Cole, J.
1. Bill of exchange: checks. — This cause has been well and fully presented, both by elaborate printed briefs and oral argument at bar. Upon the question as to the character of the instruments under which the intervenors claim, — that is, whether they are foreign bills of exchange or merely bankers’ checks, the counsel do not differ, but agree in treating them as the latter. The counsel for the plaintiff and appellee, however, add, that, being checks, they “are simply inland bills of exchange payable on demand,” citing Merchants Rank v. Spicer, 6 Wend. 443; [322]*322Harker v. Anderson, 21 id. 373; Chapman v. White, 6 N. Y. 112, and other authorities. There is' no assignment of error upon the point that the court found that said instruments were simply bankers’ checks. This may therefore be taken for granted.
2. — rights of holder: assignment of drawer before acceptance. One or two other matters may here be noticed in order that we see distinctly the precise case before this court for decision. The drawer pf the checks held by the intervenors was a banker doing business in the city of Dubuque, and the drawees were also bankers doing business in the city of New York, and with whom the drawer kept his deposits for the purpose of supplying his customers with exchange on New York by drawing his checks against such deposits in such sums as they might want. The drawees have not at any time and do not now object to paying the checks in the sums named in each and to the several holders thereof, to the extent of thé money in their hands, but only refuse to pay because they cannot safely pay, either to the assignee of the drawer, or the holders, until the respective rights of such parties are judicially settled. This, then,-is not a controversy between the holders of the checks and the drawees, or bankers, having the deposits, as to the legal right of the former to sue the latter at law prior to acceptance ; but it is a controversy between the assignee of the drawer of the, checks and the holders of them.
As the view we entertain of the law governing the rights of the holders as against the drawees, necessarily enters into and forms a part of the basis upon which our opinion rests, it is proper that we state them briefly.
Whether the holder of a check can maintain an action at law thereon against the banker-drawee having funds of the drawer to pay the same prior to acceptance, is a question about which the authorities are not agreed. It Was said, as late as in 1857, by Huntington, J., in deliver[323]*323ing the opinion of the Superior Court of Suffolk county, Mass., in the case of The National Bank v. Eliot Bank, denying the right, that no case can be found in the books directly deciding the question; and it was said in the same case, in an elaborate dissenting opinion by Abbott, J., affirming the right, that no precedent exactly in point to sustain him could be found, and none directly in point against him. See National Bank v. Eliot Bank, 5 Am. Law Reg. (Oct., 1857) 711.
And it was said by Johnson, J., in delivering the opinion of the Court of Appeals of South Carolina, in February, 1860, that the court was aware of but one single decision upon the question (National Bank v. Eliot Bank, supra) either in this country or abroad. And in an opinion, evidently prepared with great care and research, that court holds that the action may be maintained (O’Neall, Ch. J., dissenting). Fogarties & Stillman v. State Bank, 8 Am. Law Reg. (May, 1860) 393; same case in 12 Rich. Law (S. 0.) Rep^ 518. It has, however, been decided that a check for a part of the drawer’s funds in a bank constitutes no assignment of that part of such funds, until presented for payment and accepted by the bank. Ballard v. Randall, etc., 1 Gray, 605, decided in 1854, and citing Gibson v. Cooke, 20 Pick. 15; see also Dana v. Third National Bank, etc., 13 Allen, 448; Lloyd v. McCafrey, 46 Penn. St. 410; St. Johns v. Honeaus, 8 Mo. 383; Chapman v. White, 6: N. Y. 412, supra, and other cases.
Yarious reasons are assigned why the holder of such check cannot maintain his action thereon against the drawee who refuses to accept or pay. One, that there is' no privity between such holder and the drawee. 2 Pars, on Bills and Notes, p. 333; another, that such right of action in each holder of a check would render a banker, having the deposits of one person, liable to numberless [324]*324suits by as many holders. Mandeville v. Welsh, 5 Wheat. 277. Another, that the depositor or drawer of the check has his right of action for damages to his business or credit, by reason of a wrongful refusal of the drawee to accept, and that such drawee, cannot be liable to two actions for the one wrong. 1 Pars, on Bills and Notes, 61, 62; Marzatti v. Williams, 1 B. & Ad. 415. And another perhaps, that even the assignment of a chose in action does not invest the assignee with a right of action' in’his own name; and there may be others.
Let us look at these reasons for a moment. As to the objection of want of privity, although at one time there was some conflict of opinion, it is now laid down by text writers to be settled, that in cases of simple contract, if one person makes a promise to another for the benefit of a third, the latter may maintain an action upon it, though the consideration did not move from him. 2 Greenl. on Ev. § 109, and authorities cited in note 1. Nor does it make any difference in principle that the beneficiary or party suing upon the promise, was unknown to the promissor. This want of knowledge by the promissor as to who will be the party enforcing the promise, exists in the case of every negotiable instrument. The promissor having made his promise upon sufficient consideration, whether it is in writing, verbal, or implied, may, and ought to be, required to perform it according to the tenor of it, and not otherwise, to the party becoming entitled thereto.
As to the objection of liability to several parties who may. hold the checks, instead of to the one depositor, it should be remembered, that, by the custom of merchants and bankers every where, alike well known to farmers, mechanics, merchants, bankers and courts, the party receiving the deposit, does so upon either an express or implied promise to pay the same upon presentation of [325]*325the cheeks of the depositor, by whomsoever presented. If, therefore, he is made liable to numberless parties, it is because of his promise made for their benefit, and known to them, and which he has failed to perform. Munn v. Burch et al. 25 Ill. 35.
And if it be true, as it doubtless is, that the banker is liable to the depositor for the damages resulting to him by reason of the failure to pay his checks, this liability ought not, upon principle, to exempt him from the performance of his promise or undertaking to pay the checks; the holder may enforce the promise, while the depositor recovers nominal or special damages for the breach of it. Rollin v. Stewart, 14 C. B. 595. Parties are often liable to two actions at law by different suitors for one and the same wrongful act. A trespasser upon real estate may be .liable, for one trespass, to two actions, — one by the tenant, the other by the reversioner.
Free access — add to your briefcase to read the full text and ask questions with AI
Cole, J.
1. Bill of exchange: checks. — This cause has been well and fully presented, both by elaborate printed briefs and oral argument at bar. Upon the question as to the character of the instruments under which the intervenors claim, — that is, whether they are foreign bills of exchange or merely bankers’ checks, the counsel do not differ, but agree in treating them as the latter. The counsel for the plaintiff and appellee, however, add, that, being checks, they “are simply inland bills of exchange payable on demand,” citing Merchants Rank v. Spicer, 6 Wend. 443; [322]*322Harker v. Anderson, 21 id. 373; Chapman v. White, 6 N. Y. 112, and other authorities. There is' no assignment of error upon the point that the court found that said instruments were simply bankers’ checks. This may therefore be taken for granted.
2. — rights of holder: assignment of drawer before acceptance. One or two other matters may here be noticed in order that we see distinctly the precise case before this court for decision. The drawer pf the checks held by the intervenors was a banker doing business in the city of Dubuque, and the drawees were also bankers doing business in the city of New York, and with whom the drawer kept his deposits for the purpose of supplying his customers with exchange on New York by drawing his checks against such deposits in such sums as they might want. The drawees have not at any time and do not now object to paying the checks in the sums named in each and to the several holders thereof, to the extent of thé money in their hands, but only refuse to pay because they cannot safely pay, either to the assignee of the drawer, or the holders, until the respective rights of such parties are judicially settled. This, then,-is not a controversy between the holders of the checks and the drawees, or bankers, having the deposits, as to the legal right of the former to sue the latter at law prior to acceptance ; but it is a controversy between the assignee of the drawer of the, checks and the holders of them.
As the view we entertain of the law governing the rights of the holders as against the drawees, necessarily enters into and forms a part of the basis upon which our opinion rests, it is proper that we state them briefly.
Whether the holder of a check can maintain an action at law thereon against the banker-drawee having funds of the drawer to pay the same prior to acceptance, is a question about which the authorities are not agreed. It Was said, as late as in 1857, by Huntington, J., in deliver[323]*323ing the opinion of the Superior Court of Suffolk county, Mass., in the case of The National Bank v. Eliot Bank, denying the right, that no case can be found in the books directly deciding the question; and it was said in the same case, in an elaborate dissenting opinion by Abbott, J., affirming the right, that no precedent exactly in point to sustain him could be found, and none directly in point against him. See National Bank v. Eliot Bank, 5 Am. Law Reg. (Oct., 1857) 711.
And it was said by Johnson, J., in delivering the opinion of the Court of Appeals of South Carolina, in February, 1860, that the court was aware of but one single decision upon the question (National Bank v. Eliot Bank, supra) either in this country or abroad. And in an opinion, evidently prepared with great care and research, that court holds that the action may be maintained (O’Neall, Ch. J., dissenting). Fogarties & Stillman v. State Bank, 8 Am. Law Reg. (May, 1860) 393; same case in 12 Rich. Law (S. 0.) Rep^ 518. It has, however, been decided that a check for a part of the drawer’s funds in a bank constitutes no assignment of that part of such funds, until presented for payment and accepted by the bank. Ballard v. Randall, etc., 1 Gray, 605, decided in 1854, and citing Gibson v. Cooke, 20 Pick. 15; see also Dana v. Third National Bank, etc., 13 Allen, 448; Lloyd v. McCafrey, 46 Penn. St. 410; St. Johns v. Honeaus, 8 Mo. 383; Chapman v. White, 6: N. Y. 412, supra, and other cases.
Yarious reasons are assigned why the holder of such check cannot maintain his action thereon against the drawee who refuses to accept or pay. One, that there is' no privity between such holder and the drawee. 2 Pars, on Bills and Notes, p. 333; another, that such right of action in each holder of a check would render a banker, having the deposits of one person, liable to numberless [324]*324suits by as many holders. Mandeville v. Welsh, 5 Wheat. 277. Another, that the depositor or drawer of the check has his right of action for damages to his business or credit, by reason of a wrongful refusal of the drawee to accept, and that such drawee, cannot be liable to two actions for the one wrong. 1 Pars, on Bills and Notes, 61, 62; Marzatti v. Williams, 1 B. & Ad. 415. And another perhaps, that even the assignment of a chose in action does not invest the assignee with a right of action' in’his own name; and there may be others.
Let us look at these reasons for a moment. As to the objection of want of privity, although at one time there was some conflict of opinion, it is now laid down by text writers to be settled, that in cases of simple contract, if one person makes a promise to another for the benefit of a third, the latter may maintain an action upon it, though the consideration did not move from him. 2 Greenl. on Ev. § 109, and authorities cited in note 1. Nor does it make any difference in principle that the beneficiary or party suing upon the promise, was unknown to the promissor. This want of knowledge by the promissor as to who will be the party enforcing the promise, exists in the case of every negotiable instrument. The promissor having made his promise upon sufficient consideration, whether it is in writing, verbal, or implied, may, and ought to be, required to perform it according to the tenor of it, and not otherwise, to the party becoming entitled thereto.
As to the objection of liability to several parties who may. hold the checks, instead of to the one depositor, it should be remembered, that, by the custom of merchants and bankers every where, alike well known to farmers, mechanics, merchants, bankers and courts, the party receiving the deposit, does so upon either an express or implied promise to pay the same upon presentation of [325]*325the cheeks of the depositor, by whomsoever presented. If, therefore, he is made liable to numberless parties, it is because of his promise made for their benefit, and known to them, and which he has failed to perform. Munn v. Burch et al. 25 Ill. 35.
And if it be true, as it doubtless is, that the banker is liable to the depositor for the damages resulting to him by reason of the failure to pay his checks, this liability ought not, upon principle, to exempt him from the performance of his promise or undertaking to pay the checks; the holder may enforce the promise, while the depositor recovers nominal or special damages for the breach of it. Rollin v. Stewart, 14 C. B. 595. Parties are often liable to two actions at law by different suitors for one and the same wrongful act. A trespasser upon real estate may be .liable, for one trespass, to two actions, — one by the tenant, the other by the reversioner. So a party promising to discharge an incumbrance and failing to do so, may be liable to an action by the promisee and also to an action by the party holding the incumbrance. These are but illustrations of a large class of cases, both in tort and upon contract, where a party may be liable to two actions by different parties for the same wrong or upon a breach of the same promise.
As to the last objection, that an assignee of a chose in action cannot maintain an action in his own name, it may be answered, that our statute already gives the right. Kev. § 2757. So also in New York. Howard’s Code, § 111, p. 132. Such is the rule in many other States.
Argu. 2: implied promise. Without further elaboration or answer to the objections against the right of a holder of a check to maintain his action against the drawee having funds and wl.ongfu¡iy refusing to pay the same, we may state that in our view such holder can maintain his action. This view is based upon the implied promise of the party [326]*326receiving such deposits, to pay out the same upon the checks of the depositor. Where the depositor has indicated by his check the person to whom the money shall be paid, the promise of the party receiving the deposit enures to the person thus indicated, and he may enforce it; and also upon the following authorities: Weston v. Barker, 12 Johns. 276; Shepherd v. Shepherd, 7 Johns. Ch.; Morton v. Naylor, 1 Hill. 583; Cutts v. Perkins, 12 Mass. 209; Robbins v. Bacon, 3 Greenl. 346; Mandeville v. Welch, 5 Wheat. 277; Adams v. Robinson, 1 Pick. 461; Clarke v. Adair, cited by Buller, J. 4 T. R. 343; Bradley v. Root, 5 Paige, 632; Phillips v. Stagg, 2 Edw. Ch. 108; Rowe v. Dawson, 1 Ves. Sr. 331; Yeates v. Groves, 1 Ves. Jr. 280; Watson v. Duke of Wellington, 1 Rus. & M. 602; Lett v. Morris, 4 Sim. 607; Carnegie v. Morrison, 2 Met. 394; Hall v. Marston, 17 Mass. 579; Tadlock v. Hains, 3 Durnf. & E. 91; Forgarties v. State Bank, 12 Rich L. Pep. (S. C.) 518; Munn v. Burch et al. 25 Ill. 35.
Only the last two cases are directly in point. The other cases decide points more or less illustrative of the .principle upon which the two cases rest. The eases in 1 Ves. Sr. and 1 Ves. Jr. and 1 Puss. & M. were controversies with assignees. Of course, this doctrine that the payee or holder may have his action against the drawee, is limited to cases of checks, and has no application under the principle whereon it is based, to bills of exchange.
But, as before premised, this is a controversy between the assignee of the drawer, and the holders of the checks. The drawee of the checks makes no objection to paying them to the holders, but simply refers the question as to which of the claimants, the assignee or holders, are entitled to the money, and avers his willingness to pay to the party entitled thereto.
[327]*3273. Assignment for benefit of creditors: rights of assignee. An assignee takes the property of his assignor, subject to all the equities existing against it in favor of third parties. This is the general and now well ^ . settled rule, bee Burrcll on Assignments, 483, 484, and authorities cited in the notes. Neither the assignee nor the creditors whom he represents are purchasers for a valuable consideration without notice as against prior equitable liens. Haggerty v. Palmer, 6 Johns. Ch. 437; Knowles v. Lord, 4 Whart. 500; Walker v. Miller, 11 Ala. 1067; Clark v. Flint, 22 Pick. 231; see also Walker v. Miller & Co., 11 Ala. 1082; Frow v. Downman, id. 885; In re Howe, 1 Paige Ch. 127; Luckenbrack v. Brickenstein, 5 Watts & Sargt. 149; McMenoney v. Femen, 3 Johns. 82; Reed v. Sands, 37 Barb. (S. C.) 185. In other words the assignee stands in the shoes, and only succeeds to the rights, of the assignor. For the purposes of this suit, then, the assignee stands in the place , of Markell, the drawer of the checks. .Further than this, it must be remembered, that, under our practice, a party defendant (and these holders stand as such in this action) may set up as many defenses, both legal and equitable, as he may have. See Rev. § 2880. These holders of the checks have set up all the facts connected with their paying, for and receiving the checks and their failure to procure the money on them. In other words they have presented their equitable as well as their legal claims, and it is upon these together that their rights are to be determined.
The controversy, then, is simply this: Markell having received full consideration therefor draws his checks upon his banker with whom he has funds on deposit for their payment. Afterward, and before their presentation, Markell (by his assignee), notifies the drawee to withhold payment. This is done'without any claim of wrong on the part' of the drawees, and without any pretense or [328]*328suggestion against their just and equitable right to the money specified in the check.
Now, as between Markell on the one hand, and the holders of these checks on the other, in whose favor are the equities ? No person could hesitate for a single moment in declaring that the money (which in effect has been brought into court for the benefit of the party entitled thereto) should be paid to the holders of the ehecks rather than to Markell, who has once received from them the money which the checks represent. If, as between Markell and the holders, the latter would be entitled to the money, then, since the assignee of Markell stands in his shoes and succeeds only to his rights, the holders of the checks would be entitled to the money as against the assignee, and this, too, regardless of whether the holder of- a check can maintain his action against the drawee, or whether a check operates as an assignment pro tcmto of the deposit, as hereinbefore discussed.
There are one or two facts apparent from the transcript, having some bearing upon the whole case, but which áre not set forth specifically in the finding of facts, but are embraced in the general language used in the closing part of the seventh finding as set out in the statement-, It appears from the schedule of the liabilities of Markell annexed to the assignment, that he was indebted to Corbin & Co. a little over $2,000, the sum stated being just the difference between the sum now in controversy, and the amount of the unpaid drafts drawn by him upon them prior to the assignment. And in the schedule of assets, no claim against Corbin & Co. is made, Now, while it may be fully true that a failure to schedule either liabilities or assets, cannot of itself affect the rights of parties in relation thereto; yet such facts may be considered in determining the construction and effeófc of the instrument of assignment. Só that it may [329]*329be proper to look at the schedules of assets and liabilities in this case, for the purpose of ascertaining whether the assignor intended to transfer any claim upon Corbin & Co. to his assignee; or whether he recognized the fact, that he had by his checks already transferred his claim upon them so that in point of fact he had none to transfer to his assignee. If the instrument of assignment did not profess to transfer the claim againt Corbin & Co., and there was no intent to transfer it, nor any right in equity existed to transfer it, then it is very clear that the assignee did not acquire any legal or equitable title to any supposed claim of Markell upon Corbin & Co., and therefore he could not maintain this action.
"Without resting our determination of the cause, upon this latter ground, we prefer to and do place our decision upon the particular and special facts and circumstances of the case, and hold, that, as between the plaintiff and the holders of the checks, the latter are entitled to the amount in the hands of Corbin & Co. The judgment of the District Court is therefore
Eeversed.
Weight, J., dissenting.
June 23, 1869.