First National Bank of Angelica v. Hall, 44 N.Y. 395 (1871)
A negotiable instrument made payable to the order of a bank cashier, as such, is deemed payable to the bank itself, and no endorsement is necessary for the bank to have the rights of a holder.
Summary
This case addresses whether a bank can be considered a holder in due course of a draft made payable to its cashier without a specific endorsement from the cashier. The Court of Appeals of New York held that a draft payable to the order of a bank’s cashier, designated as such, is legally payable to the bank itself. Therefore, no separate endorsement from the cashier is required for the bank to achieve the status of a holder in due course, provided the bank had no knowledge of defenses against the draft. This ruling confirms the principle that such instruments are treated as if they were directly payable to the banking institution.
Facts
The First National Bank of Angelica (plaintiff) received a draft payable to “Robinson, Cashier.” The bank initially refused to discount the draft without an additional name. The draft was then presented again with another name, after which the bank discounted it. The defendant attempted to argue defenses against the draft’s validity, which the bank claimed were not applicable since they were a holder in due course.
Procedural History
The trial court ruled in favor of the First National Bank of Angelica. The defendant appealed, arguing the bank was not a holder in due course due to the lack of endorsement from Robinson, the cashier. The Court of Appeals of New York reviewed the case.
Issue(s)
Whether a draft payable to the order of a bank cashier, designated as such, requires endorsement by the cashier for the bank to be considered a holder in due course.
Holding
No, because under these circumstances, the draft is deemed payable directly to the bank, and no endorsement is necessary for the bank to have the rights of a holder in due course.
Court’s Reasoning
The court reasoned that the draft’s designation “payable to the order of the plaintiff’s cashier, as such” indicated the intent to make the bank the payee. The court cited previous cases, The Bank of Genesee v. Patchin Bank and Bank of New York v. Bank of Ohio, to support the principle that instruments payable to a cashier, with the addition of