Respondents' points. Central Nat. Bank v. Valentine, 18 Hun, 417; Platt v. Chapin, 49 How., 318. Practically, all the plaintiff did in the case at bar was to take two cheque from Simmons to its own order, together aggregating the amount of the proceeds of the discount. One of these it credited as a nominal book-keeping payment to the account of John Satterlee & Co. Under the well settled law of this state such a book-keeping entry constituted no parting with value. Phoenix Ins. Co. v. Church, 81 N. Y., 218; McQuade v. Irwin, 39 Supr. Ct., 396; Burnham v. Baylis, 14 Hun, 608. But it may perhaps be urged that a different presumption as to payment arises in respect to the receipt and crediting by a bank of a cheque drawn upon itself. Conceding that such may be the fact in certain cases, the one at bar is clearly not such a case. The debit balance of the Satterlee account was produced by the act of the bank in charging against this account a cheque for $30,000 of some third party deposited by Satterlee & Co. on the 28th of January, 1890, which came back through the clearing house on the 29th unpaid. If the $21,210 cheque was intended to be accepted by plaintiff in absolute payment of anything it was the amount remaining unpaid upon this returned cheque for which it held Satterlee & Co. responsible by reason of the firm's endorsement thereof at the time of its deposit. But while nominally crediting the Simmons cheque to the unpaid balance of the Satterlee account, it took pains to hold on to the returned cheque, thereby retaining its claim against Satterlee & Co. if the Simmons cheque should not prove to be good to the bank by reason of failure of the title of the bank to the notes discounted for Simmons's account and negativing any possible presumption that the crediting of this Simmons cheque was intended to be an absolute payment of the returned cheque. The tentative character of the transaction further appears from the fact that the bank never canceled the two Simmons Respondents' points. cheques upon its iron file, according to the custom of banks respecting paid cheques, and kept these cheques also in its possession. Furthermore, there is really no evidence in the case that Satterlee & Co. ever had anything to do with this transaction. The cheque for $21,210 was payable, not to Satterlee & Co., but directly to plaintiff. That Conrad N. Jordan, who handed the cheque to plaintiff, had any authority or claimed to have any authority to represent Satterlee & Co., there is not a particle of evidence. That the bank intended to part with nothing but to hold on to everything and to its claims against everything is too apparent for dispute. The other Simmons cheque for $6,413.46 the bank, in order to make some excuse for its possession, entered as a nominal payment of three notes included in this very discount and none of which had yet matured. The utter sham character of this pretended payment is shown by the fact that the bank retained all three notes, collected one at maturity and brought suit on the other two, which suit is still pending. Although it was claimed that the commencing of this suit was a mistake, it appeared that after the discovery of the alleged mistake the suit was noticed for trial, and no offer has ever been made to surrender these notes. But if the bank had surrendered the notes under the circumstances it would have constituted no parting with value. If a bank discounts a note and passes the proceeds to the credit of its customer and then takes a cheque back from the customer for the amount of the proceeds and surrenders up the note, wherein does such surrender of the note constitute any parting with value? III. Defendant was entitled also to a direction upon the ground that plaintiff failed to prove want of notice of the character of the notes in suit. The burden was on plaintiff to prove not only that it parted with value, but that at the time it so parted with value it had no notice of the equities, Canajoharie Nat. Bk. v. Diefendorf, Opinion of the Court, by MCADAM, J. supra. If the bank parted with any value it was not at the time the discount was made, but on the 6th of February when it received the cheques. There is not a particle of evidence in the case to show that at this time the bank did not havé notice of the facts respecting this paper. The persons then in charge of the bank had certainly acquired knowledge of the rascally character of the parties who had been in possession of the bank at the time the paper was taken. IV.`Plaintiff's paying-teller was clearly right when he testified that plaintiff had parted with nothing upon the faith of the note in suit, and the judgment and order appealed should be affirmed, with costs. BY THE COURT.-MCADAM, J.-The action is on a past due promissory note for $5,000 made by the Lorillard Brick Works Company to the order of James A. Simmons and endorsed by him and by Jacob Lorillard and passed before maturity to the credit of said James A. Simmons on the books of the plaintiff. The evidence established the fact that the note was made by Lorillard in the name of the Brick Company (he being its President) and endorsed by him individually, all for the accommodation of Simmons, and that it was diverted by him from the purpose for which it was intended. This made it necessary for the plaintiff to show two things. First. That the plaintiff paid value for the paper. Second. That the plaintiff had no notice that the paper had been diverted. Comstock v. Hier, 73 N. Y., 269; Vosburgh v. Diefendorf, 119 Ib., 357; Canajoharie Nat. Bk. v. Same, 123 Ib., 191. The plaintiff proved want of notice of the diversion, and the contest narrowed itself down to the single question, whether the plaintiff paid value for the paper within the meaning of that term as declared by the courts. The mere formal discounting of the note, and passing the proceeds to the credit of Sim Opinion of the Court, by MCADAM, J. mons upon the books of the bank did not make the plaintiff a holder for value as against the accommodation maker and endorser of diverted paper. The plaintiff must have actually paid out and parted with the proceeds of the discount before it could acquire an indisputable title thereto. Central Natl. Bk. v. Valentine, 18 Hun, 417; Platt v. Chapin, 49 How., 318. The plaintiff concedes the proposition stated, but claims to have paid out the proceeds within the meaning of that term as decided by the cases of Pratt v. Foote, 9 N. Y., 463, and Mayer v. Heidelbach, 123 Ib., 332. Those cases hold substantially, that where a pre-existing debt has been actually and absolutely extinguished in consideration of the transfer of negotiable paper, the transferee is a holder for value within the rule protecting such holder against prior equities. In Pratt v. Foote, supra, it appeared that the Prattsville Bank (owned by the plaintiff) held the defendant's note for $1,000 and interest, payable to and endorsed by Samuel Scudder. That five days before the note matured, the defendant called at the bank with Scudder's check on the bank for the amount of the note and interest (payable on the day the note fell due), and proposed to the cashier that he should take the cheque and give up the note which the latter declined to do. It was then agreed that the cheque should be left, that the cashier should pin it to the note, and if Scudder's account was made good on the day both fell due, the cheque would pay the note. Five days after the note matured several sums were credited to Scudder, more than sufficient to meet the cheque, which was thereupon charged to Scudder's account, and the note posted in the bill-book and tickler as paid, and the charge of the cheque to Scudder was posted from the cash-book into the ledger. The maker of the note in that case interested himself in its payment, and could on the day the credit was made, have withdrawn, the money from the bank on Scudder's cheque, and returned it in extinguish Opinion of the Court, by MCADAM, J. ment of the note, if the bank had required him to do so, and the court held that in legal effect the same result was produced by the mode which the bank adopted. In Mayer v. Heidelbach, supra, the proposition decided, was that where a depositor in a bank, having sufficient funds standing to his credit, tenders to the bank a cheque in payment for negotiable paper it has for sale, and the bank accepts the cheque, charges it against the deposit, cancels and files it as a voucher, and delivers over the paper purchased, the purchaser is a holder for value, the antecedent debt of the bank being pro tanto actually and in fact extinguished. In the present instance, there was no agreement whereby any other obligation was to be paid with the moneys credited to Simmons, as in the Pratt case, and no delivery up of other securities as in the Mayer case. Practically all the plaintiff did in the case at bar, was to take two cheques from Simmons to its own order, together aggregating the amount of the proceeds of the discount. One of these it credited as a nominal bookkeeping payment to the account of John Satterlee & Co. (a firm in which Simmons was a member). The debit balance of the Satterlee account was produced by the act of the bank in charging against this account a check for $30,000 of some third party deposited by Satterlee & Co. on January 28, 1890, which came back through the clearing house on the 29th unpaid. While nominally crediting the Simmons cheque to the unpaid balance of the Satterlee account it held on to the return cheque, thereby retaining its claim against Satterlee & Co. if the Simmons cheque should not prove good to the bank by reason of failure of the title of the bank to the notes discounted for Simmons' account, thereby negativing any presumption that the crediting of this Simmons cheque was intended to be an absolute payment of the returned cheque. The tentative character of the |