Allen v. Merch. Bank of New-York. ERROR from the supreme court. This was an action of assumpsit, brought in the superior court of the city of NewYork by S. & M. Allen against the bank, to recover the amount of a bill of exchange, drawn in New-York on a mercantile house in Philadelphia, and deposited by the plaintiffs with the Merchants' Bank in New-York for collection, which was lost to the plaintiffs in consequence of the omission to give notice of non-acceptance to the endorsers. On 26th June, 1830, F. I. Spooner, at the city of New-York, drew a bill of exchange on Messrs. Boller & Baker, of Philadelphia, for $600, payable five days after date to his own order. He endorsed the bill to James M. Gould, who sold it to the plaintiffs and endorsed his name upon it. The plaintiffs, on the day of its date, deposited the bill for collection with the Merchant's Bank, who sent it to the Philadelphia Bank in the city of Philadelphia. On 28th June, the Philadelphia Bank delivered the bill to its notary, who, on the same day, presented it to the drawers for acceptance, which being refused, he noted the bill for non-acceptance, and returned it to the bank, but omitted to give notice of non-acceptance to the endorsers of the bill. On Saturday, the third day of July, it was again delivered to the notary, to be presented for payment; it was presented, and payment being refused, the notary protested the bill and sent notices of non-payment per mail, under cover, to the cashier of the Merchant's Bank, directed to the drawer and the Messrs. Allen. On the sixth of July, the Messrs. Allen received the notice of non-payment, and on the seventh gave a similar notice to Gould, the endorser. The plaintiffs brought a suit against Gould, and failed, on the ground of want of notice to him, of the non-acceptance of the bill, and they then commenced their suit against the Merchants' Bank, claiming to recover the amount of the bill, and the costs and charges of the suit against Gould, notice of that suit having been given to the Merchant's Bank, and their aid requested in the prosecution. The plaintiffs proved that Gould held securities in his hands deposited with him by Spooner to ensure the payment of the bill, which he surrendered after sufficient time had elapsed Allen v. Merch. Bank of New-York. Spooner became in to receive notice of non-acceptance. solvent on the second day of July. The plaintiff's attempted to prove a usage or custom in the city of New-York that when the banks there receive a bill or note for collection, payable out of the city, they become responsible for the diligence of the banks to which they transmit the bill or note, and also for that of the agents employed by such banks in the taking of the necessary measures to charge the parties to the bill or note, in case of its dishonor. They accordingly called a number of merchants and brokers, who testified that such was their understanding of the matter, and such their opinion as to the obligation iucurred by the banks. On the other hand, a number of officers of the banks in the city of New-York testified that such was not the understanding of the banks; that the receiving of negotiable paper, payable out of the city, for collection, was deemed a favor to the customers of the banks; and that the only obligation incurred by the banks in such cases was, to transmit the paper to proper agents in due season for collection. The plaintiffs, wholly failed to prove any thing like a usage or custom recognized by the banks, by their acknowledgement of liability and payment of losses incurred through the want of diligence of the banks to which negotionable paper was transmitted, or the want of diligence of the agents employed by such banks. On the part of the defendants, it was proved that the Bank of Philadelphia, and the notary employed by it, were distinguished for punctuality and diligence in the transaction of business; and further, that by the law merchant of Pennsylvania, it is not necessary to present a bill or note like the one in question for acceptance, and to give notice of non-acceptance, for the purpose of charging the parties to such bill or note; that it is sufficient if it be presented at inaturity for payment, and if not paid, that notice of nonpayment be given. Mr. Justice Oakley charged the jury, that the defendants, upon general principles of law, and independent of any custom or usage, or of any agreement, express or implied, were only bound to transmit the bill to Philadelphia in due time. and to some competent agent; and were not liable for any VOL. XXII. 28 Allen v. Merch. Bank of New-York. negligence or omission of such agent in giving notice of the non-acceptance of the bill. That it was the duty of the jury to inquire whether such usage or custom existed in the city of New York as was alleged on the part of the plaintiffs, and in weighing the evidence which had been given, they must distinguish between a usage or custom, and any general understanding on the subject, which prevailed among men of business in the city; that to establish the usage or custom claimed by the plaintiffs to exist, it must appear that the practice of the banks had been generally in conformity to such alleged usage, and for so long a period as to have become generally known; that it did not appear to him, from the evidence, that there had been any such practice on the part of the banks, as no case of the kind had before occurred; but it was for them to determine whether any such practice or usage existed. If they should find that such usage or custom did not exist, they would then inquire whether there was any mutual understanding or any agreement between the defendants and their dealers generally, or between them and the plaintiffs particularly, that they were or would be responsible for the sonduct of the bank or notary abroad in cases of this kind; that if they should find that no such understanding or agreement existed, then the defendants were not liable, although the jury should find that a general and notorious understanding existed among men of business in the city of New-York that the banks there were responsible in the manner claimed by the plaintiffs. To this charge the plaintiffs excepted. The jury found for the defendants, on which judgment was entered. The plaintiffs removed the record into the supreme court, where the judgment of the superior court was affirmed. See the opinion of the court delivered by the Chief Justice, 15 Wendell 486, et seq. The plaintiffs thereupon sued out a writ of error, removing the record into this court. H. E. Davies, for the plaintiffs in error, insisted that the Merchant's Bank, by receiving the bill for collection, assumed the duty of giving notice of non-acceptance, and was responsible for the omission of the agent employed by the Allenn v. Mech. Bank of New-York. Philadelphia Bank. In support of this proposition, he cited Van Wert v. Woolley, 3 Barn. & Cres. 439. He contended that the case of The Bank of Washington v. Triplett & Neale, 1 Peters, 50, did not support the decision of the supreme court of this state, inasmuch as there the draft was left with the Alexandria Bank, only for transmission and not for collection. He also insisted that the evidence fully proved a usage rendering the defendants liable, and that the evidence of such usage was properly received. H. P. Edwards & G. Wood, for the defendants in error, insisted upon the following points: I. The defendants in error, having selected, a foreign bank in Philadelphia, in good general credit, are not responsible for the alleged default or omission in question in this cause, by the established and uniform usage in regard to the banks in the United States, recognized by judicial decisions. Bank of Washington v. Triplett and others, 1 Peter's R. (U. S. Supreme Court,) 30. Stone and others v. Cartwright, 6 T. R. 411. Smedes v. Utica Bank, 20 Johns. R. 384. Woolrych's Commercial Law, p. 320. II. The Bank of Philadelphia, (and a fortiori, the defendants in error,) is not liable for the default of its notary in a particular case, where (as in the present case,) his general character is good, and the bank is in no default in the selection and continuance of the officer. Smedes v. Utica Bank, 20 Johns. R. 384. III. The notary was not guilty of any negligence or misfeasance in omitting to give notice of the non-acceptance of the bill in question-it not being required by the common law, as interpreted in Pennsylvania. A bailee is required to use only the same diligence which a prudent man would use in his own concerns, and is not answerable for mistakes of law in doubtful cases, which, with ordinary care, could not be avoided. Baike v. Chandles, 3 Camp. N. P. 17. IV. The judge, who presided at the trial of this cause, was warranted in charging the jury that, upon general prin 1 Allen v. Merch. Bank of New-York. ciples of law, the Merchants' Bank was only bound to transmit the bill in question, in due time, to a competent agent in Philadelphia; and was not liable for any neglect or omission on the part of such agent, in giving notice of the non-acceptance of the bill. V. There is no special usage in the city of New-York, creating a liability repugnant to the foregoing principles. VI. The opinions of men of business, dealers with banks in the city of New-York, as to the true legal construction of a contract or transaction, cannot alter the legal operation thereof. Trott and others v. Wood. 1 Gallison's R. 444. Smith and others v. Wright and others, 1 Caines, 43, 45. VII. Although the opinion or understanding of dealers in a trade, as to the meaning of terms, or other matters relating to their business, which are constantly occurring in practice, may be evidence of such practice, and consequently of their usage; yet their abstract opinion in relation to a legal liability which has never been enforced or submitted to in practice, is no evidence of usage. VIII. If general opinion or understanding, as to what the law is, constitutes a usage or practice, sufficient to establish the law, then the usage in question is established in favor of the defendants in error; inasmuch as it is the usage of the banks in cases of doubt or difficulty, which guides the court in settling the law. Renner v. Bank of Columbia, 9 · Wheat. 581. Mills v. Bank of the U. States, 11 id. 431. Bank of Washington v. Triplett and others, 1 Peters, (U. S.) 25. S. A. Foot, in reply. The Merchants' Bank by receiving the bills for collection, are deemed in law to have promised to do all such acts, as should become necessary to enable the owners of the bill to enforce their remedy against the parties thereto. Admitting the plaintiff's knew the ordinary course of business to be that the bank here would send the bill to its correspondents in Philadelphia to have it presented for acceptance and payment, the employment of such agents, was the act of the bank, which became responsible for the diligence and fidelity of its agents. The owners of |