N. Y. Superior Court.-H. C. Bower, et. al., agst. Z. Newell, and others.

. IV. In relation to the motion for three per cent. damages under the statute, the plaintiffs are in this dilemma: if the instrument is considered a mere check, the statute does not give them any damages; if it is held to be a bill of exchange, they are not entitled to anything.

No such claim was made on the trial.

V. The motion for judgment should be denied, and judgment ordered for the defendant.

By the Court. DUER, J.-It appears very clearly, from the opinion of Mr. Justice Johnson, with a certified copy of which we have been furnished, that our former judgment in this case was reversed by the Court of Appeals, upon the single ground, that upon the report of the Referee, the case was not distinguishable from that of Woodruff v. The Merchants' Bank, in which the judgment of the Supreme Court was affirmed in the Court of Errors. (25 Wend., 673. 6 Hill, 172.) The learned Judge expressly says, that in accordance with that decision the usage which was proved before the Referee, ought to have been excluded.

It is certain, however, that the usage which was offered to be proved in Woodruff v. The Merchants' Bank, being confined to the banks of this city, was strictly local, nor do we at all doubt that it was upon this ground that the evidence was rejected.

The character of the usage excluded the presumption that the contract of the parties was made in reference to its existence, and it is familiar law, that it is only when this presumption is raised that the usage is binding. When a usage applicable to the contract is general, the knowledge of the parties and their intention to adopt the usage are inferred from the mere fact of its existence, but to bind them by a local usage, their knowledge of its existence and their intention to follow it, are not inferred, but must be established by direct or circumstantial proof. (Gabay v. Lloyd, 3 Bing., 793. Palmer v. Blackburne, 1 Bing., 61. Kingston v. Knibbs, 1 Camp., 505.) In Woodruff v. The Merchants' Bank, no such proof was given, or

offered.

It seems to us a necessary conclusion, that the Court of Appeals in referring to the decision in Woodruff v. The Merchants' Bank, as a controlling authority, must have regarded the usage which was proved before the Referee as merely local, and in reality confined to the bank on which the check in question was drawn. It is only on this supposition, that this decision as bearing upon the question of usage, could with any propriety be referred to at all. The Referee had stated in his opinion, which was before the Court, that the parties were bound by the usage of the Thompson Bank, upon which the check was drawn, and it is this opinion, as we are persuaded, that the Court of Appeals in declaring that its own judgment was conformed to that of the Supreme Court, and of the Court of Errors in Woodruff v. The Merchants' Bank, meant to overrule. It is true, that the usage

N. Y. Superior Court.-H. C. Bower, et al., agst. Z. Newell, and others.

proved before the Referee was far more extensive than that upon which he rested in part his decision, but the opinion of Mr. Justice Johnson shows that the fact was overlooked.

The usage as now proved upon the trial which the Court of Appeals directed, is general, in the broadest sense of the term. It embraces all the banks of Connecticut, their dealers and customers, and its existence and prevalence are established by evidence which has not been controverted, and seems incontrovertible. We cannot hesitate to say that the usage, as general, is conclusively proved.

The legal effect of the usage now proved, has not been declared by the Court of Appeals, and we are therefore at liberty, and are bound to declare it, in conformity to our own views of the existing law .And it is our deliberate and fixed opinion that the law is settled-settled by decisions far too numerous to be quoted-that the interpretation of a mercantile contract is in all cases governed, and controlled by usage, (4 Term R., 216,) where the usage justifies the presumption that the contract was made in reference to its existence; and that this presumption always exists when the usage proved is general, definite, uniform, and notorious. In all such cases it is the duty of judges to give that construction to the agreement of the parties which the usage requires, however widely this construction may differ from that, which in the absence of such proof, the terms of the instru ment, or the rules of law, would constrain them to adopt. Convinced that such is the law, we cannot do otherwise than hold, that in this case the evidence of usage was properly admitted; that it proves that the check in suit was not entitled to days of grace, and that consequently it was duly protested, and the defendant Newell, by notice of the protest, duly charged as an endorser.

Notwithstanding the confidence, as well as ingenuity with which the able counsel for the defendant enforced his argument, we cannot believe that the Court of Appeals intended to give its sanction to the doctrine upon which he insisted, namely, that evidence of a usage can never be admitted to vary that interpretation of a written contract which the court would otherwise adopt, or to supersede the application of a rule of law, by which its decision would otherwise be governed. Had such been the rule, it is manifest that days of grace would never have been allowed; and were the doctrine now to be admitted, it would follow that evidence of usage must hereafter be rejected in a vast majority of the cases in which it has been hitherto received. That the Court of Appeals has given its sanction to an innovation so extensive and perilous as this, is a supposition that we are bound to reject. The attention of that high tribunal may not have been fully directed to the cases to which I refer; but that in the exercise of an arbitrary discretion it meant to condemn and overrule them, it is impossible to believe. In all the cases that I shall quote, (to which a large addition might readily be made,) it will be found, upon examination, that the effect of the evidence of usage has been to vary, and vary materially, that which would otherwise have been deemed the legal construction of the contract. In some of the cases

*

N. Y. Superior Court.-H. C. Bower, et al., agst. Z. Newell, and others. the usage effects the change by adding its own terms to those of the contract; in others, by giving a different meaning to the words of the contract, and in many by superseding a rule of law, that the court would otherwise have been bound to follow, and apply (Scott vs. Bourdillon, 2 Bos. & Pull. 215; Uhde vs. Walters, 3 Camp. 16; Robertson vs. Clarke, 1 Bing. 445; Astor vs. Union Ins. Co., 7 Cow., 202; Mason vs. Skurray, 1 Mars. on Ins., 226. (In this case Lord Mansfield said, "Every man who contracts under a usage, does so, as if the usage were inserted in the contract in terms.") Brough vs. Whitmore, 4th Term R. 206; Da Costa vs. Edmonds, 4 Camp., 142; Ross vs. Thwaite, 1 Park on Ins., (Hildyard Ed.) 23; Gould vs. Oliver, 2 Scott, 252; Same vs. Same, 4 Bing. N. Ca., 134; Coit vs. Com. Ins. Co., 7 John., 383; Allegre vs. Mary. Ins. Co., Harr & John, 408; Turney vs. Etherington, 1 Burr., 348; Pelly vs. Roy. Ex. As. Co., id. 341; Noble vs. Kennoway, Doug., 510; Salvador vs. Hopkins, 3 Burr, 1707; Gregory vs. Christie, 1 Park, by Hildyard, 104; Farquharson vs. Hunter, id. 105; Moxon vs. Atkyis, 3 Camp., 200; Gracie vs. Mar. Ins. Co., 8 Cranch., 75; Coggeshall vs. Amer. Ins. Co., 3 Wend., 283; *Long vs. Allen, 2 Park., 797, 4 Doug., 276; *Newman vs. Cazalet, Park.; Vallance vs. Dewar, 1 Camp., 503; Kingston vs. Knibbs 1 Camp., 500; *Bond vs. Gonzales, Salk. R., 445; *Gordon vs. Morley, 2 Strange, 1264; *Enderly vs. Fletcher, 2 Park., 646; *Ougier vs. Jennings, 1 Camp., 505; *Palmer vs. Blackburne, 1 Bing., 61; Planch vs. Fletcher, Doug., 251; Eyre vs. The Mar. Ins. Co., 5 Sergt. and Watts, 116. (The usage proved in this case was directly opposed to the construction which the same court had previously adopted, 6 Whar., 249, and Sergeant, J., said, "We are not able to distinguish this case from the numerous cases decided in which proof of a usage had been admitted to vary and control the language used in a policy, and to give a construction different from that which it would otherwise have received.) Stewart vs. Aberdeen, 4 Mees. and Wells, 211; *Halsey vs. Brown, 3 Day, 346; *Rennie vs. Bk. of Columbia, 9 Wheat., 482; *Lenox Bank vs. Page, 9 Mass., 158; *Jones vs. Fales, 4 Mass., 252; *Holderness vs. Collinson, 7 B. and Cres., 212; *Seaman vs. Gordon, 8 Carr. and P., 392; Gillan vs. Simpkin, 4 Camp., 241; *Scordet vs. Brodie, 3 Camp., 253; Mills agt. Bank U. States, 4 Wheat., 430; *Bank of Washington vs. Triplett, 1st Peters, 3; and * Chicopee Bank vs. Eager, 9 Metcalf, 583; *Buffalo Commercial Bank vs. Kortright, 22 Wend., 348; * Allen v. Mer chants' Bank of N. York, 15 Wend., 486; S. Ć. in Error, 22 Wend., 218. In this remarkable case the judges of the Superior Court, of the Supreme Court, and the Court of Errors, were all of opinion that the construction which the law would otherwise give to a contract between a bank and one of its dealers may be set aside by proof of an opposite usage.)

No rule of law, we readily admit, is better established, or rests upon more solid foundations, than that which forbids the introduction of parole evidence, to alter or vary the terms or legal import of an agreement in writing.

N. Y. Superior Court.-H. C. Bower, et al., agst. Z. Newell, and others.

Nor is there any rule where its scope and meaning are properly apprehended, Judges should be more anxious to maintain and enforce. It is a mistake, however, to suppose (as the observations of Mr. Jus tice Thompson in Rennie v. Bank of Columbia, have clearly shown, 9 Wheat. 587) that this salutary rule is violated by the admission of the evidence of usage to control the interpretation of a mercantile contract. The evidence is introduced, not to vary, but to ascertain, the legal import of the agreement by ascertaining the sense in which the parties meant it should be understood and carried into effect. The usage when so proved as to justify the presumption that the contract was made in reference to its existence, becomes a part of the contract, with the same effect as if it were inserted in terms. Had the words, "without grace," followed the order of payment in the check in suit, the legality of the protest, and consequently the liability of the defendant would never have been doubted. The judgment of law upon the evidence before us, is that these important words are a part of the check, and are just as binding upon the maker, the indorser, and the bank, as if expressed upon its face. The usage inserts the words, and the law makes it our duty to give effect to the insertion.

It is this consideration, that a general and established usage, is an integral part of every contract which its terms embrace, that explains and justifies the decisions in which the evidence has prevailed to set aside a rule of law, by whichthe interpretation of the contract, and the rights of the parties, would otherwise have been governed. As "modus et conventio vincunt legem," the right of the parties by a positive stipulation to prevent the application of a rule of law, by which their rights and liabilities under their contract would otherwise be determined, is undoubted, and as a general usage is held to afford the same evidence of the intentions of the partics, as express words, it must necessarily have the same effect. A rule of law at variance with the usage is not applied, for the conclusive reason, that the parties have agreed that it shall not be. And proof of the usage proves their agreement.

The consent of the parties is the origin of every usage. When the frequency of this consent has created a general and uniform usage, its expression is no longer deemed to be necessary, and then the law from its just regard to the real intentions of the parties, knowing that the consent was meant to be given, supplies its expression.

It is not to be denied that in a few cases judges have held the language, that a usage, however general, uniform and notorious, inconsistent with an established rule of commercial law, is wholly void, and consequently that evidence of its existence in such a case ought never to be received. It would, perhaps, not be difficult to show that this language has originated in a misconception of the grounds, and true import of the decision of the King's Bench in (Edie vs. The East India Co., 2 Burr, 1216); vide 1 Duer on Jus., p. 361-2, note xxii. But it is deemed sufficient to say that the doctrine which it asserts is expressly contradicted and overruled by a series of decisions reaching back more than a century, continued to the present day, and occurring

N. Y. Superior Court.-H. C. Bower, et. al., agst. Z. Newell, and others. nearly in every branch of commercial law. In most of the cases which I have cited, marked with an asterisk, a rule of law, that must otherwise have controlled the decision, was set aside by a proof of an opposite usage, and in all the admissibility of such evidence to prevent the application of a rule that would otherwise be followed, is plainly declared.

If prior adjudications are evidence of the law which we are bound to declare, those which I have stated press upon our judgment and conscience with an accumulated force, which we are unable to resist. Upon the authorities, therefore, as well as upon principle, we must hold that every rule of law which the parties to a contract may set aside by an express stipulation, is liable to be superseded by an hostile usage, and that it is only when an express stipulation, as an illegal contract, would be void, that proof of a corresponding usage can be justly excluded.

The propositions I have stated are general; but it seems to us there are special reasons, amounting to a special necessity, for holding that the interpretation which judges are bound to give to an order upon a bank depends wholly upon the evidence of usage. As a general rule, when monies are deposited in a bank, there is no express agreement between the depositor and the bank, and in the absence of such an agreement, we think it cannot be doubted, that the contract which the law implies is, that the orders for payment, the checks of the depositor upon his funds, shall be honored and paid according to the established and known custom of the bank in its relations with other dealers. Hence proof of the usage must be admitted in order to show the terms of the contract, a contract which from its nature embraces every future payment, that upon checks in the usual form, the bank may be required to make. Where, therefore, the usage proves that an allowance of grace has never been claimed by the bank upon checks in the ordinary form, even when payable upon a future day, but that invariably such checks have been paid or protested on the specified day, it will be the duty of the court to say, that the parties agreed that no grace should be allowed upon the particular check in controversy, and that this agreement is binding upon all to whom knowledge of the usage may be justly imputed.

It follows from these observations that this case is very plainly distinguishable from that of Woodruff vs. The Merchants' Bank. The order in that case was not a check in the ordinary form which the implied contract between the drawer and the bank might reasonably have been construed to embrace. It was not a check payable at the counter of the bank upon which it was drawn, but by its terms required the payment to be made at a bank in this city. To create an obligation to make the payment so required, an acceptance by the bank, on which the check was drawn, was indispensable; and as this necessity was apparent upon the face of the draft, it was upon its face not a check, but a bill of exchange, and, as such, subject to the rules by which bills of exchange, as distinguished from checks, are known to be governed. It is evident from the opinion furnished to us that