National Bank of Newburgh v. . Smith , 66 N.Y. 271 ( 1876 )

When the note in suit was protested and the liability of the defendant as indorser fixed, there were no funds appropriated for the payment of the same. The general deposit of money afterwards without regard to the note did not, of itself, operate as a payment. On the contrary, as there was no agreement that the money deposited was to be appropriated for such a purpose, the act itself indicates that there was no intention by the depositor or the plaintiff to apply it upon the note. The subsequent disposition of the money, without any objection, confirms the inference that there was no design thus to appropriate it. If such had been the intention no reason exists why a check should not have been given for the amount of the note in suit and the note taken up or at least a charge made for the same upon the maker's account. In the absence of any express directions or an agreement to that effect, it was optional with the bank whether it should apply the money or not upon the note in suit, and it was under no positive legal obligation to do so. (Marsh v.Oneida Central Bank, 34 Barb., 298; Pitts v. Congdon, 2 Comst., 352; Beardsley v. Warner, 6 Wend., 611.)

The question is not presented whether the rights of the parties would have been changed, if the maker of the note had to his credit on account sufficient to meet the note when it matured, and the authorities cited on this subject, therefore, have no application.

The note having been duly protested and no act done by the plaintiff, which discharged the liability of the indorser, the judgment must be affirmed.

All concur.

Judgment affirmed.