Chicopee Bank v. Philadelphia Bank
75 U.S. 641 (1869)

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U.S. Supreme Court

Chicopee Bank v. Philadelphia Bank, 75 U.S. 8 Wall. 641 641 (1869)

Chicopee Bank v. Philadelphia Bank

75 U.S. (8 Wall.) 641

Syllabus

1. Although a bill payable at a particular bank be physically and in point of fact in the bank, still, if the bank be wholly ignorant of its being there -- as when, ex. gr., a letter in which the bill was transmitted when brought from the post office to the bank has been laid down with other papers on the cashier's desk, and before being taken up or seen by the cashier has slipped through a crack in the desk, and so disappeared -- the fact of the bill's being thus physically present in the bank does not make a presentment.

And this is so although the acceptor had no funds there, did not call to pay the bill, and in fact did not mean to pay it anywhere.

2. In such a case, therefore, the holder cannot look to prior parties, even though, by having been informed after inquiry by him that the bill had not been received at the collecting bank, they could have inferred that it had not been paid at maturity by the acceptor.

3. A court having fairly submitted to a jury the evidence in a case, and charged as favorably to a party as he could properly have asked, may, in the exercise of its discretion, refuse a request by that party to charge as to which side the burden of proof belongs.

4. An accidental loss or disappearance in a bank of a bill sent to it to collect, from the bank's not taking sufficient care of letters brought to it from the mail, carries with it a presumption of negligence in the bank; and on a suit against it, the burden of proof is on the bank to explain the negligence.

5. If, through this negligence alone, it is inferable that notice of presentment, demand, and nonpayment were not given to the holder so as to enable him to hold parties prior to him, the bank guilty of the negligence is responsible to the holder for the amount of the bill even though the holder himself have not been so entirely thoughtful, active, and vigilant as he perhaps might have been.

This was a suit by the Seventh national Bank of Philadelphia against the Chicopee Bank of Springfield, Massachusetts, founded upon the allegation, that by reason of the neglect of the latter bank, the former lost its remedy against the prior parties on a bill of exchange, to-wit, the drawer and payee.

The bill was drawn by one Coglin, of Philadelphia, on Montague, of Springfield, payable to one Rhodes, of Philadelphia, for $10,000, and accepted by Montague specially payable at the Chicopee Bank. The day of payment was Saturday, February 18, 1865. On the 13th, Rhodes, the

Page 75 U. S. 642

holder, endorsed the bill for value to the Philadelphia bank, which sent it at once by mail, enclosed in a letter, to the Chicopee Bank, to receive payment. The course of the mail between Philadelphia and Springfield is two days. On the 15th, this letter with other letters and papers, was duly delivered by the postman, and placed on the cashier's table, but (as was afterwards ascertained) this letter slipped from the pile, through a crack in the table, into a drawer of loose papers, and its presence in the bank was not known to the cashier, and as the two banks had no previous dealings, he was not expecting anything from the other bank. On the 18th, Montague, the acceptor, made no attempt to pay the bill either by calling for it or depositing funds, and subsequently, at the trial, made oath that he intended not to pay the bill, and had a defense against it. The cashier of the Philadelphia bank, not receiving, on the 17th, an acknowledgment of the letter which he had sent on the 13th, felt somewhat anxious, and on the 18th consulted the president. On Monday, the 20th, he telegraphed to the cashier of the Chicopee Bank as follows:

"Did not you receive ours of 13th instant, with Montague's acceptance, $10,000?"

The dispatch did not indicate either the time or place of payment of the draft, and the reply was sent,

"Not yet received."

This dispatch was received by the cashier of the Philadelphia bank at noon of the 20th. He testified at the trial that he wrote to Mr. Rhodes the same day, informing him of what he had learned, that he had no recollection of writing to Coglin, but, as he knew they were jointly concerned in dealings in petroleum lands, he presumed Rhodes would inform him. This was the only step the cashier took toward charging the prior parties. They both did business at that bank -- Coglin was a director; both were frequently there and well known to the cashier. As the mail required two days, and the 19th was Sunday, there was no question but the cashier

Page 75 U. S. 643

had until and including the 24th to give notice to Rhodes and Coglin. After the receipt of the reply of the 20th, at noon, he took no steps, by post or telegraph, to ascertain from the Chicopee Bank whether the acceptor had or had not been ready to pay on the 18th. The Philadelphia bank brought no suit against Rhodes or Coglin, but sued the Chicopee Bank for the amount of the note on the ground that, by its negligence, they had lost the power to charge the prior parties.

The court below instructed the jury that the prior parties were absolutely discharged by what took place at the Chicopee Bank on the 18th; that where a bill is accepted payable at a particular bank, the bank need not seek the acceptor, but that there must still be a presentment in order to charge prior parties; that the presence of the bill at the bank, ready to be delivered to the acceptor upon his tendering payment, was equivalent to a presentment, but that if the bill is not at the bank on the day of payment, ready to be delivered as aforesaid, there is a failure of presentment, and the prior parties are discharged, although the acceptor made no attempt to pay; that in this case, therefore, the prior parties could not be held by any notice of whatever description, whenever or by whomsoever given, and that if the loss or mislaying of the bill during the whole of the 18th was owing to the negligence of its cashier, the Chicopee Bank was liable for the amount of the note.

After the charge was fully delivered, the court was asked by the counsel of the Chicopee Bank to instruct the jury as to the burden of proof. This the court refused to do, considering that it had already sufficiently instructed the jury.

The verdict and judgment were accordingly for the plaintiffs.

Page 75 U. S. 648

MR. JUSTICE NELSON delivered the opinion of the Court.

The case was put to the jury whether or not the loss of the bill, and consequent inability of the collection bank to take the proper steps against the acceptors to charge the prior parties, was attributable to negligence and want of care on the part of the Chicopee Bank, and that if it was the bank was responsible. The jury found for the plaintiffs.

In cases where the drawee accepts the bill, generally, in order to charge the drawer or endorser, the holder must present the paper, when due, at his place of business, if he has one, if not, at his dwelling or residence, and demand payment, and if the money is not paid, give due notice to the prior parties. If he accepts the bill, payable at a particular place, it must be presented at that place and payment demanded. In these instances, as a general rule, the bill must be present when the demand is made, as in case of payment the acceptor is entitled to it as his voucher. When the bill is made payable at a bank, it has been held that the presence of the bill in the bank at maturity, with the fact that the acceptor had no funds there, or, if he had, were not to be applied to payment of the paper, constitute a sufficient presentment and demand, and if the bill is the property of the bank, the presence of the paper there need not be proved, as the presumption of law is that the paper was in the bank, and the burden rests upon the defendant to show that the acceptor called to pay it. [Footnote 1]

Page 75 U. S. 649

In the present case it is argued that the bill was in the Chicopee Bank at the time of its maturity, and, as the acceptors had no funds there, a sufficient presentment and demand were made, according to the law merchant. It is true the bill was there physically, but within the sense of this law it was no more present at the bank than if it had been lost in the street by the messenger on his way from the post office to the bank and had remained there at maturity, and this loss, which occasioned the failure to take the proper steps, or rather, in the present case, to furnish the holder with the proper evidence of the dishonor of the paper, so as to charge the prior parties and enable him to have recourse against them, is wholly attributable, according to the verdict of the jury, to the collecting bank. In the eye of the law merchant, there was no presentment or demand against the acceptors, and as a consequence of this default, the holder has lost his remedy against the drawer and endorser, which entitles him to one against the defendant. The radical vice in the defense being the failure to prove a presentment and demand upon the acceptors at the maturity of the bill, the question of notice is unimportant.

But if it had been otherwise, the notice itself was utterly defective. That relied on is the answer of the defendant to the telegram of the plaintiff of the 20th February, which was that the bill had not yet been received. This was after its maturity, and it simply advised the holder and payee endorser, to whom the information was communicated the same day, that the drawer and endorser were discharged from any liability on the paper. It showed that the proper steps had not been taken against the acceptors to charge them.

Some criticism is made upon the refusal of the court below to charge as to which side the burden of proof belonged in respect to the question of negligence and want of care after the paper came into the hands of the defendant. No objection is taken to the charge itself upon this question,

Page 75 U. S. 650

and indeed could not have been, as the point was submitted to the jury as favorably to the defendants as could have been asked. We think the court, after having submitted fairly the evidence on both sides bearing upon the question, had a right, in the exercise of its discretion, to refuse the request.

If, however, the court had inclined to go further and charge as to the burden of proof, it should have been that it belonged to the defendant. The loss of the bill by the bank carried with it the presumption of negligence and want of care, and if it was capable of explanation so as to rebut this presumption, the facts and circumstances were peculiarly in the possession of its officers, and the defendant was bound to furnish it. Where a peculiar obligation is cast upon a person to take care of goods entrusted to his charge, if they are lost or damaged while in his custody, the presumption is that the loss or damage was occasioned by his negligence or want of care of himself or of his servants. This presumption arises with respect to goods lost or injured, which have been deposited in a public inn or which had been entrusted to a common carrier. But the presumption may be rebutted. [Footnote 2]

Judgment affirmed.

[Footnote 1]

Chitty on Bills, p. 365a, 353, Springfield ed. 1842; 1 Parsons on Notes and Bills, pp. 363, 421, 437; Byles on Bills, p. 251 and note; Fullerton v. Bank of United States, 1 Pet. 604; Bank of United States v. Carneal, 2 Pet. 543; Seneca Co. Bank v. Neas, 5 Denio 329; Bank v. Napier, 6 Humphry 270; Folgar v. Chase, 18 Pickering 63.

[Footnote 2]

Dawson v. Chamney, 5 Q.B. 164; Coggs v. Bernard, 2 Lord Raymond 918; Day v. Riddle, 16 Vt. 48; 1 Phillips on Evidence, Cowen's & Hill's Notes, p. 633.

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