John S. Dickerson et al., Appellants, v. Charles Wason et al., Respondents

John S. Dickerson et al., Appellants, v. Charles Wason et al., Respondents. The property in business paper received for collection by one engaged in the business of banking and collection, and forwarded by him to his correspondent in the usual course of such business, without any express agreement in reference thereto, does not become vested in the correspondent, although he may have remitted upon general account, m anticipation of collections. It is only where by express contracts, or well established course of dealing, the correspondent becomes responsible for the collection, and cannot seek reimbursement of advances, in case of the non-payment of the paper, that he can retain it or the proceeds of the collection, as against the real owner. (Argued February 1, 1872; decided February, 6, 1872.) Appeal from judgment entered upon order of the General Term of the Supreme Court in the first judicial district, overruling plaintiffs’ exceptions, and ordering judgment upon verdict in favor of defendants. On the 21st of July, 1863, plaintiffs were the owners of a promissory note, made by E. P. Myers, of Cleveland, for $316.45, payable to the order of L. A. Garner, and by him indorsed in blank. This note matured Aug. 27, 1863. On the 21st July, plaintiffs indorsed the note, and deposited it with Van Saun & Son, in New York city, for collection. On the next day, Van Saun & Son sent it in a letter to Wason, Everett & Co., the defendants, stating, “inclosed we hand you for collection * * * and when paid, remit proceeds in draft on New York,” etc. “Protest if not paid.” “ Please report collection by numbers.” The note thus inclosed was indorsed by Van Saun & Son, as follows: “ Pay Wason, Everett & Co., or order, for collection.” It was received by the defendants about July 24, and collected at maturity. On this day the defendants heard that Van Saun & Son had stopped payment. They never remitted to them the proceeds of this note, nor any other money after the 27th August, the day it was paid. Defendants had, however, prior to this date, sent to Van Saun & Son, August 12th, $572.73; August 14th, $1,049.60; and August 18th, $155.22. Between August 11th and 25th, inclusive, Van Saun & Son had sent the defendants paper for collection in various amounts. And when the former stopped payment, the defendants were indebted to them in account current in the sum of $5.82, after charging themselves with the proceeds of the note in question. The defendants did not credit this note to Van Saun & Son until it was paid. Nor had they made any arrangement to take the note or to buy it at any price, before maturity. The remittances made to Van Saun & Son by the defendants were of paper received from their customers in the course of their business, and payable in Hew York. They were made “ as a general remittance on account current.” Defendants knew that Yan Saun & Son’s business included that of making collections, and theirs was the same. The court directed the jury to find a verdict for defendants, to which plaintiffs’ counsel duly excepted; exceptions were ordered to be heard at first instance at Special Term; judgment meanwhile suspended. A. WaJcemam, for appellants. Defendants could make no valid claim to note without showing that they parted with value for it in good faith and without notice. (McBride v. Farmers’ Bank, 26 N. Y., 450; Com. Bank v. Marine Bank, 1 Trans. Appeals, 302.) The indorsement was notice of plaintiffs’ claim. (Sigourney v. Lloyd, 8 B. & C., 622.) The course of business did not authorize the taking and application upon account. (Van Namee v. President, etc., Bank of Troy, 8 Barb., 312; 26 N. Y., 450, 455; Warner v. Lee, 2 Seld., 144; Sweeney v. Easton, 1 Wall., 166.) A. P. Pyett for respondents. Plaintiffs failed to make a case. (3 Seld., 459; 1 Kern., 203; 8 Ohio [U. S.], 465.) Defendant having remitted in anticipation of collection, had the right to retain proceeds. (Gordon v. Kearney, 8 Ohio, 572; Am. Law Mag., March, 1864.) [MAJORITY — Folger, J.] Folger, J. The plaintiffs never in fact parted with the ownership of the note to Yan Saun & Son; but, by their indorsement of it, they did give the apparent title of it to Yan Saun & Son. It is the law in this State that where persons in the business of banking and collecting send to their correspondents or agents, in the regular course of business of receiving and sending notes between them for collection for mutual account, business paper received from customers for collection, the agent or correspondent acquires no better title to it or to its proceeds than was owned by the one transmitting it, unless there is a hona fide purchase of it for value or advances made upon it in good faith, without notice of any defect in the title. (See McBride v. Farmers’ Bank, 26 N. Y., 450; Com. Bank v. Marine Bank, 1 Trans. App., 302.) If the property in the note, without purchase or advance, is to vest in an agent or correspondent for collection, he must become absolutely responsible to his principal for the amount. (Scott v. Ocean Bank, 23 N. Y., 289.) An obligation to become thus responsible can be established only by a contract to be expressly proven or inferred from an unequivocal course of dealing. (Id.) There was in the case in hand no express contract as to this note. On the contrary, one of the defendants testifies that they “ never made any arrangement with Van Saun & Son to take the note, nor to buy it at any price.” Hor can it be inferred from the unequivocal course of dealing between them, that the defendants were to become responsible for the amount of it. The note was never credited to Van Saun & Son by the defendants. It was held by them until the day of its maturity, when it was paid by the maker, and the money received was credited, and for that money the defendants became responsible. Ho note was ever credited in any way until payment made, and then the avails were credited. It is true that the defendants had sent forward to Van Saun & Son drafts for the defendants’ credit, and that they were sent in anticipation of collections; but no remittance was in anticipation of the collections of any particular note, even if such remittance would have availed to defendants’ benefit. The drafts were sent, to be put to the credit of the defendants as a general remittance in account current. It is not to be inferred from the course of business between Van Saun & Son and the defendants, as shown by the testimony, that had the maker of this note refused or omitted to pay the same, and Van Saun & Son had continued solvent, the defendants would have been obliged' to seek their reimbursement for remittances made, from the maker and indorsers of the note. The note would have been protested, according to the direction to that effect, contained in the letter in which it was transmitted for collection, and the defendants would have sought from Van Saun & Son immediately, payment of any balance of indebtedness. It cannot be held then, in view of the decisions above cited, that from this course of dealing the defendants became the owners of such notes as were in their hands at the time of the failure of Van Saun & Son, or of the proceeds of such as had been paid, to which notes or proceeds Van Saun & Son had no title as against their principals, the real owners. The judgment appealed from should be reversed, and a new trial ordered, with costs to abide the event. All concur. Judgment reversed.