taken in absolute payment.. Whitbeck v. Vanness, 11 Johns. 408 ; Noel v. Murray, 13 N. Y. 167 ; Gibson v. Tobey, 46 Ib. 640. The distinction between the two cases is well stated by Judge Dean in Noel v. Murray [supra), p. 172, as follows : “ It is well settled, both on authority and principle, that the acceptance by the creditor of the note of a- third party for an antecedent debt, is no extinguishment of the debt, unless it is shown that there was an agreement between the parties that it should operate as an extinguishment, and that, in such case, the onus is upon the party seeking to set it up as a payment. But where there is no debt existing between the parties, arid the one delivers to the other property, and receives in return the note of a third person in full or part payment, and gives a receipt saying that it is received in full or part payment, the presumption is that it was so received, and the onus is then upon the party receiving such note, to show the contrary.” The presumption that a note or check delivered by a debtor to his creditor, on account of an indebtedness, is not received in absolute payment, is not altered by the giving of a receipt in full. In Tobey v. Barber (supra), where this rule was recognized, the court, referring to an early precedent, said: “ The case of Murray v. Gfouveneur & Kemble, which was decided in the Court of Errors in February, 1800, on an appeal from a decree in Chancery, is in point as to the question before us, for it is to be observed that the rules of evidence are generally the same in cases of law and of equity. It was there decided that receipts were explainable, and that a bill was not a discharge of a precedent debt, unless by express agreement, and that a receipt of a bill as cash was still not sufficient evidence that the bill was taken as absolute payment.
    II. When a check given by a debtor to his creditor is not paid on presentation, the debtor is not relieved from the payment of his debt, unless he has sustained actual loss by the laches of his creditor. The debtor is none the less a debtor because he has provided his creditor with a means of obtaining payment. Unless he can show that, by the negligence of his creditor in dealing with the check, he has suffered actual loss, he will not be excused from payment of the debt. This is well stated by Mr. Daniels as follows : “ But while it is true that the burden of proof is upon the plaintiff to show that no loss or injury resulted to the drawer when he seeks to excuse the non-presentment of the check, yet where the suit is brought upon the pre-existing debt for which the check was given, it has been held that the defendant who pleads payment, must not only show delivery to and. acceptance of the check by the plaintiff, but also that through the plaintiff’s laches loss or injury has accrued.” Daniels on Negot. Insts., .§ 1588. The leading authority upon this point is Syracuse R. R. Co. v. Collins, 1 Abb. N. C. 47,reported below, 3 Lans. 29. When the debtor gives to his creditor a check of a third person, it is equally clear that no definite loss can accrue from the creditor’s delay in presenting it for payment, unless by reason of the neglect, the fund upon which it was drawn can no longer be made available for its payment. If the check was worthless when given, and no funds are subsequently deposited to meet it, it furnishes the creditor no opportunity to collect his claim, and his neglect to promptly present it can occasion the debtor no actual damage. The principle established by the authorities is that the onus of proving payment is upon the debtor. If he alleges that he has sustained loss through the laches of the creditor, that loss must be definitely determined and clearly proved. It must not be left to hypothesis or conjecture.
    
      J. W. Bartram, attorney and of counsel, for respondent, argued :
    I. The plaintiff agreed with defendant to accept the Woodruff check in full payment and gave receipt in full. When a vendor of goods takes at the time of the sale and delivery, the note of a third person and gives a receipt for payment in full of the price of the goods, the presumption is that the note was taken as an absolute and final payment for the goods. Barbour’s Law of Payment, Page 470, § 2 ; Noel v, Manning, 1 Duer, 385 ; aff’d 13 N, Y. 167 ; St. John v. Purdy, 1 Sand, 9 ; Hall v. Stevens, 40 Hun, 578 ; Conklin v. King, 10 N. Y. 440.
    II. The burden of proving that the check was not received in full and as a cash payment, rests with plaintiff. Gibson v. Toby, 46 N. Y. 637, and cases above cited. No such proof appears in the case at bar, but on receipt of the check, plaintiff gave receipt in full.
    III. The question as to whether or not the check was received in satisfaction of the claim, and was intended so to be received, was a question of fact for the jury. The jury found the agreement to be, that the check was received by plaintiff as such satisfaction. Darnell v. Morehouse, 45 N. Y., 64.
   By the Court.—Truax, J.

On the 22d of August, 1887, the defendant was indebted to thé plaintiff in the snm of $439.00 for services rendered before that date by plaintiff to defendant. The plaintiff presented his bills for such services, and the defendant gave him his own check for $165.55, and the check of one Woodruff, which was drawn to thó order .of the defendant, for $273.45. ‘Defendant’s check was paid, but the Woodruff check was not paid ; and plaintiff brought this action, on the original indebtedness to recover the said sum of $273.45.

One of the defences is payment. There is no direct evidence that the Woodruff check was taken in payment. The defendant says that the plaintiff presented his bill; he (defendant) gave him his check and the Woodruff check, and plaintiff gave defendant a receipt in full. Plaintiff says that when he presented his bill to the defendant, the defendant handed him the Woodruff check saying, “ I' have Mr. Woodruff’s check ; will you take that?” And plaintiff replied, “ Yes, with your endorsement” —and thereupon defendant endorsed the Woodruff check and handed it to plaintiff. Nothing was said about the check’s being taken in payment of the account, and it is to be noticed that the receipt does not purport to be in full payment. This testimony of the plaintiff was not contradicted on the trial, and is the only evidence in the case on this point.

We are of the opinion that this evidence did not warrant the jury in finding that the check was given to plaintiff in payment ; and, as we shall hereafter see, as there was no other evidence in the case that warranted the jury in finding for the defendant, the verdict should have been set aside and a new trial granted.

One of the defences was that the Woodruff check was not presented for payment by the plain tiff until some nine days after it was given to him by the defendant, and that by reason of this failure to present the check there was a loss to the defendant. There is not the slightest evidence to warrant the jury in finding that there was any loss to the defendant by reason of the aforesaid failure of the plaintiff to present the check. The uncontradicted evidence is, that at no time did the drawer of the check have enough funds in the bank to pay the check. The fact that he had money enough in his possession is immaterial, for plaintiff was under no obligation to the defendant to present the check to the drawer personally and demand payment from him. The place of payment was the bank,—and it was the duty of the drawer to have funds 'at the place named in the check. What the nature of- the relations between the bank and Woodruff were is also immaterial. The plaintiff was not bound to take part in a litigation or controversy between the bank and Woodruff. He had fulfilled all the obligations that the law placed upon him when he presented the check at the place named in the check.

In an action for the collection of a pre-existing debt, the onus of proving payment is upon the defendant; and proof of the delivery to and receipt by the plaintiff of a check on account of the indebtedness is not sufficient to prove payment, but the defendant must go further and show that the check has been paid or that, by the laches of the plaintiff, he has incurred a loss. The delivery of a check does not operate as payment of a previous debt, and a receipt given upon delivery of a- check acknowledging the receipt of money adds nothing to the effect of such delivery, and is subject to parol proof as to its real import. Bradford v. Fox, 38 N. Y. 289.

The court at the close of the case allowed the jury to take the pleadings into the jury-room and instructed the jury that “ the pleadings may be regarded as in evidence, but only so far as they relate to questions at issue and presented at the trial, and as to which evidence has been taken or where the facts are admitted.” The counsel for the plaintiff asked the court to instruct the jury that “ the matters alleged in the answer are not to be taken as admitted, because there is no pleading on the part of the plaintiff in reply.” This was refused and he excepted.

It was error, we think, to submit the pleadings to the jury with the instruction given by the court, and without the modification asked for by the appellant. It presented to the jury without proper instruction, and with an erroneous instruction that the jury might regard as admitted facts, certain allegations of the answer to which the plaintiff had not replied.

Some of the facts that the jury might consider as admitted under this instruction of the court were the allegations in the fifth, sixth, seventh and eighth paragraphs of defendant’s answer. Some of these allegations were entirely immaterial, and no evidence was offered to sustain then,—and yet they went before the jury as undenied by the plaintiff, and it may well be said that they influenced the minds of the jury.

• We are of the opinion that the judgment and order appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.

Dugro, J., concurred.

Sedgwick, Oh. J., dissented.  