German-American Bank of Rochester v. Atwater

• Decision Date: 27 November 1900
• Citation: 165 N.Y. 36,58 N.E. 763
• Parties: GERMAN-AMERICAN BANK OF ROCHESTER v. ATWATER.
• Court: New York Court of Appeals Court of Appeals

165 N.Y. 36

58 N.E. 763

GERMAN-AMERICAN BANK OF ROCHESTER

v.ATWATER.

Court of Appeals of New York.

Nov. 27, 1900.

Appeal from supreme court, appellate division, Fourth department.

Action by the German-American Bank of Rochester against Agnes L. Atwater. From a judgment of the appellate division (53 N. Y. Supp. 1104) affirming a judgment dismissing the complaint, plaintiff appeals. Affirmed.

The action was brought to recover on certain promissory notes made by the firm of Atwater, Armstrong & Clark to the order of the defendant, the wife of Atwater, which notes she indorsed to the plaintiff after maturity. The plaintiff shortly prior to the 29th day of April, 1896, was the holder of considerable paper that it had discounted for the benefit of said firm; and the latter, being unable to pay their obligations, assigned all of the assets of the partnership to the bank as security for the partnership obligations held by it. The firm, as well as this plaintiff and defendant, were of the opinion that the assets were likely to prove more than sufficient to pay the bank in full; and Atwater was anxious that the balance should be applied in payment of the notes held by his wife, upon which there was due on the 29th day of April $7,467. The other members of the firm and the plaintiff were willing that she should have the benefit of any resulting surplus to the extent of the amount due to her, and they undertook to make an arrangement that should accomplish that purpose. The plan adopted was that the defendant should indorse the notes to the bank, which in return should give the defendant credit in an amount equal to the sum due on the notes; the deposit to stand as security for the payment of the notes. Four days later the defendant, through her husband, who acted for her in these matters, asked permission to draw $1,175 of the deposit, to be used in part payment for a property that the defendant had previously purchased; and, upon his promise to replace the amount, he was allowed to draw it. June 8th the defendant drew out $4,399.19, and with it she paid the bank for property purchased from it by the Rochester Box & Lumber Company, of which she was a member. Other sums were drawn from time to time down to December 23d following, when there remained on deposit only the sum of $181.18. These moneys were withdrawn without any promise to return them, except in the first instance, but the plaintiff's cashier demanded their return on several occasions. A day or two prior to March 24, 1897, the cashier, having failed to secure the return of the moneys thus withdrawn, told the defendant's husband that she was liable as an indorser upon the notes, which he denied, and on the 24th a formal demand in writing was made for the payment of the notes; and about two weeks later, upon the 9th day of April, 1897, notice of protest in due form was given. The trial resulted in a dismissal of the complaint, and the judgment entered thereon was affirmed in the appellate division. Other facts, so far as material, are stated in the opinion.

Joseph W. Taylor, for appellant.

W. A. Sutherland, for respondent.

PARKER, C. J. (after stating the facts).

That the plaintiff had to make a demand on the makers for payment, and give notice of dishonor to the defendant in the event of nonpayment, in order to recover of her upon the notes, is, of course, conceded. The time at which demand should have been made and notice of protest given has been the subject of sharp controversy, but we regard the law applicable to this situation as settled by the Eisenlord Case, 15 Hun, 23, affirmed in this court on the opinion below in 79 N. Y. 617. In that case, as in this one, the defendant indorsed the notes after maturity, but denied liability, notwithstanding the indorsement, because of the failure of the indorsee of the notes to make a proper demand for payment and give notice of dishonor, and the court stated the law in this state to be that where a party indorses past-due paper ‘the law implies a contract * * * that he will proceed with reasonable diligence to demand payment, and give notice if not paid. Failing in this, the indorser is discharged.’ The plaintiff in this case caused a notice of protest to be...