Where a note was given in the District of Columbia on the 11th
of March, payable sixty days after date, and notice of its
nonpayment was given to the endorser on the 15th of May, being
Monday, the notice was not in time.
Although evidence was given that since 1846, the bank which was
the holder of the note, had changed the preexisting custom, and had
held the paper until the fourth day of grace, giving notice to the
endorser on Monday, when the note fell due on Sunday. This was not
sufficient to establish an usage.
An usage, to be binding, must be general as to place, and not
confined to a particular bank, and in order to be obligatory must
have been acquiesced in and become notorious.
It was an action of assumpsit brought by Adams, the plaintiff in
error, upon a promissory note drawn by Haw, Yellott & Company,
in favor of Philip Otterback, the defendant in error, and
discounted by the Bank of Washington. The proceeds of the
discounted note were paid by the bank upon the check of Otterback.
After the note had been protested for nonpayment and notice of
protest had been given to the endorser, it was assigned to Adams,
the plaintiff in error.
On the trial of the cause, the plaintiff gave in evidence the
note, the handwriting of drawers and endorser being admitted, and
proved that the note was discounted on the 11th of March, 1848, the
day of its date, and the proceeds paid on defendant's check; that
the note which was payable at sixty days was unpaid at maturity,
and was delivered to George Sweeny, a notary, on Monday, the 15th
day of May, 1848, after 3 o'clock, who on that day demanded
payment, which was refused, and thereupon, on the same day, he
delivered a notice for the endorser at his dwelling.
The plaintiff also gave in evidence by the teller and bookkeeper
of the bank that after the decision of the case of
Cookendorfer
v. Preston, and about two years prior to the date of the note
in controversy, the bank changed the custom which had previously
prevailed in regard to the demand and protest of negotiable
discounted notes held by the bank, and that in all cases of
discount they had up to that time held the paper until the fourth
day of grace; and by the change, if that fourth day of grace
happened to fall on Sunday, it became the custom of the bank to
retain them till Monday, and on that day deliver the same to the
notary to demand payment and give notice. And on cross-examination
it appeared that only four instances of practice under this custom
were shown.
Page 56 U. S. 540
Upon this state of facts, the court instructed the jury that if
they should
"find the whole evidence aforesaid to be true, yet the plaintiff
has not thereby shown that he has used due diligence in demanding
payment, and giving notice of the nonpayment of said note, and is
not entitled to recover in this action."
To this instruction the plaintiff excepted, and the case was now
to be argued upon it.
Page 56 U. S. 544
MR. JUSTICE McLEAN delivered the opinion of the Court.
This action was brought on a promissory note dated 11 March,
1848, given by George W. Yellett, Henry Haw, and William B. Scott,
in the name of Haw, Yellett & Co., in which they promised to
pay to Philip Otterback, Esquire, or order, sixty days after date,
the sum of eight hundred dollars, for value received; which note,
before it became due, was assigned to the plaintiff.
The general issue was pleaded, and the cause was tried by a
jury.
The note was discounted by the Bank of Washington, the proceeds
of which were drawn by the defendant.
The following facts appear in the bill of exceptions. The note
was unpaid at maturity, and on Monday, the 15th of May, after three
o'clock of that day, was delivered by the bank to George Sweeny,
the notary employed by said bank to demand payment thereof, and for
protest if not paid. The notary stated that he demanded payment at
the United States Hotel, and was answered, "neither of the
proprietors are within, and it cannot be paid." On the same day,
notice was left at the dwelling of the endorser.
The witness further stated, that he had been teller of the bank
since the year 1836, and that after the decision of the case of
Cookendorfer v. Preston, by the supreme court, in 1846,
the said bank changed the usage and custom which had theretofore
prevailed therein, in regard to the demand and protest of
negotiable paper held and discounted by it; and in all cases of
discount they thereafter held the paper until the fourth day of
grace; and if the said fourth day fell on Sunday, it was under the
said change the custom of the bank to retain it until Monday, and
on that day to deliver the same to the notary to
Page 56 U. S. 545
demand payment and give notice, and Sylvester B. Bowman,
bookkeeper of the bank, states that since the decision of said
case, the usage had been changed by the bank, as above stated.
No notice of such change had been given, so far as the witness
knew, and it was further stated, that four cases had occurred in
which the notes becoming due on Sunday, the notice was given on
Monday. On the evidence, this Court instructed the jury that the
plaintiff had not used due diligence in demanding payment and
giving notice of nonpayment to the endorser -- to which the
plaintiff excepted.
This Court, by several decisions, have sanctioned the usages of
banks in this district, in making demand and giving notice of
nonpayment, varying from the law merchant.
Renner
v. Bank of Columbia, 9 Wheat. 587-588;
Mills v. Bank of the
United States, 11 Wheat. 430, and in some instances
where, in this respect, notes left in a bank for collection, have
been placed on a different footing from notes discounted.
Cookendorfer v.
Preston, 4 How. 324.
But these usages had been of long standing and of general
notoriety. Rights had grown up under them which could not be
disregarded without injury to commercial transactions. In the case
before us, the usage relied on, and under which notice to the
endorser was given, had been adopted by the bank two years before
the note in question was discounted, but it seems only four cases
had occurred under it. No public notice was given at the time of
its adoption, and no presumption can arise from the facts stated,
that the endorser could have had notice of the usage.
It is said, if a bank may establish a usage, it may change it;
and that there must be a beginning of acts under it. This may be
admitted, but it does not follow that a usage is obligatory from
the time of its adoption. To give it the force of law, it requires
an acquiescence and a notoriety, from which an inference may be
drawn that it is known to the public, and especially to those who
do business with the bank. It is unnecessary to consider whether a
usage adopted might acquire force from public notices generally
circulated. No such notice was given in this case.
But to constitute a usage, it must apply to a place, rather than
to a particular bank. It must be the rule of all the banks of the
place, or it cannot, consistently, be called a usage. If every bank
could establish its own usage, the confusion and uncertainty would
greatly exceed any local convenience resulting from the
arrangement.
In this country and in England, three days of grace are given by
the general commercial law, and the day the note matures
Page 56 U. S. 546
is not one of them. In Hamburg, the day the bill falls due makes
one of the days of grace. Notice must be given to the drawer or
endorser on the day the dishonor takes place, or on the next day.
If notice be given through the post office, it must be forwarded by
the first mail after the demand of payment. If the note fall due on
Sunday, under the general law, the demand of payment must be made
on Saturday.
The usage is not proved in this case. Four instances in the
course of two years are insufficient to establish a usage. Such a
rule would, in effect, abolish the commercial law, in regard to
demand and notice on promissory notes and bills of exchange. There
is ground to doubt whether any deviation from the general law has
not been productive of inconvenience.
No explanation is given why the demand of payment on the note
was made at the United States Hotel, in this city. Such a demand
would seem to be insufficient.
We are therefore of the opinion that there was no error in the
instructions of the court to the jury; the judgment of the circuit
court is therefore
Affirmed.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Columbia, holden in and for the County of Washington, and was
argued by counsel. On consideration whereof, it is now here ordered
and adjudged by this Court, that the judgment of the said circuit
court in this cause be, and the same is hereby affirmed with
costs.
