128 U.S. 26 (1888), Leather Manufacturers' Nat. Bank v. Merchants' Nat. Bank

Citation:128 U.S. 26, 9 S.Ct. 3, 32 L.Ed. 342
Party Name:LEATHER MANUF'RS NAT. BANK v. MERCHANTS' NAT. BANK.
Case Date:October 22, 1888
Court:United States Supreme Court
 
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Page 26

128 U.S. 26 (1888)

9 S.Ct. 3, 32 L.Ed. 342

LEATHER MANUF'RS NAT. BANK

v.

MERCHANTS' NAT. BANK.

United States Supreme Court.

October 22, 1888

Error to the Circuit Court of the United States for the Southern District of New York.

The original action was brought December 7, 1877, by the Merchants' National Bank of the city of New York against the Leather Manufacturers' National Bank, to recover back the sum of $17,500 paid on March 10, 1870, to the defendant, the holder of a check drawn upon the plaintiff for that amount, with interest from June 20, 1877. The defendant, among other defenses, pleaded the statute of limitations; and also that the plaintiff never demanded repayment or tendered the check to the defendant until long since the commencement of this action. At the trial before a jury the following facts were proved or admitted: On March 9, 1870, the Bank of British North America, having a larger amount on deposit with the Merchants' Bank, drew upon that bank a check for $17,500, payable to Margaret G. Halpine or order, and delivered it to Thomson & Ramsay; and this check, with the names of Mrs. Halpine and of William C. Barrett indorsed thereon, came to the hands of Howes & Macy, private bankers, who deposited it with the Leather Manufacturers' Bank. On March 10, 1870, the Merchants' Bank paid the amount of the check to the Leather Manufacturers' Bank through the clearing-house, and charged the amount on its own books to the Bank of British North America. By the usual course of dealing between the Bank of British North America and the Merchants' Bank, the passbook containing entries of the deposits made by the one, and of the payments made by the other on account thereof, was written up and returned to the Bank of British North America fortnightly, together with the checks and other vouchers for such payments; and on March 17, 1870, the pass-book containing the charge of the payment of the check in question was so balanced and returned with the check. The account between the Bank of British North America and the Merchants' Bank continued to exist until February 21, 1881, the day of the trial of the action brought by the former bank against the latter, mentioned below. At the time of the payment by the Merchants' Bank to the Leather Man ufacturers' Bank both parties believed Mrs. Halpine's indorsement to be genuine, whereas in fact it had been forged by Barrett, the second indorser, who afterwards absconded. Howes & Macy failed in 1873. The Bank of British North America, on or about January 24, 1877, first learned that Mrs. Halpine contended that her indorsement was forged; and on January 26, 1877, notified that fact to the Merchants' Bank; and on June 2, 1877, demanded of that bank payment of the amount of the check, and left the check with it that it might look into the matter. On the same day the Merchants' Bank showed the check to the Leather Manufacturers' Bank, informed it that the Bank of British North America had demanded repayment of the money because the indorsement of Mrs. Halpine's name was a forgery, and made a like demand upon the Leather Manufacturers' Bank, which declined to pay. On June 20, 1877, the Merchants' Bank returned the check to the Bank of British North America, and that bank again demanded of the Merchants' Bank payment of the amount, and tendered it the check, and it refused to pay. On August 10, 1877, the Bank of British North America gave written notice to the Merchants' Bank that it had been sued for the amount of the check, by reason of the Merchants' Bank having paid the same upon a forged indorsement; and that, in the event of being held liable for the amount, it should hold the Merchants' Bank to its strict legal liability. The action against the Bank of British North America is reported as Thomson v. Bank, 82 N.Y. 1. On November 7, 1877, the Bank of British North America brought an action in a court of the state of New York against the Merchants' Bank for the amount of the check, upon the ground that the payment thereof by the Merchants' Bank had been made upon a forged indorsement of the payee's name, and that the amount had been demanded of the Merchants' Bank by the Bank of British North America on June 20, 1877, and refused, and still remained to its credit. In that action, the Merchants' Bank pleaded that the indorsement was genuine, and that the cause of action was barred by the statute of limitations; and, before that case came to trial, gave written notice of its having been so sued to the Leather Manufacturers' Bank, in order that it might defend the suit or protect its rights as it might deem proper, and that the judgment, if adverse, might be conclusive upon it. On March 7, 1881, the Bank of British North America recovered judgment against the Merchants' Bank, which was affirmed by the court of appeals. 91 N.Y. 106. The Merchants' Bank, on January 25, 1883, paid the amount of that judgment, and received the check from the Bank of British North America, and on March 15, 1883, gave notice to the Leather Manufacturers' Bank of having so paid, and tendered the chck to it, and demanded payment of that amount, with interest from June 20, 1877, which was refused. In the present action the defendant, at the close of the whole evidence, asked the court to instruct the jury to return a verdict for the defendant, upon the grounds 'that the cause of action, if complete, did not accrue within six years before the commencement of this action;' and 'that the cause of action, if a demand and tender were necessary, had not accrued...

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