Appellate Term, Second Department, December, 1917. [Vol. 102. rendered against it in favor of the plaintiff for the total sum of $767.32, principal, interest and costs. The judgment is clearly erroneous. Only a question of law is presented. The facts, which were admitted, were as follows: On January 25, 1916, Benjamin Sicklick, who was the president of the appellant corporation, with its authority, made its promissory note to his individual order for $750 due in four months from date. This note he indorsed as an individual and discounted at the plaintiff bank where he had a personal account. The maker of the note was a corporation transacting business in Brooklyn, and Sicklick, its president, was engaged in a different kind of business in Newark, and kept his personal account in the plaintiff bank in that city. This is the note that was sued on. At its maturity Sicklick gave to the plaintiff his own check for $50 together with another similar note for $700 made by the appellant and indorsed by him, the first note being thereupon surrendered after it had been stamped "paid" by the plaintiff. The note for $700 was due in three months and at maturity thereof it was also stamped “ paid " and surrendered by the plaintiff, which in place of it received a third note of similar tenor for $700 due on November 27, 1916. When the third and last note fell due Sicklick gave to the note teller of the plaintiff bank his personal check for $700 drawn to the plaintiff's order on his personal account with the plaintiff. The note teller took this check to Mr. Williams, plaintiff's president, and the latter authorized the acceptance of the check in payment of the note, which was thereupon canceled, stamped or punched " paid "' and surrendered to Sicklick. Mr. Williams testified that he accepted the check of Sicklick in payment of the note and surrendered the note to Sicklick and then charged the check against the account of Sicklick, deducting Misc.] Appellate Term, Second Department, December, 1917. that sum from his account on the books of the bank. The check was also stamped or punched "paid" on November 28, 1916. The plaintiff's contention is, that notwithstanding these facts the appellant is liable as the maker of the original note because of the fact that Sicklick's check for $700, although charged against his account, was never in fact paid because a certain check for $925 drawn on a bank in Bangor, Penn., and deposited in Sicklick's personal account with the plaintiff three days before the maturity of the last note of the series, was never collected. It was inferred that witheut that deposit being made good Sicklick's personal account did not have sufficient funds to satisfy his check or draft against it for $700. In other words, the plaintiff contends that the check for $925 was an uncollected asset erroneously credited to Sicklick's account, and that the plaintiff erred in accepting Sicklick's check on itself for $700 in payment for and surrendering the last note of the series and in charging Sicklick's personal account with the check for $700 · upon its books and marking the check " paid." Section 200 of the Negotiable Instruments Law provides as follows: A "Section 200. Instrument; how discharged. negotiable instrument is discharged: "3. By the intentional cancellation thereof by the holder." It is true that the mere stamping of a negotiable instrument with the word " paid," or the cancellation of it in any other way, is not conclusive evidence of its discharge; for the reason that such cancellation may have been done through error or mistake. Scott v. Betts, Lalor's Sup. 363, and note; Watervliet Bank v. White, 1 Den. 608; Irving Bank v. Wetherald, 36 N. Y. 335. Section 204 of the Negotiable Instruments Law provides that: "A cancellation made unintentionally, or Appellate Term, Second Department, December, 1917. [Vol. 102. under a mistake, or without the authority of the holder, is inoperative; but where an instrument or any signature thereon appears to have been canceled the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake or without authority." In the present case, however, the cancellation of the note was not unintentional nor the result of a mistake. It is not claimed nor shown that there was any fraud or deceit on the part of Sicklick practiced upon the bank in obtaining the cancellation and surrender of the notes, or any of them, and it was entirely competent for the bank to accept the check of its depositor in payment of the last note made by the appellant. If payment in such manner was accepted by it, the maker of the note was discharged. The evidence clearly establishes that fact. There was no conflicting evidence upon which the trial justice could have reached any different conclusion. Had there been, a different result of the appeal would necessarily follow. Although I have not found any case in the courts of this state precisely similar to the instant case the authorities to which I shall refer seem to me to be controlling upon the facts in this case. In Pratt v. Foote, 12 Barb. 209, the facts were as follows: The cashier of a bank received from Foote, the maker of a note holden by the bank, payable on the twenty-fifth of November thereafter, the check of Scudder, the indorser, for the amount of the note, dated on the day when the note was payable, upon the understanding that if, when the check became due, it was made good it would pay the note; but there was no agreement to receive the check as an absolute payment of the note. On the day the note fell due Scudder's account at the bank was largely overdrawn. Between the twentieth and twenty-fourth of November large Misc.] Appellate Term, Second Department, December, 1917. sums were deposited to the credit of Scudder, but his account still remained overdrawn. On the twenty-fifth of November Foote's note was entered in the books of the bank as having been paid, etc. Scudder's check was also charged to his account. In December Scudder failed, and Foote on being informed at the bank that neither the note nor check had been paid, and that Scudder's check had not been made good, gave a new note for the debt. It appeared that at the time the note sued on was given Foote had no knowledge of the entries which had been made in the books of the bank in relation to the payment of his note. Upon giving the new note the first note and the check were delivered up to him. Upon these facts Mr. Justice Wright, at the Circuit without a jury, rendered judgment in favor of the plaintiff for the amount of the note with interest. From that judgment the defendant appealed, and the General Term affirmed the judgment, Mr. Justice Harris writing the opinion. In the course of the opinion Mr. Justice Harris made this statement: "I agree with the learned judge who tried this cause, that in the absence of other evidence the entries in the books would furnish controlling evidence that the note had been paid. But these entries are not conclusive, and, when taken in connection with all the other facts in the case, I think they do not sustain the position upon which the defendant relies, that the check was received as an actual payment of the note, or in lieu of such payment." And he then discussed the point that the question of acceptance was a question of fact to be decided at the Circuit, and it having been decided against the defendant the conclusion of the trial judge was fully warranted by the evidence. Upon appeal to the Court of Appeals this judgment was unanimously reversed. .See 9 N. Y. 463; 10 id. 599. It was held by the court Appellate Term, Second Department, December, 1917. [Vol. 102. that where there is no conflict or uncertainty of evidence the conclusion to be drawn from the facts proved is a question of law; and the court held that the entries upon the books of the bank were of precisely the same effect as if the money was first paid to the payee of the check and instantly repaid to the bank. Judge Selden, writing for the court, said: "The real question in this case is not, as I conceive, whether an agreement was proved between the plaintiff and defendant, that the former would accept the check of Scudder in satisfaction of the defendant's note; but it is whether what was undeniably said and done did not amount to an actual payment of the first note. There are two distinctions which it is indispensable to make in order to arrive at a just conclusion upon this point. "In the first place, it is necessary to discriminate between the acceptance by a creditor from his debtor of a new security or obligation for an old debt, and the acceptance by a bank of a check drawn upon itself in payment of a note. The transactions are entirely different. The former is the mere substitution of one executory agreement or obligation to pay for another. In such a case there is no extinguishment of the precedent debt, unless there is an express agreement to accept the new obligation or security as a satisfaction of the old. One executory agreement is not a satisfaction of another unless by virtue of some contract between the parties; and this contract cannot be inferred from the mere acceptance of the new security, but must be proved by evidence aliunde. But when a bank receives upon a debt a check drawn upon itself by one of its customers, and charges it in account, it thereby admits that it has funds of the drawer sufficient to meet the check; and the acceptance is per se an appropriation of those funds to the payment of the check. A transaction of the former kind operates only |
