
    L. Shuster Smith et al., Appellants, v. Abraham D. A. Miller, impleaded, etc., Respondent.
    (Argued March 28, 1873;
    decided May 6, 1873.)
    The indorser of a note or the drawer of a draft is not discharged by an omission to demand payment and to give notice of non-payment where such omission could not possibly operate to his injury, but such injury is presumed until it is made to appear that no damage could have resulted. Mere proof of the insolvency of the maker or drawer is not sufficient, and will not excuse the neglect.
    Plaintiffs received from defendant, in payment for a bill of goods, a draft at sight, which was upon the same day presented for payment, and the drawers gave their check for the amount. This check was given about two hours before the close of business ; it was good when given, and during the business hours of that day. Without presenting it -for payment or certification, plaintiffs deposited it in bank for collection; and next day payment of the check was demanded and refused, the bankers having stopped payment. Wo further demand of payment of the draft was made. In an action to recover for the goods sold, held, that there had been no refusal to pay the draft; that plaintiffs should have demanded it back when the check was dishonored and again presented it for payment, and in case of refusal given notice ; also, that the neglect of the plaintiffs to present the check for certification or payment upon the day when given, by means whereof the amount was lost to them and defendants, discharged the latter.
    Appeal from judgment of the General Term of the Superior Court of the city Mew York, affirming a judgment in favor of defendant, entered on a verdict.
    This action was brought to recover the purchase price of a bill of goods sold by plaintiffs to defendant. The goods were sold November 5, 1867. Defendants, who resided at Buffalo, on the eighteenth of November, inclosed to plaintiffs a draft at sight, upon James K. Place & Co., of New York, for the amount of the purchase. The draft was received by plaintiffs about 10 a. m., of the nineteenth; was presented for payment about 1 p. m. The drawees gave in payment a check on the Manufacturers’ National Bank for amount of draft. This check plaintiffs indorsed and deposited in the Citizens’ Bank, at about 1.30 p. m. They wrote to defendant that the draft had been received and paid. At the time of giving this check, and during that day the check was good. On the next day the check was returned from the clearing-house, the bank upon which it was drawn having refused to pay, for the reason that the makers had stopped payment, and the bank had applied the balance on deposit upon a debt due by them to the bank. No further demand of payment of the draft appears to have been made. Further facts appear in the opinion. The court directed a verdict for defendant.
    
      Ambrose Monell for the appellants.
    A new trial was granted herein to enable plaintiffs to prove facts that would exonerate them from the presumption of negligence ; if this were not so, the court would have directed judgment absolute. (Marquardt v. Marquardt, 4 Kern., 336; Edmiston v. McLeod, 16 N. Y., 543; Griffen v. Marquardt, 17 id., 543; Crittenden v. Empire S. D. Co., 3 Abb. Pr., 71.) It is sufficient if the custom which excused plaintiffs’ delay in presenting the check is proved to be known and not contrary to law. (Fox v. Parker, 44 Barb., 541.) The evidence of the existence of such custom among merchants was sufficient, (Astor v. Union Ins. Co., 7 Cow., 202; Vail v. Rice, 5 N. Y., 155 ; Hawes v. Lawrence, 4 id., 345; Allen v. Mer. Bk. of N. Y., 22 Wend., 215.) The draft being made payable in New York city, was governed by the lex loci as regards dealing with drafts drawn by merchants on merchants. (Everett v. Vendryes, 19 N. Y., 436; Bowen v. Newell, 13 id., 290 ; Renner v. Bk. of Columbia, 9 Wheat., 581.) This custom in New York city to pass checks, received in payment of drafts on merchants, through the clearing-house, was clearly proved and has been recognized by this court. (Turner v. Bank of Fox Lake, 3 Keyes, 426; Burkhalter v. Second Nat. Bk., 42 N. Y., 538.) Defendants were as chargeable with knowledge of this custom as if they, instead of Place & Co., had given the check. (Wadsworth v. Olcott, 6 N. Y., 64; Outwater v. Nelson, 20 Barb., 29 ; N. Y. & H. R. R. Co. v. Schuyler, 31 N. Y., 87.) Defendant was bound to show a loss had been sustained. (Bradford v. Fox, 38 N. Y., 291.
    
      Joseph H. Choate for the respondent.
   Kapallo, J.

When this case was before us on the appeal taken by the defendant (43 N. Y., 171) the judgment was reversed on two grounds. One was that the plaintiffs having received the draft, and undertaken its collection, they were bound to show that they demanded payment of the drawees within due time, that payment was refused, and notice of such non-payment duly given'to the drawers; and that in the absence of such proof they could not recover against the drawers, either upon the draft or the indebtedness for which it had been given. The facts then appearing were that the plaintiffs had presented the draft for payment upon the same day upon which they received it, and that the drawees, so far from refusing payment, gave their check for the amount, which check was good at the time, and during all the business hours of the day when given. That it was deposited by the plaintiffs in bank for collection, without having first been presented for certification at the bank upon which it was drawn, and went into the clearing-house the next day, when it was rejected, the maker of the check having in the meantime stopped payment, and the bank in which they kept their account having applied their funds to a debt due by them to such bank. No further demand of payment of the draft was shown to have been made upon the drawees, but the draft was allowed to remain in the hands of the drawees and the plaintiffs retained the check.

We held that in order to preserve their recourse upon the drawers of the draft the plaintiffs should, when the check was dishonored, have demanded back the draft and again presented it for payment, and, in case of refusal, given notice of such demand and refusal to the drawers, as was done, in the case of Turner v. Bank of Fox Lake (3 Keyes, 425), and Burkhalter v. Second Nat. Bank of Erie (42 N. Y., 538). There had been in fact, in the present case, no refusal by the drawees to pay the draft.

These facts were not changed on the second trial. The learned judge who dissented in the court below from the affirm, anee of the judgment rendered on the second trial, expresses the opinion that there was no necessity for protesting the draft, as the drawees, J. K. Place & Co., were insolvent, and the drawers could therefore sustain no loss.

Where the omission of demand and notice cannot possibly operate to the injury of the indorser of a note or drawer of a draft, he will not be discharged, but such injury is presumed until the plaintiff, by proof or. his side, removes all chance of damage. It has been held in some cases that if the indorser (drawer) know of the maker or acceptor’s absolute and recorded insolvency, that is enough, though. any insolvency short of that will not do; our own eases have not gone so far toward excusing want of demand. (See Com. Bank v. Hughes, 17 Wend., 98, and cases cited.) The mere insolvency of the drawee or acceptor of a draft is no excuse for neglecting to present it for payment. (Jackson v. Richards, 2 Caines, 343; Hunt v. Wadleigh, 26 Me., 271; Esdaile v. Lowerby, 11 East, 114; Edwards on Bills, 486 [marg].). There is no pretence that the drawers had not funds in the hands of the drawees. The laches of the plaintiffs in not again demanding payment of the draft when the check was returned were sufficient to discharge the liability of the defendants as drawers of the draft, and it consequently extinguished the debt for which the draft was given. (Story on Bills, § 109, and note.)

The other ground upon which we reversed the former judgment was that the check was good when given, and would have been paid or certified if presented with reasonable diligence, and that the amount of the check had been lost through the neglect of the plaintiffs to present it for certification or payment on the day on which it was received by them, they having had about two hours of that day in which they might have presented it, and that this neglect discharged the drawers of the draft. The plaintiffs had received from the drawees of the draft the means of obtaining the amount thereof, and by their own laches these means became unavailable, and the amount was lost both to them and the defendant. To meet this defence, evidence was introduced on the second trial for the purpose of showing that it was the universal custom in ISTew York to deposit such checks in banks for collection through the clearing-house, without first presenting them for certification at the bank upon which they were drawn. We think that the plaintiffs failed to prove any such custom. Some witnesses testified that they were not in the habit of having checks certified before depositing them for collection. But the whole current of the evidence was to the effect that a large proportion of the checks deposited in bank for collection were certified before being deposited, and that each depositor exercised his own judgment as to whether or not to have checks certified before depositing. That if there was any doubt as to the responsibility of the maker of a check, it was customary to have it certified, and that when checks were deposited without being certified, this was done on the ground that the holder had such entire confidence in the responsibility of the maker that he was willing to take the risk of the check remaining good on the next day, and that the question whether or not the check should be presented for certification before being deposited, was determined by the amount of confidence the holder had in the drawer of the check. There was some slight conflict in the evidence on this subject, but not sufficient, we think, to require the submission of the question to the jury, or to have justified them in finding the universal custom claimed by the plaintiffs to exist. There was positive and uncontradicted evidence of a contrary usage on the part of many dealers, and this showed that the custom, testified to by one or two of the witnesses was not general. It is not necessary to decide whether. in case the custom had been proved* it would have governed the question of defendants’ liability.

On both grounds we think the judgment should be affirmed.

All concur.

Judgment affirmed.  