Citizens' State Bank v. Cowles

• Decision Date: 31 January 1905
• Citation: 180 N.Y. 346,73 N.E. 33
• Parties: CITIZENS' STATE BANK v. COWLES.
• Court: New York Court of Appeals Court of Appeals

180 N.Y. 346

73 N.E. 33

CITIZENS' STATE BANK

v.COWLES.

Court of Appeals of New York.

Jan. 31, 1905.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by the Citizens' State Bank against Sarah B. Cowles. From a judgment of the Appellate Division (86 N. Y. Supp. 38,89 App. Div. 281) affirming a judgment for plaintiff, defendant appeals. Reversed.

Justus A. B. Cowles and Charles P. Cowles, for appellant.

Jerome A. Peck, for respondent.

WERNER, J.

The action is upon a check dated June 1, 1900, drawn by the defendant upon the First National Bank of Port Chester, N. Y., to the order of W. W. Miller & Sons, for $600. The check was given in payment for a team of horses purchased by the defendant from the Millers under a written guaranty of soundness and condition, the alleged breach of which is now sought to be interposed as a defense.

The horses were delivered shortly after midnight on the 2d day of June, and later in the morning it was discovered that one of them was ill from pneumonia, as a result of which it died within about nine days. On Monday, the 4th of June, which was the first business day after the giving of the check, the defendant's son notified the bank to stop payment on the check, and them communicated by telephone with one of the payees, advising him of the sickness of one of the horses, and of the fact that payment of the check had been stopped.

The payees indorsed the check to one George M. Hoffman, the president of the plaintiff bank, and mailed it to him at Little River, Kan., but whether it was so mailed before or after the notification as to the illness of the horse does not appear. Hoffman received the check on the 8th day of June, indorsed it, and within two or three hours deposited it with the plaintiff, which credited the amount thereof to Hoffman's account, indorsed the check to the National Bank of Kansas City, Mo., and sent it to that bank for collection. What was done with the check after that does not appear, except as it may be inferred from the fact that it was received by the First National Bank of Port Chester (on which bank it was drawn) on the 14th of June, where it was protested, and marked ‘Payment stopped.’

One of the issues tendered by the defendant's answer was that the plaintiff was not an innocent holder of the check for value. Upon the trial the plaintiff made out its case by introducing the check in evidence, and relying upon the presumptions in support of negotiable paper, together with the allegations and admissions of the answer. The defendant then introduced evidence bearing upon the breach of warranty or failure of consideration in the sale of the horses, and this was supplemented by reading from depositions issued to Hoffman and Waitt, who were officers of the plaintiff bank. From these depositions it appeared that at the time of the delivery of the check to the plaintiff the payees thereof did not have an account with the plaintiff bank, and that the check was indorsed by the payees to Hoffman, who at once indorsed and delivered it to the plaintiff. At this point we encounter some haziness in the testimony. Hoffman stated that the check was indorsed to him and he received the money from the bank. Waitt, the cashier, testified that the plaintiff paid $600 for the check, but afterwards qualified this by saying that as cashier he credited Hoffman's account with the amount of the check. Had the conflicting inferences which may be drawn from these equivocal statements been submitted to a jury, with proper instructions, the defendant would, of course, be bound by a decision against her, because it would have to be assumed that the plaintiff had become the actual owner of the check by purchase. The difficulty with the case...