
    William T. Hooker, President of the Continental Bank, Plaintiff and Respondent, v. J. F. Franklin, Appellant.
    1. A bank which receives from its customer a check, drawn by a third person on another hank, and credits to the customer, in its account with him, the amount of such check, as so much cash, is not guilty of laches, by reason of not presenting it to the drawee until the following day, when, in so presenting the check, it acts in conformity to the regular and established course of business in such cases.
    2, Such a depositary hank, by such a transaction, does not undertake to exercise, nor subject itself to the duty of exercising, any greater diligence to obtain payment of the check, than is practised by conforming to the established usage of hanks, and the customary course of business in such cases.
    8. Hence, in such a case, the depositor of the check, endorsing it at the time of such deposit, will be liable to the depositary for the amount of it, on its being protested for non-payment, when so presented, and being duly notified of such presentment, and of the refusal of the drawees to pay it, although the drawer had funds in the hank, on which it was drawn, during some parts of the day of such deposit, and subsequently thereto, sufficient to pay it.
    (Before Bosworth and Woodruff, J. J.)
    Heard, December 11, 1857 ;
    decided, February 27, 1858.
    In this action William T. Hooker, as President of the Continental Bank, is plaintiff, and Joseph F. Franklin is defendant.
    It comes before the Court at General Term, on an appeal by the defendant from a judgment entered on the report of John L. Mason, referee. It was commenced on the 22d of April, 1857.
    The action is on a check drawn by the Chicago, St. Paul and Fond du Lac Railroad Company on the American Exchange Bank, dated April 15, 1857, for $10,000, in favor of J. W. Currier, and by him endorsed to the defendant, Joseph F. Franklin. Franklin endorsed and deposited it in the Continental Bank (of which he was a customer) on the same day. The amount of the check was passed to the credit of Franklin, in his bank account, as cash. The check was not paid by the American Exchange Bank, and Franklin is sued as endorser.
    The complaint alleges the above facts, and contains the usual averments of demand of payment, and refusal, and notice, to charge the endorser.
    The answer alleges, that the drawers of the check, the Chicago, St. Paul and Fond du Lac Railroad Company, had funds in the American Exchange Bank on the 15th day of April, 1857, and at the opening of the bank on the 16th, sufficient for the payment of the check, and that its non-payment was wholly owing to the negligence or improper conduct of the plaintiff; denies presentment and notice; avers that the drawers of the check have paid or secured plaintiff, and that this action is for the benefit of the drawers; avers, that plaintiff notified defendant that it was the rule and custom of the Continental Bank to require all large checks to be certified, before receiving them on deposit, except where the bank intended to assume the payment of the same; also an agreement between defendant, Franklin, and the bank, that the latter was to receive no check for $10,000, unless certified, and if it did, was to assume the risk of non-payment, &c.
    The referee’s report, exclusive of its recitals, was as follows, viz.:— .
    “ And I do find, certify and report, that the following facts were established before me:—
    “I. The defendant, Joseph F. Franklin, was, on the fifteenth day of April, one thousand eight hundred and fifty-seven, the holder of the check for the sum of ten thousand dollars mentioned in the complaint, dated on the day and year last mentioned, drawn by the Chicago, St. Paul and Fond du Lac Railroad Company, by Charles Butler, their treasurer, upon and directed to the American Exchange Bank in the City of New York.
    “LL The said defendant endorsed the said check and deposited the same with the Continental Bank, of which the plaintiff is president, at or about 11 o’clock in the forenoon of the said fifteenth day of April, aforesaid, and received credit for the same in cash in account with the said bank.
    “IN. The said check was sent by the said Continental Bank to the American Exchange Bank through the Clearing House, according to the established usage of the banks of the City of New York, on the following day, at or shortly after the opening of the bank.
    “IV. The said check was returned by the American Exchange Bank to the Continental Bank, about twelve o’clock of the same day, unpaid, payment thereof having been stopped by the drawers, of which fact the defendant, Franklin, was immediately notified by the said bank.
    “V. The said check was also duly presented before three o’clock of the same day to the paying teller of the American Exchange Bank by a notary public, and, payment thereof being refused, the same was protested for non-payment, and notice given at or about three o’clock of the same day to the defendant.
    “VI. It was admitted by the parties that there was, on the closing of the bank on the 16th day of April, and still is, a balance in the Continental Bank, to the credit of the defendant, Franklin, of four thousand and forty-four dollars and sixty cents, which was agreed should be credited on the said check if the plaintiff shall recover in this action.
    “ My conclusion of law upon the above facts is—
    “ That the plaintiff is entitled to recover, against the said defendant, Joseph F. Franklin, the balance of the said ten thousand dollars, for which the said check was given, after deducting therefrom the sum of four thousand and forty-four dollars and sixty cents, with interest from the sixteenth day of April, one thousand eight hundred and fifty-seven, to the date of this report. Wherefore, I respectfully certify and report, that the plaintiff should recover against the said defendant, Franklin, the principal sum of five thousand nine hundred and fifty-five dollars and forty cents, and also one hundred and thirteen dollars and forty-six cents for interest thereon, amounting in the whole to the sum of six thousand and sixty-eight dollars and eighty-six cents, with costs. All which is respectfully submitted.
    “ Dated, Hew York, July 24th, 1857.
    “ Jno. L. Mason", Referee.”
    And judgment thereon was entered, on the Slst day of July aforesaid, for the sum of $6162.77, to which said report the said defendant duly excepted. The exceptions taken are covered by the points made on the appeal. • .
    
      Gerardus Clark, for appellant.
    I. The presentation of the check at the Clearing House by .the Continental Bank, and there having it passed to their credit, was a payment, at least so far as the defendant was concerned; and if not so, then the subsequent presentation to, and acceptance thereof by, the American Exchange Bank, was clearly a payment; and the endorser (Franklin) was thereby absolved from all further liability on the check.
    II. The American Exchange Bank, having funds of the drawers in their hands, had no right, after having received the check and credited it to the Continental Bank, to change that credit at the request of the drawers, and then call upon the Continental Bank for repayment; and still less had the Continental Bank the right to repay the amount, to the detriment of the defendant. Such a course is calculated to throw monetary operations into great confusion and uncertainty.
    III. It is evident, from the testimony of De Baun, that if the check had been presented at the American Exchange Bank any time during banking hours on the 15th of April, it would have been paid or certified; and the Continental Bank, by omitting to make such presentation, and presenting it at the Clearing House on the 16th, and there receiving credit for the full amount, assumed the responsibility of its payment, and showed that they intended to rely upon the drawer, according to the evidence of the teller, Henderson and Tallman.
    IV. This idea, that the Continental Bank intended to assume the risk, is confirmed by what seems to have been the understanding between the bank and Franklin, as shown by him.
    V. The drawers having funds sufficient to pay the check, in the hands of the drawees, the moment the latter received the check, it operated as an appropriation of so much of those funds, and, therefore, as a payment in respect to all other parties. (Conroy v. Warren, 3 Johnson’s Ca. 264; Cruger v. Armstrong, id. 5-8.)
    VI. The plaintiffs were chargeable with gross negligence, in not presenting the check to be certified or paid, on the 15th of April, at the American Exchange Bank, where there were ample funds for the payment thereof.1 And the defendant is thereby exonerated.
    VII. For the reasons above stated, the report of the referee was erroneous, and should be set aside, together with the judgment entered thereon.
    
      
      Wm. Allen Butler, for respondent.
    I. The proof, as to the presentment of the check, demand of payment and notice to the defendant, Franklin, as endorser, was sufficient.
    II. There was no want of diligence, nor any improper conduct, on the part of the plaintiff, the Continental Bank, in regard to the presentment of the check, or in any other respect. (.Merchants’ Bank v. Spicer, 6 Wend. 443; Gough v. Staats, 13 Wend. 549.)
    III. There was no proof that the check would have been paid, if presented on the 15th, or that the drawers bad funds in bank when it was presented. The American Exchange Bank refused to pay it, and the check did not, of itself, operate as a transfer or assignment of any of the drawers’ funds in their hands, or create any lien thereon. (Chapman v. White, 2 Seld. 412; Ballard v. Randall, 1 Gray, 605 ; Dykers v. Leather Bank, 11 Paige, 613.)
    IV. There was nothing in the transactions at the Clearing House which operated to discharge the defendant, Franklin. The defendant’s proof showed, that the credits given at the Clearing House are for all checks, independent of the question whether they will be paid by the banks on- which they are drawn, and that this check was dealt with according to the usage and custom of banks, in regard to checks of which the payment has been stopped by the drawers.
    V. The taking of security, by plaintiff, for the ultimate payment of the debt, did not discharge the endorser, no time having been given to the drawers, nor their liability in any manner released. (Story on Bills, § 427; Mohawk Bank v. Van Horne, 7 Wend. 117.)
    VI. The defence of a rule or agreement as to uncertified checks, received on deposit, being at the risk of the Continental Bank, wholly failed for want of proof.
    VII- The several rulings of the referee, in respect to evidence, and his conclusions of fact and law, are correct, and the judgment should be affirmed with costs.
   By the Court. Bosworth, J.

The defendant kept an account with the Continental Bank, and on depositing with that bank, on the 15th of April, 1857, the check in question, received credit for its amount. Instead of taking it to the American Exchange Bank, and obtaining payment of it, he deposited it with the Continental Bank.

The Continental Bank, in its proceedings to obtain payment of the check, conformed to the established usage of the banks in the City of Hew York, and the customary course of business in such cases.

The Continental Bank did not undertake, expressly or by implication, to exercise, or subject itself to the duty of exercising, any greater diligence to obtain payment of the check.

It passed through the Clearing House to, and was presented at, the American Exchange Bank, on which it was drawn, soon after that bank opened, on the 16th. That bank refused to pay it, and returned it to the Continental Bank, about 12 o’clock of that day. The defendant was immediately and personally notified of these facts: the defendant said there must be some mistake in the matter, and he would see to it immediately. He told Mr. Tallman, another teller, who went to him with the check, and with information that payment of it had been stopped, “ something about some third person, and that he would make it good before three o’clock, p. M.”

When a case presents no peculiar circumstances, laches cannot be imputed to the holder of a check, as between him and his immediate endorser, merely because he does not present it until the day after he received it. (Merchants’ Bank v. Spicer, 6 Wend. 443; Gough v. Staats, 13 id. 549.)

Certainly no laches can be imputed to a depositary, receiving it tor presentment and collection, who, in presenting it on the next day after its receipt, acts in conformity with the regular and established course of business in such cases.

A rule which required all banks in the City of Hew York to present, for payment, all the checks deposited by their customers, on the day of their deposit, would compel them to decline business of that character, and defeat the objects, in many cases, for which deposits are made, and put an end to certain facilities, which result from obtaining credit for the amount of a check, for the day of its deposit, without providing for its payment until the following morning.

The transaction at the Clearing House did not operate as a payment of the check by the American Exchange Bank, nor make it the duty of that bank to credit the amount of it to the Continental Bank. Giving to the transaction that effect, would be in direct conflict with the established course of business.

The American Exchange Bank never accepted the check, in any such sense, as to have agreed, even by implication, to pay it, or credit its amount to the Continental Bank.

There was no evidence which authorized the referee to find that the Continental Bank received the check, as a purchaser and at its own risk, or upon an agreement not to look to the defendant, in the event of its being dishonored.

In our opinion, there is no error in the judgment appealed from, and it must be affirmed, with costs.  