author: O’Brien, J. Van Brunt, P. J.

text:
    The People v. The St. Nicholas Bank. Hugh J. Grant, as Temporary Receiver, App’lt. In the Matter of the Petition of Levi C. Lathrop et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed April, 1894.)

    1. Banks—Deposits.
    A deposit becomes the property of the bank, and is not, in the absence , of fraud, subject to reclamation.
    2. Same—Special appropriation.
    Where there is no agreement or arrangement, express or implied, that such deposit shall be specifically appropriated or applied to the payment of any particular check or claim, there is no trust relation created between, the parties.
    3. Same—Certified checks.
    The payees of certified checks acquire no special lien upon, or equitable-assignment of, any special fund or particular portion of the assets of the bank.
    A Same—Clearing house.
    - No portion of the deposits of any day is, by its transmission to the clearing house for collection, appropriated to the payment of checks certified on that day.
    5. Same—Custom.
    The relation between the payees of checks and the bank is controlled by rules of law, and not by any supposed custom to which such payees are strangers.
    6. Appeal—Who may.
    Where the claimants, and not the receiver of the bank, apply for summary relief which is granted notwithstanding the opposition of the receiver, the latter is entitled to appeal to the general term.
    The petition upon which the order is founded recites that the petitioners, who are bankers and brokers, for some years had an account with the Saint Nicholas Bank, and that on the morning of December 20, 1893, they had on deposit to their credit in such bank $279,255.32; that on that day they delivered to the bank in checks, for deposit to the credit of their account, the sum of $86,324.40, and on the same day drew for presentation to said bank, for payment or certification, checks' to the amount of $86,-' 200.80, the certified checks alone amounting to $74,741.80.
    That the Saint Nicholas Bank did not open its doors for business on the 21st day of December, 1893, though it sent to the Clearing House for collection all the checks deposited by the petitioners, and the checks drawn against the deposits of the petitioners, including certified and uncertified, were sent by the holders thereof through their banks to the Clearing House; the intent being on the part of the Saint Nicholas Bank, and of the other banks holding checks of the petitioners, that the checks deposited by the other several banks should be paid by the checks belonging to the petitioners, drawn by other parties on other banks and delivered by petitioners to the Saint Nicholas Bank, and by that bank to the Clearing House, for that specific purpose; the effect of which would and should have been a mutual exchange, satisfaction and settlement of obligations.
    That is, the checks would have been cleared and the checks drawn by the petitioners on said bank, to the order of other parties and deposited by them in their various banks for collection, would have been paid by the checks of still other parties, to the order of the petitioners, which St Nicholas Bank had sent to the clearing house for that purpose before the superintendent of banks had closed the doors and taken possession of said bank.
    The petitioners allege that the checks referred to were their property, delivered to the bank in trust for the specific performance of the above trust.
    But the petitioners show that, instead of such exchanges, satisfaction and settlement of said respective classes of checks being permitted, as the petitioners are informed and believe, an individual member of the clearing house, without law or right or the authority of his associates, at the time wrongfully interposed and prevented the performance of said act and trust, and took and received said checks from the clearing house in the Gallatin National Bank, in trust for superintendent "of banks, and as the petitioners are informed and believe, have delivered the checks to the temporary receiver of said bank, without the authority or consent of petitioners, and against their written protest, to the Gallatin National Bank, forbidding it to so deliver said checks and requiring it to hold and supply said checks for the specific purpose for which they were so deposited.
    The petitioners further show that the clearing house thus wrongfully refused to effect the exchanges of the said the St. Nicholas Bank on that day, which exchanges the petitioners are informed and believe showed a credit in favor of said bank in the sum of .over $50,000, and that the bank was wrongfully closed on the morning of December 21, 1893, pending examination, and forbidden to transact business by order of Charles M. Preston, superintendent of banks; of which action neither any officer of said bank or either of the petitioners had notice beforehand.
    The checks that were certified as above are all now in possession of the petitioners. They either retained the possession of all such checks, of took them up for full value from the persons to whom they had delivered them.
    The affidavit in support of this petition states “ that neither said examiner nor said superintendent of banks at any time announced to the public; or to any depositor, shareholder, director, officer or employe of said bank, his purpose at any time preceding the 21st day of December, 1893 of closing said bank, nor did either said examiner or superintendent announce to anv such person, or to deponent or deponent’s firm, that he would close said bank before the morning of December 21, 1893, or that the capital of said bank was in any way supposed or alleged to be impaired, or of any other condition of said bank other than that of entire solvency, and that the bank would resume and continue business on the 21st day of December, 1893, and thereafter uninterruptedly as it had hitherto done and in the usual course of business.”
    That, misled by such conduct and silence on the part of the superintendent of banks and the examiner, the petitioners made the large deposits of money stated.
    By the answering affidavit it is shown that $478,725.88, consisting of all the checks, drafts and notes which the St. Nicholas Bank had on hand, were sent in the usual course of business to the clearing house for collection; that deposits were received on the 20th by the bank, and checks certified in the same manner as it had been the custom to do ever since the organization of the bank.
    The relief asked was that all deposits of checks made by the petitioners on December 20, or the proceeds thereof, be returned, or that the receiver be directed to pay checks, certified and uncertified, which had been drawn by the petitioners on said day. Relief was accorded to the extent of directing that the receiver pay the amount of checks certified on the 20th and which were presented to the clearing house on the 21st, and denied as to the uncertified checks.
    From such denial the petitioners appeal, and from so much of the order as directs payment of the amount of certified checks, the receiver appeals

      John M. Bowers, for the receiver; Frank J. Maiher, for petitioners.
   O’Brien, J.

The respondents claim that, upon the facts, the bank derived no legal title to any of the deposits of December 20th, 1893, and that neither the checks nor their proceeds ever became the property of the bank. We think the reasoning in the opinion of the court below disposes of this contention. As therein said:

“There can be no doubt that the checks deposited by the petitioners on the 20th day of December, 1893, became the property of the bank. Credit was given therefor in the petitioners’ pass book, and thereupon the relation of debtor and creditor arose with regard to the sum so credited. Nor can there be any doubt as to the relation of the parties with regard to certifications made by the bank upon the same day. The legal effect of such certifications was to transfer the obligation of payment to the bank. The latter then became debtor to the holders of the cheqks and its debt to the depositors was correspondingly reduced, It is true that these certifications created a legal obligation upon the part of the bank without regard to the state of the depositors’ account.”

This is a correct statement of the legal relations of the parties, and there is nothing in the case referred to by respondents óf Cragie v. Hadley, 99 N. Y., 131, which in any way destroys its accuracy. In that case, as shown by the opinion, the drafts-, for the proceeds of which the action was brought, were deposited with the bank between two and three o’clock in the afternoon of April 13fch, 1882, and were credited in the plaintiff’s pass book and on the books of the bank to, their account “The bank closed its •doors at the usual hour on that day, and never opened them afterwards. It turned out that the bank was irretrievably insolvent, •owing debts to the amount of $1,300,000, with assets not exceeding-in value 40 per cent, of its debts, and had been so insolvent for months before its failure, of which fact the president had full knowledge, and presumably its other officers and agents.” Upon these facts, and while recognizing the general doctrine “that upon a deposit being made by a customer in a bank, in the ordinary course of business, of money or of drafts or checks received and credited as money, the title to the money or to the drafts or checks is immediately vested in and becomes the property of the bank,” the opinion says: “The further rule that one who has been induced to part with his property by the fraud of another, under the guise of a contract, may upon discovery of the fraud rescind the contract and reclaim the property, unless it has come to the possession of a bona fide holder, is equally well settled.” And upon the ground of fraud on the part of the bank in receiving under the circumstances, the deposit, it was held that the depositor was entitled to rescind the contract which was implied from the deposit, and to reclaim the property which the bank had obtained by fraud.

Here not a single fact is presented to support the charge of insolvency, or to show that the officers had knowledge that the bank was insolvent; the only fact in this connection being, that the superintendent of banks closed this bank on the morning of the 20th of December, 1893. While such action of the superintendent may have been perfectly proper, from this circumstance no inference can be drawn of knowledge of the bankrupt condition of the institution on the part of the officers, which would make it a fraud for them to receive the deposits. And the case relied upon of Cragie v. Hadley, supra, (as well as other cases that might be cited, wherein the reclamation of checks or drafts deposited shortly prior to the failure of a banking situation has been sustained), is placed on the ground of fraud on the part of the bank in receiving deposits after its insolvency was known to its officers. It may transpire that on December 20th this bank had sufficient assets to meet its deposits, and that there was merely an impairment of capital, which, while requiring the intervention of the State and the initiation of proceedings to wind up the bank, would not necessarily constitute the kind of fraud which the courts say justifies the reclamation of deposits. A general allegation that the debts and liabilities of the defendant exceed the total amount of the assets and the value of all its property by over $150,000 (taking into account the fact that its capital stock was $500,000) would mean simply that there was an impairment of its capital stock to the extent mentioned, still leaving a surplus of $350,000 over and above what it owed to its depositors. The condition of the bank, whether solvent or not, is as yet undetermined, the present receiver being but a temporary one, and the final judgment not having as yet been entered. That no fraud was attempted is apparent from the conduct of the bank and its officers in having made provision to meet all the checks which were presented on the 21st to the Clearing House in the ordinary course of its business, and without having, up to that time, been guilty of any act indicative of open or covert insolvency.

What facts must appear to justify a reclamation of a deposit when once made has been many times stated. Thus, St. Louis & San Francisco R. R. Co. v. Johnston, 138 U. S., 566, head note, states: “When a bank has become hopelessly insolvent, and its president knows that it is so, it is a fraud to receive deposits or checks from an innocent depositor ignorant of its condition, and he can reclaim them or their proceeds.”

The court below, as shown by the opinion, did not base its order upon this theory, but thought that the strict legal relations of the parties were affected by a custom in regard to clearances, by force of which “ there was an appropriation of these checks (of depositors sent by the bank to the Clearing House) to the payment of their obligations maturing that day and payable through the Clearing House. The checks and the certifications were to offset each other;” and that by this act of appropriation the creditor obtained an equitable right to the application of the property which was not "to be affected by the failure of the Clearing House to apply them as intended.

In this we think the learned judge fell into two errors—one in basing the right of recovery upo,n the theory of the misconduct of the agent; and again in assuming a custom of which there is no evidence in the papers, and of which we think there is no existence in fact. If the right to an equitable lien or preference is to be accorded the petitioners here, it cannot, for obvious reasons, be put upon the ground of agency, but must, under well settled equitable principles, be based upon the theory of a trust. If the checks which the bank received from its depositors on December 20th, and sent to the Clearing House on the 21st, constituted a trust fund for the purpose of meeting the checks certified on the 20th, then the receiver, standing in all respects in the bank’s stead, would have the same duty and obligation of carrying out the trust—a duty which equity could compel him to perform.

That deposits may be special, so as to create a trust or an appropriation as between the parties, is evident. To prove that requires no more than evidence that the intention and desire were communicated by the depositor to the bank, and that the latter agreed, or is estopped from denying that it agreed, to so apply the deposits. When the trust or special deposit is found, upon facts sufficient legally to authorize the finding, then the contract is established and effect must be given to it. Upon such an inquiry, as said in Straus v. Tradesmen's Nat. Bank, 122 N. Y., 382; 33 St. Rep. 638.

“ The qxiestion (is) whether the Tradesmen’s Bank was entitled to retain from the fund (claimed to be a special deposit) the amount due it from Dixon (a depositor). This was dependent upon the nature of the credit to Dixon, and the character in which the bank was at liberty to assume that the deposit furnishing the credit was made. As a rule a deposit made in a bank by a person on general account becomes its fund, and the relation between the depositor and the bank is that of debtor and creditor, and in the absence of any agreement to the contrary, the bank is at liberty to apply the money upon a demand due it from the depositor.”

In People v. City Bank of Rochester, 96 N. Y., 32, a note was outstanding, and petitioners wishing to anticipate payment, on a certain day informed the bank in regard to the note, and then gave and the' bank received their check for the amount of the note, less rebate of interest, in these words:

“Pay to our note, due January 6th, 1883, or bearer, $2,000.
Sartwell, Hough & Ford.”

Danforth, J., writing the opinion therein, says: “ The transaction in question was not between the bank and SartweJl, Hough & Co. (petitioners) in their relation of debtor and creditor, nor of bank and depositor. The object of the latter was to provide a fund for the payment of the specific note, and the engagement of the former was to apply that fund to that payment. Libby v. Hopkins, 104 U. S., 303: In re Le Blanc, 14 Hun, 8; 75 N. Y., 598. These cases stand upon the ground of a specific appropriation of a particular fund for the payment of the claim there brought in question. So does the one at bar. That fact is lacking in People v. Merchants' & Mechanics' Bank, 78 N. Y., 269. Here the checks of petitioners were money assets in the hands of the bank, and were so treated by all parties; they were delivered to it with explicit directions to apply the proceeds on payment of the notes; their directions were assented to by the bank officer. It assumed a duty, and the receiver, as its representative, is bound by it. The checks were impressed with a trust.”

In addition to these cases, many others could be cited wherein the distinction is clearly pointed out, that unless by an arrangement between the parties there is a setting apart or appropriating of particular property, or a fund for a particular purpose, no trust is present as between a bank and its depositors, the ordinary relation between whom is that of debtor and creditor; it being necessary to constitute a trust that there should be a specific appropriation of a particular fund for the payment of a particular claim. Libby v. Hopkins, 104 U. S., 303; People v. Merch. & Mechanics' Bank of Troy, 78 N. Y., 269; Cavin v. Gleason, 108 N. Y., 256 ; 7 St. Rep., 13.

That there was a special appropriation, by express arrangement or agreement of the parties, is not claimed, but, as we understand, it is insisted that by force of the custom governing clearances as bearing upon the payment of certified checks, there was created an appropriation of deposits made on the 20th and sent to the Clearing House on the 21st for the specific purpose of paying the certified checks of the 20th. We are no longer speaking of the right to a return of the deposits, but of the right of a holder of a, check certified on the 20th to claim an appropriation or setting aside of a specific fund by the bank, out of which he is equitably entitled to a preference.

As said in Cooke v. State Nat. Bank of Boston, 52 N. Y, 114:. “The certification of a check, if written out, would contain a statement that the drawer had funds sufficient to meet it in the-bank, applicable to its payment, and an agreement on behalf of the bank that these funds should be retained and paid upon the check when it was presented.” And as said by Rapallo, J., in speaking of the nature of the contract that a bank makes on certifying checks, Thompson v. Bank of N. A., 82 N. Y., 6: “ The bank has given a negotiable obligation to the holder of the check which is equivalent to a certificate of deposit. If the-holder of the certified check should lose it, he would still have his remedy upon it against the bank, but could not have recourse against the drawer, whose funds had thus been locked up or transferred to the credit of another party.”

The contract, therefore, that a bank makes when it certifies a check is in effect an acceptance. There is no trust relationship between such bank and the holder of the check, nor is the bank bound to set apart from itf other funds a particular sum for its-payment. First Nat. Bank v. Leach, 52 N. Y., 349; Lynch v. First Nat. Bank of Jersey City, 107 id., 179; 11 St. Rep. 389; Goshen Nat. Bank. v. Bingham, 118 N. Y., 349 ; 28 St. Rep. 702. These cases are authority for the proposition that by the certification of a check, or the issuance of a certificate of deposit, a bank becomes debtor to the holder of such check, and is not obliged to set apart any portion of its assets as a particular fund to pay such check.

The petitioners here not claiming to have made a deposit on . the 20th as a special fund to pay the checks certified or uncertified, drawn on that day, but having, in the usual and ordinary way, made a deposit, and having drawn checks, some of which were certified and some not, it cannot be said that the latter were-certified or drawn against the amount deposited on that day, because such statement is unsupported by any facts. Nor do we think that the transaction of making the deposit, drawing checks, and having some of them certified, of itself and irrespective of any other transactions or agreements, was a contract the effect of which was to take the moneys represented by the checks so-certified out of the property of the bank as well as of the depositor, or that under any principle of the law merchant such a transfer can operate as an assignment over of the deposits to the payees of the certified checks. On the contrary, there was no special or trust relation, upon the facts appearing, created between the parties as the result of the deposit and the drawing of the checks, certified or uncertified; because, as between the bank and the payees of the certified checks, the relation was that of a debtor and creditor; and as said in O'Connor v. Mechanic's Bank, 124 N. Y., 331; 36 St. Rep. 277, respecting “an ordinary uncertified check upon a general account,”'it “is neither a legal nor an. equitable assignment of any part of the sum standing to the credit of the depositor, and confers no right on the payee that he can enforce against the bank.”

In the case of Attorney General v. Continental Life Insurance Co., 71 N. Y., 325, where, from the circumstances under which the check was issued, it was claimed that the intent was to transfer and assign to the holder a like amount of the fund on deposit in a trust company, it was said:

“ The petitioner was a creditor of the insurance company upon a claim upon a life policy. When she received the check she was a creditor still, the claim not having been paid, but only liquidated. When the company failed and went into the hands of a receiver, the rights of all the creditors to all the assets became fixed by statue, and the petitioner, not having acquired any lien upon arty of the assets, occupies the position of a general creditor. The necessary delay in transmitting the check for her indorsement, and in returning it, was unfortunate because, in the meantime, the statute had seized the assets and provided for their distribution among all the creditors, and both precedent and reason have clearly defined and well established the general rule to be applied, and courts ought not to depart from it to meet a particular case of supposed hardship.” So we can say here, the act of the clearing house, or one of its officers, in not making the clearance was unfortunate, because before the mistake could be rectified the receiver took possession of the assets under the statute for all the creditors, and no legal or equitable right to a preference in payment being made out, the general rule firmly established should be adhered to, which secures equality among creditors.

This brings us finally to a consideration of the effect upon the relations between the parties of the transmission of checks, etc., by the bank to the clearing house, and of the relation which the holders of checks, certified or uncertified, bear to the clearing house. That the clearing house furnishes but a convenient method for banks of making their collections and payments as between each other, and that an outsider, not a member thereof, is not .to be benefited or injured by the action of such banks as between themselves, becomes evident, we think, upon reflection. As clearly stated by the appellant, the precise nature of the transactions of the clearing house are these: Take the case of the intended action of the Saint-Nicholas Bank on the morning of the 21st day of December, 1893. It sent to the clearing house all checks, drafts and other obligations held by it on other members of such clearing house. These checks were accompanied by a statement headed ‘Saint Nicholas Bank,'Settling Clerk’s Statement, December 21, 1893.’ It contained a list of," the different banks, members of the clearing house, by their numbers; opposite such numbers were the names of the banks, and still opposite the names of the banks was the entire amount of all checks drawn on such particular bank. Then all the checks held by the other banks, members of the clearing house association, on the Saint Nicholas Bank are presented to it at its desk in the clearing house, and are footed up by its settling clerk. On the balance being thus fixed, if a debit balance, the Saint Nicholas Bank pays the same in cash ; if a credit bank it receives the same in cash. All that the clearing house does is to distribute these payments for differences. The liability of the clearing house, if any, does not commence till these differences are settled by the banks. The Saint Nicholas Bank, however, on the morning of the 21st day of December, 1893, was bound to offset as against its claims on the other banks, just as much by checks certified by or drawn by it days, weeks or months previous, as by checks certified by it, or checks drawn on it the day previous. It is impossible to incorporate into this clearing house business any custom .which inures to the benefit of a depositor and permits a general belief that his certifications will be paid by the bank remitting his deposits to the clearing house the next morning for the express purpose of meeting such certified checks. It is also impossible to incorporate into the business of such clearing house any custom on which a depositor can rely that his deposits will be remitted to meet in the clearing house the next morning all such checks as he may draw against them, whether certified or uncertified. The precise custom and the precise knowledge that the depositor must have is that the banks use the clearing house as a convenient method of making their own collections and their own payments, and that they do not send the deposits of one day against the checks of the same day. Nor do they send specific funds to meet specific certifications. That, in simple truth, they send in all their checks, drafts and obligations of every kind and -offset against the same all other checks and other obligations of any kind at any time issued by them or properly drawn on them, which may happen to be presented at a specified date.

Had there been no clearing house, the Saint Nicholas Bank would have collected from each of the banks on whom checks received by it were drawn, by sending to such banks and demanding payment thereof, and would likewise have paid on demand all other banks who held checks drawn on it, whether certified or uncertified. Doubtless the Saint Nicholas Bank would have effected the exchanges itself with each of the other banks by simply paying from day to day the difference between checks held by the respective banks. If, for the convenience of these banks, they all meet at a certain place and hour and make payments and agree on offsets, it certainly makes no change in the legal statutes of the transaction and does not carry rights to depositors not otherwise belonging to them.

The entire amount that was collected by the superintendent of banks and turned over to the temporary receiver, upon the checks that were sent by the Saint Nicholas Bank to the clearing house on the morning of tlie 21st of December, 1893, was the sum of $412,928.79. Why should this be used up in favor of certified checks that went through the clearing house that morning alone ? Why should it not be applied with just as much force to certified checks of the 19th of December, 1893, or certified checks of the 9th of December, 1893, or certified checks of any other date that happened to go into the clearing house that morning ? Why should it not be just as much applied to uncertified checks ? Why, in short, if the court should give any preference in the matter, should not that preference be directed to carry through the transaction that would have taken place .at the clearing house on that morning had the Saint Nicholas Bank been in a position to carry on its ordinary business?

In the not improbable case that the checks and drafts that were presented against the Saint Nicholas Bank in the clearing house on the 21st day of December, 1893, exceeded the checks and drafts it sent there, how will the court discriminate as to which of the holders of such checks shall be paid? In short, the moment that the supposed equity created by the assumed custom is permitted, the temporary receiver and the court find them,selves surrounded by a maze of difficulties, the end of which cannot be foreseen.

But whatever the custom or manner of dealing between the bank and the clearing house, how can this be said to affect the relations of a particular bank to the payees of checks certified by it, or uncertified and drawn upon it? The relation between the bank and such payee is one controlled by settled principles of law. It can matter little to the latter what customs prevailed in the clearing house, nor are they in any way interested whether the bank against which the certified checks held by them are drawn makes its settlements through the clearing house or by messengers sent around to each bank. As said in Overman v. Hoboken City Bank, 1 Vroom, 61: Where there is no claim “that the association called the clearing house is an institution authorized by special legislation, or any authority existing in such association, in any way to alter or modify the law merchant in regard to checks or commercial paper, such association cannot be held to have power to make usages or rules to bind those who are not parties to its organization. Its usages and rules, if not in conflict with law, may, by the application of tacit adoption in the contracts of members, bind them in the same way that a general usage of‘trade may bind those who deal with reference to it, and who are, therefore, held to impliedly adopt it. But those who are not bound by such usages, and have not contracted with reference to them, have no right to avail themselves of them to create an obligation against those who are parties to their adoption and bound by them inter sese only.” And we agree with what was said in Merchants' Bank v. Bank of the Commonwealth, 139 Mass., 518: “To the regulations of this association the customers of the bank are not parties, and whatsoever effect is to be given to them as between the banks, their customers are not in a situation to claim the benefit of them, nor are they liable to be injuriously affected by them.

The sending, therefore, as a matter of convenience, of checks through the clearing house on a certain day for collection, does not, by any custom known to us or established by the moving effect an appropriation of such checks as a fund for the payment of checks, certified or uncertified, drawn by the bank’s customers on "the bank's customers on the previous day. And that checks so sent are for the purpose of collection, and not of appropriation, becomes evident when we remember that it is entirely proper and right, if more convenient, for the bank to make its own collection of such checks outside the clearing house and through its own agents.

We have considered this subject as though the determination had been reached in an action after a trial, and the discussion into-which we have been drawn, and the difference between the views which we entertain and those héld by the learned court below, as-to the custom prevailing among banks dealing with the Clearing House, will show, as was said in the Matter of North River Bank, 60 Hun, 91; 37 St. Rep. 931, that “the practice of deciding such claims upon summary application is not to be encouraged, but the claimant should ordinarily be remitted to his action at law.”'

Considering the amount of money here involved, the facts up-, on which the right to the relief was based, the absence of any authoritative decision upon the question, and the condition of the receivership, we think it would have been a proper case for the court to refuse to entertain a summary application and remit the claimants to their remedy by action. But that the court bad the right and power to entertain the application was decided at the last term in the case of People v. St. Nicholas Bank (in re Kurtzman). It was therein held that a temporary receiver, as an officer of the court, had a right, pursuant to the provisions of the Code of Civil Procedure, to apply from time to time to the court for instructions. In referring in that decision to the court, we meant, not simply the special term, or any other branch, but the entire court made up of its various branches, including the general term. It having been held, therefore, that the receiver, as an officer of the court, has a right to apply to the court for instructions, the discretion which is vested in the special term can also be exercised by the general term upon the receiver taking an appeal. Whether he would be justified in taking an appeal to the court of appeals is a question for that court. In this case it was not the receiver applying to the court for instructions, but depos- ! itors who have brought the receiver into court to obtain a direc- j tion that he pay a large sum to such claimants out of the moneys-in his hands. Under such circumstances, where. the claimants ¡ and not the receiver apply for summary relief, and this is granted > notwithstanding the opposition of the receiver and the interests which he represents, we fail to see why the receiver is not, within I the meaning of § 1294 of the Code, a party aggrieved, and thus 1 having the right to appeal to the general term. ¡

To recapitulate, we think, upon the undisputed facts, that the | application should have been in all respects denied, for the j reasons: . . 1

. . (1) That upon the petitioners having made a deposit, it became j the property of the bank, and no fraud having been shown, such j deposit was not subject to reclamation. j

(2) That, as there was no agreement or arrangement, express i or implied, that such deposit should be specifically appropriated or applied to the payment of any particular check or claim, there was no trust relation created between the parties.

(3) That, with respect to certified checks, the payees thereof acquired no special lien upon or equitable assignment of any special fund or particular portion of the assets of the bank.

(4) That any portion of the deposits of December 20, 1893, which became the property of the bank, was not, by the fact of its being transmitted to the Clearing House for collection, appropriated to the payment of checks certified on the 20th.

(5) That the relation between the payees of the checks and the bank is controlled by rules of law, and not by any supposed custom, which may affect the members of the Clearing House, but to which such payees are strangers.

The order appealed from, therefore, in so far as it directed the receiver to pay over moneys, should be reversed, and in other respects affirmed, with costs.

Follett, J., concurred.

Van Brunt, P. J.

(concurring) Under the principles declared in the decision of the case of the People v. St. Nicholas Bank (in re Kurtzman), decided at the last term of this court, I am unable to perceive how the receiver has any standing in this court as an appellant. In that case it was decided that the receiver was not a trustee for the creditors, but was the mere hand of the court to execute the directions and obey the orders given to him by the court. The receiver, therefore, representing nobody but the court, when directed by an order of the court to do a certain thing is certainly not aggrieved by such an order; and the provisions of § 1294 of the Code which regulate the right to appeal are that a party aggrieved may appeal; and no authority to appeal is given to anybody else. In the case at bar, however, notwithstanding this position, an appeal is entertained upon the part of a receiver, representing, as above stated, nobody but the court —in fact the hand appealing against the directions of the brain. It is apparent that if the receiver—the hand—had not taken the unwarrantable liberty of disputing the directions of the brain, according to the result of the opinions in this case, over $130,000 would have been misappropriated becausé of the entertainment by the court of applications for the disposition of property in the receiver’s hands in individual cases of a like character to those in which the court held, in the case above cited, that such direction should be given. If the receiver had obeyed the order he certainly would have been protected by the direction of the court, and thus it seems to me we' have at once a striking illustration of the evil results almost necessarily attending the entertainment of proceedings of this character on behalf of and against the receiver.

_ It is now urged in respect to the decision in the case cited that “in referring in that decision to the court, we meant not simply the special term, or any other branch, but the entire court made up of its various branches including the general term,” and that “it having been held therefore that the receiver, as an officer of the court, has a right to apply to the court for instructions, the discretion can also be exercised by the general term upon the receiver taking an appeal.”

It is further stated that “in this case it was not the receiver applying to t,he -court for instructions, but depositors who ha.ve brought the receiver into court to obtain a direction that he pay a large sum of money to such claimants out of the moneys in his hands. Under such circumstances, where the claimants and not the receiver apply for summary relief, and this is granted, notwithstanding the opposition of the receiver and the interests which he represents, we fail to see why the receiver is not' within the meaning of § 1294 of the Code, a party aggrieved, and thus having the right to appeal to the general term.”

What difference it can make as to the relations of the receiver to the court, as to who is the cause tif the giving of the direction to the receiver, I cannot imagine. According to this theory, if the receiver asks the court for instructions, he is entitled to them and must act upon them ; but if he gets them without asking for them, he may contest them; a .conclusion the mere statement of which seems to carry with it its refutation.

It is said that because instructions are opposed by the receiver and the interests he represents, that he is a party aggrieved within the meaning of § 1294 of the Code.

In the case cited, the decision was founded upon the assertion that the receiver represented nobody but the court, that he was the mere hand of the court, and therefore entitled to directions from the court, a position which shows clearly that the receiver is not a party aggrieved. A principal (the court) can give his agent (the receiver representing the court only, as held) any instructions it pleases, and the agent cannot be aggrieved. According to the view advanced in the case 'at bar, it depends upon whether the instructions suit the receiver’s taste or not, whether they shall be obeyed. If he is indifferent or even careless, the receiver is protected by the order, no matter how harmful to the interest of those whom the court represents.

But it is said that the receiver is entitled to the instructions of the whole court made up of its various branches, including the general term, and that when instructions have been given by-one branch of the court the directions vested in that branch may also be exercised by another branch, viz., the general term, upon the receiver taking an appeal. Whatever may he the powers of the general term in the cases of original applications made to it, it is clear that it can review the action taken by the special term only in the manner provided by the Code, and that is by an appeal by a party aggrieved. But as a temporary receiver, as was held in the Kurtzman Case, as has been above shown, represents nobody but the court (the court in this instance being represented by the special term) he certainly has no grievance against his principal which can possibly bring him within the category of an aggrieved party and entitled to appeal.

There can be no doubt but that the only proper practice is to have all such questions determined when the persons wnose rights may be ultimately affected are before the court, so that they can be heard before such rights are adjudicated upon. Differing as I do with the views of the majority of the court in the case cited, I concur in the result arrived at by Mr. Justice O’Brien.

It has been the well established doctrine for a long period in. the history of adjudications in this state that upon a deposit being made by a customer in a bank, in the ordinary course of business, of money, or of drafts or checks received and credited as money, the title to the money, or to the drafts or checks, is immediately vested in and becomes the property of the bank. Commercial Bank of Albany v. Hughes, 17 Wend., 94; Metropolitan Nat. Bank v. Lloyd, 90 N. Y. 530; Cragie v. Hadley, 99 N. Y. 131. And this rule was in no respect infringed upon by the decision of the case of the People v. City Bank of Rochester, 96 N. Y. 32, and kindred cases. In the cases at bar there is attempted to be established a claim that the deposits which were made upon the day that the checks of the petitioners were certified, were specially devoted to the meeting of such certified checks. There does not seem to be a particle of evidence to sustain any such proposition, which was the ground upon which the case of the People v. City Bank of Rochester, last cited, was decided. In the cases at bar deposits were made generally, and certifications were made generally, the depositors, in every instance, having balances to their credit at the time the deposits on the day in question were made, in some instances in excess of the checks drawn and certified, and in others such balance not being sufficient (excluding the deposits of the day) to meet such drafts.

The certification of a check by a bank is a statement upon the part of the bank that the drawer had sufficient funds to meet it in the bank applicable to its payment, and an agreement on behalf of the bank that these funds should be retained and paid upon the check when it was presented. It may further be said that as far as the holder of the check was concerned it is immaterial whether such statements in respect to the amount of money which the depositor had in the bank is true or not—there is an obligation upon the part of the bank to pay that check when presented. Therefore the certification of the check is simply an acceptance by the bank of a draft upon it, by which it becomes primarily liable to the holder to pay. Now, such being the undertaking of the bank upon certification of the check, where is there any promise or understanding or agreement upon the part of the bank that the money last received shall be appropriated to meeting that obligation ? Upon the contrary, applying the ordinary rule in respect to credits, where payments are made upon general account, the bank in the payment of such an obligation would be presumed to use the money which had first been deposited, and not that which had been last deposited. This rule has been repeatedly applied in respect to the application of payments, where the Statute of Limitations had arisen, where the question has been as to the payment out of particular moneys, and in kindred cases. Clm/tnn,s Case, 1 Mer. 572; Walden v. Davison, 11 Wend. 65; Allen v. Culver, 8 Den. 293 ; U. S. v. Kirkpatrick, 9 Wheat. 720 ; Bixby v. Drexel, 56 How. 478 ; Sheppard v. Steele, 43 N. Y. 52. Therefore the claim that thése certifications were made, based upon the deposits of the day, or were to be deemed as an appropriation of these deposits to the payment of these checks by the bank, seems to have no foundation.

The only ground upon which the petitioners can establish any right to the application, of any particular moneys to the meeting of these checks and certifications is that by the sending of the checks to the Clearing House to be exchanged with the various banks upon which they were drawn, the Clearing House was created a trustee for the purpose of the application of the proceeds' of the checks deposited to the payment of the checks certified and drawn. If this rule is to be adopted, however, it does not limit itself to the checks drawn and certified on the day of this deposit, but applies to all checks, no matter when drawn nor when certified, which were presented at the Clearing House on the morning of the day subsequent to this deposit; because if any trust was created, it was for the benefit of all who had claims upon the bank which were presented at the Clearing House on that day. And this suggestion seems to me to show the fallacy of the position that there was any trust created which gave the holders of these certified checks or the checks drawn upon the day when these deposits were made, the right to claim payment out of the proceeds of the checks deposited which were sent to the Clearing House.

The learned court below placed its decision upon the ground of agency—that the Clearing House was the agent of both parties in respect to the exchanging of the checks in question. But it seems to me that in the case of the mere failure of an agent to do his duty, the party in respect to whom I have directed my agent to do something which he has failed to do, does not get any .vested right in its performance. The failure of my agent to follow my directions is precisely the same as though I bad failed to act myself. Suppose, for example, I had sent my clerk with the money to pay a debt which I owed. He went to the place, but for some reason did not pay the debt, and returned, and the sheriff having an attachment against me, issued at the suit of another creditor, serves it upon my clerk with my money in his possession. Would the first named creditor have any claim upon that money? Would not the attaching creditor be able to hold it under his attachment ? There would be no change of title; it would be in me all the time.

So it was in respect to this failure to carry through the exchanges at the Clearing House on the morning after the deposit. The agent did not do what it was instructed to do. There was no change of title. That remained precisely the same as though this abortive effort to effect the exchange had not been made. From the course of business in the Clearing House, it would ^ appear that that institution is a mere exchange where _ the various banks meet for the purpose of exchanging their obligations and paying their debts; that it is the place of meeting of the various banks to effect their exchanges under the direction of the managers of the Clearing House. And I am unable to see that the Clearing House got any title to or control over the property of any of these banks. The one bank exchanges obligation with the other, and the debtor bank pays to the creditor bank in cash. And that is all. Where is there anything in such a transaction tending to show that the Clearing House was created a trustee for the purpose of paying obligations of this bank out of the property of the bank ? It seems to me that this being the course of business, this property belonged to the St. Nicholas Bank, until its agents parted with it in the effecting of the exchanges.

It is a familiar principle that with the inability of a principal to act because of legal incapacity, the right of the agent to act falls. So in the cases at bar, when this bank ceased to do business, whatever uncompleted work its agents had on hand, such agents had no power to finish it, because their power ended with the incapacity of the bank. And this court has no power to complete that which was incomplete, unless some person has acquired a vested right in such completion. This, we have seen the holders of these checks have not acquired, there being no appropriation of any particular money of the depositor to the meeting of these obligations and no right acquired to any such application.

I am, therefore, of opinion that the order was ill-advised, and that such applications should not be entertained by the court, .since as has already been shown they are apt to lead to results disastrous to those who may be finally entitled to the residuum of the wreck.


source: Caselaw Access Project

author: Dykman, J.

license: Public Domain

text:
    James H. Styler, Resp’t, v. The Long Island Railroad Company, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed February, 1894.)

    Appeal—Conflicting evidence.
    A verdict, upon conflicting evidence, will not be disturbed on appeal.
    Appeal by the defendant, The Long Island Railroad Company, from a judgment of the supreme court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 24th day of March, 1893, and from an order entered in said clerk’s office on the same day, denying defendant’s motion for a new trial.

      W. 0. Beecher, for app’lt; Thomas B. Pearsall, for resp’t.
   Dykman, J.

This is an appeal by the defendant from a judgment entered upon the verdict of a jury, and from an order denying a motion for a new trial upon the minutes of the court.

The action is for the recovery of damages resulting from a personal injury to the plaintiff by reason of the negligence of the defendant.

The testimony upon the trial was contradictory, that on the part of the plaintiff making a cause of action for him, and that on the part of the defendant sufficient to exculpate the company.

It was, therefore, a proper case for the jury, and the trial judge submitted the same in a charge which was eminently fair towards the defendant, and the jury rendered a verdict in favor of the-plaintiff.

We must assume, therefore, that the testimony on the part of the plaintiff commanded the belief of the jury and in that view the verdict cannot be disturbed.

We find no error, and the judgment and order denying the-motion for a new trial should be affirmed, with costs.

Pratt and Cullen, JJ., concurred.

Judgment and order denying motion for new trial affirmed, with costs.


text:
    Henry Henney, Resp’t, v. The Brooklyn Elevated Railroad Company et al., App’lts.

      (Supreme Court, General Term, Second Department

      Filed February, 1894.)

    Judgment—Elevated railroad.
    Where condemnation proceedings have been instituted subsequently to the commencement of an action to restrain the operation of an elevated railroad, the portion of the judgment, which provides for an injunction, is proper.
    Appeal by the defendants, The Brooklyn Elevated Bailroad Company and another, from a judgment of the supreme court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 27th day of January, 1893, upon the decision of the court after a trial at the Kings county special term.
    The judgment in the action contained, substantially, the following provisions:
    That the defendants, their agents and all persons claiming under them, be and they hereby are perpetually enjoined from maintaining or using the elevated structure on Hudson avenue in the city of Brooklyn in front of the plaintiff’s premises.
    That if the defendants shall, within twenty days after the service of a copy of the judgment, with notice of entry thereof, deliver to the plaintiff a written offer to pay to him $325 and interest, then upon the plaintiff’s tender to the defendants of a duly executed conveyance to the Brooklyn Elevated Bailroad Company of the easements in said premises which had been taken by the said elevated railroad in Hudson avenue, Brooklyn, including the easements of light, air and access, and any right or easement whatsoever as abutting owner or otherwise, which may be subject to injury resulting from the structure of such railroad or incidental to its use, and if they pay to the plaintiff the sum of $325 and interest, the judgment shall be inoperative and void so far as it affects the maintenance and operation of such structure and railway.
    That the plaintiff omits or refuses to accept such offer or to deliver such conveyance duly executed within twenty days after such offer, the said judgment shall be inoperative and void so far as it affects the maintenance and operation of such railroad.
    The supplemental answer contained the following allegation;

      “ Defendant alleges that since the commencement of this suit proceedings have been instituted, under the Condemnation Law, for the purpose of condemning the rights and easements, if any, in the property described in the complaint herein, which have been taken by the said elevated railroad structure.”

      Wm, N. Cohen, for app’lts; Stephen M. Hoye and Francis Bussell Whitney, for resp’t.
   Dykman, J.

This is an appeal from a judgment in favor of the plaintiff against the defendant.

The action was for the recovery of damages to property resulting from the construction and operation of the defendant’s elevated railroad and to restrain its operation.

The trial was before a judge without a jury and we find no error in the record.

The portion of the judgment which provides for an injunction would be erroneous if it was absolute and the proceedings for the condemnation of the property had been instituted previous to the commencement of the action.

But such proceedings were instituted subsequently to the commencement of the action, and the restraining portion of the judgment will become inoperative upon the payment of the sum of money awarded.

Under such circumstances we see no reason for a reversal of the judgment.

The judgment should be affirmed, with costs.

Cullen and Pratt, JJ., concur.

Judgment affirmed, with costs.


author: Pratt, J.

text:
    William Jacklin, Resp’t, v. The National Life Association of Hartford, Conn., App’lt.

      (Supreme, Court, General Term, Second Department,

      Filed February, 1894.)
    1. Insurance—Live—Mental derangement.
    Mere mental aberration will not necessarily constitute ill-health.
    8. Same.
    To what extent mental disturbance will destroy or interfere with the functions of the body, must depend upon the circumstances of each case and is a question of fact.
    3. Damages—Stipulation.
    A stipulation as to amount due renders unavailable an objection upon the trial that there was a lack of proof as to the amount due under the contract.
    Appeal by the defendant, The National Life Association of Hartford, Conn., from a judgment of the supreme court in favor of the plaintiff, entered in the office of the clerk of the county of Orange on the 21st day of February, 1893, upon the decision of the court after a trial at the Orange county circuit, with notice of an intention to bring up for review on such appeal the exceptions filed to the findings, refusals to find and rulings of the court, and the order directing judgment.

      This action was brought to recover the amount of a life insurance policy upon the life of Yenie Jacklin by her father, the beneficiary named in such policy.
    The opinion of the trial court was as follows:
    Brown, J.—“ The policy that provides for the payment of $100 ‘solely from the funds accumulated from payments of its insuredalso, that if such accumulation on hand shall be insufficient to pay accrued claims, for an assessment on contracts in force of five per cent, on single premium, and if the whole fund from assessments and accumulations is sufficient to pay all claims, it shall be distributed pro rata, etc.
    It has been stipulated that ‘the sum to be received on this policy, if anything, is $73.97.’ In view of this stipulation the point made of a lack of proof of the amount due under the contract is without force.
    Proof of accumulation by the company and the amount that should be realized by an assessment could go no further than the stipulation, and was unnecessary. I think ch. 231, Laws of 1877, is applicable to this policy.
    Such is the clear implication from chap. 328, Laws of 1885, and while it might be a debatable question if the act of 1885 had not been passed, this question does not even admit of a serious dispute.
    The point was not presented in Ronald v. Mutual R. F. L. Association, 132 1ST. Y. 378; 44 St Eep. 407, neither was the act of 1885 called to the attention of the court.
    1 am also of the opinion that the question of the breach of warranty must be decided in plaintiff’s favor. The question in substance was: ‘What is the condition of health of your mother?’ and the answer was, ‘sound.’
    The mother was then in the Binghamp’ton Lunatic Asylum afflicted with chronic mania, a serious form of insanity, and at times violent, profane and obscene.
    The physician testifies that at the time of her admission she was in fair physical condition, and that in 1891 (the time of application for insurance) she was eating and sleeping well except when she had periods of mental disturbance.
    Both parties have, by withdrawing the case from the jury, treated this question as one of law, and the proposition, therefore, is, ‘Can the court determine as a question of law that an insane person is necessarily in unstiund physical condition?’
    ISTo evidence has been given to show whether an insane person is considered among medical men as in an unsound condition of health, and the court possesses no expert knowledge which enables him to solve that question as one of fact. But obviously mere mental aberration will not necessarily constitute ill-healthy
    To what extent mental disturbance will destroy or interfere with the functions of the body must depend upon circumstances of each case. It is a question of fact to be solved in each instance by the evidence.
    There is nothing before me that compels me to say that the mother-was in unsound health, and as the burden of so proving rests upon the defendant, the decision, in the absence of proof, must be against it
    “Judgment for plaintiff for $73.97.”

      John M. Gardner, for app’lt; F V. Sanford1, for resp’t
   Pratt, J.

The opinion filed by the court below covers all the questions and renders further discussion unnecessary.

The judgment must be affirmed, with costs.

Cullen and Dykman, JJ., concur.

Judgment affirmed.


text:
    Ada G. Van Sickel, Resp’t, v. Silas A. Ilsley et al., App’lts.

      (Supreme Court, General Term, Second Department,

      Filed February, 1894.)

    Appeal—Conflicting evidence.
    When there is a conflict of evidence upon a material issue, the case is properly submitted to the jury.
    Appeal by the defendants, Silas A. Ilsley and Stillman Ilsley, from a judgment of the supreme court in favor of the plaintiff, entered in the office of the clerk of Kings county on the 27th day of March, 1893, upon the verdict of a jury in favor of the plaintiff rendered at the Kings county circuit, and from an order denying defendants’" motion for a new trial entered in said clerk’s office on the 27th day of March, 1893.
    The plaintiff’s fingers were crushed by a press at which she was working, and to recover damages resulting from the injury thus inflicted this action was brought against her employers.
    The jury rendered a verdict in plaintiff’s favor for $3,300.

      Charles G. Nadal and Thomas S. Moore, for app’lts; George Wl JDease and Charles J. Patterson, for resp’t.
   Dykman, J.

This is an appeal from a judgment entered upon the verdict of a jury, and from an denying a motion for a new trial upon the minutes of the court

The action was for the recovery of damages resulting from personal injuries to the plaintiff.

The plaintiff was in the employment of the defendants, and her duty was to operate a machine or press for stamping and beading tin.

The ordinary method for stamping the tin was by the fall of the punch or press caused by placing the foot of the operator upon the treadle.

The plaintiff claims and so testified that she was injured by the fall of the press or punch when her foot was not upon the treadle, and so her theory and that of her counsel is that such a fall would not occur if the machine had been in order, and as it did so fall it follows that the machine was not in order.

On the part of the defendants, testimony was introduced which tended to show that the machine was in perfect order and condition at the time of the accident and for some time thereafter. Such contradictory testimony rendered t]ie case a proper one for the jury, and it was submitted by a charge to which there was no exception. We find no errors and cannot say that the verdict is excessive. The judgment and order denying a new trial should be affirmed, with costs.

Cullen and Pratt, JJ., concur.

Judgment and order denying motion for new trial affirmed, with costs,


author: Cullen, J.

text:
    In the Matter of the Will of Alexander F. Wilson, Deceased.

      (Supreme Court, General Term, Second Department,

      Filed February 12, 1894.)

    Will—Execution—Mark.
    Where the testator signs by a mark, and one of the subscribing witnesses is dead, the making of such mark may be proved by the .suiviviug witness.
    Appeal from decree of surrogate’s court denying probate of will.

      Richard H. Arnow, for app’lt; J. Mortimer Bell, for resp’ts; Dudley R. Horton, special guardian.
   Cullen, J.

This is an appeal from a decree of the surrogate of Westchester county, refusing to admit the will to probate. The will was subscribed by the testator’s mark in the presence of the two attesting witnesses. The attestation clause is full and complete. One of the witnesses has died. The other testified to the proper publication of the will, and that he saw the testator sign his mark thereto. The surrogate refused probate on the ground that the making of the mark by the testator must be proved by another and additional witness, following his own previous ruling In re Reynolds' Will, 4 Dem. Sur. 68. We think that that decision does not rest on sound principle. Section 2620 of the Code permits, in case of the death of a subscribing witness, the will to be proved by proof of the handwriting of the testator and that of the deceased witness.1 In re Walsh, 1 Tuck. 132, it was held that a mark was not handwriting, within this provision, because it has no characteristics, and that therefore the will of a marksman could not be admitted to probate except on the testimony of the two subscribing witnesses. This rule has not been followed in any reported case. The next case was In re Reynolds, already cited. Subsequently, In re Dockstader, 6 Dem. Sur. 106 ; 19 St. Rep. 245, the rule in the Reynolds Case was not followed, but the will was admitted to probate on the testimony of a single subscribing witness that he saw the testator make his mark, the other witness being deceased. In re Phelps, 5 N. Y. Supp. 270; 22 St. Rep. 896, the surrogate of New York adhered to the rule of the Reynolds Case, but subsequently, In re Hyland, 27 N. Y. Supp. 961; 58 St. Rep. , the same judge reversed.his previous ruling. In re Kane, 20 N. Y. Supp. 123, the surrogate of Eockland follows the ruling in the Hyland and Dockstader Cases. The current of authority and custom is, therefore, against the decision made by the court below. If a mark be handwriting, and the subject of proof at all within this provision of the Code, it may be proved as well by one witness as by more, if the witness commands eredence ; and one disinterested witness is as competent as another to prove the fact. The only objection to the sufficiency of proof by a single surviving attesting witness is that in every case the statute requires the testator to either sign in the witness’ presence or acknowledge his signature, and to prove the will the witness must testify to either one or the other of such requisites, either of which would be proof of the handwriting of the deceased: that hence, when the statute prescribes that proof must be made of the handwriting of the testator, some further evidence, or evidence of further witnesses, is required. If the section cited referred only to cases where some attesting witness survived or could be produced, there would be great force in this objection ; but the provison of the Code is general, and applies to cases where the testimony of no attesting witness can be obtained. We think that we are not warranted in limiting the provisions of this section to proof of handwriting by others than the attesting witnesses. It is possible to imagine cases where this construction would perhaps render fraud more easy, but such a danger is more imaginary than real. On the other hand, to uphold the rule laid down by the surrogate will cause many properly executed wills to fail without any fault or neglect on the testator's part. The current of practice and authority being against that rule, we think that it should not be upheld. The decree appealed from should be reversed, and a decree entered admitting the will to probate.

All concur.


text:
    Nicholas Wilhelm et al., Pl’ffs, v. Charles Wilken, Def’t.

      (Supreme Court, General Term, Second Department,

      Filed February 12, 1894.)

    Deeds—Quit-claim—Recording.
    Quit-claim deeds are conveyances within the meaning of the recording acts.
    Controversy submitted on agreed statement of facts, under § 1279 of Code.

      Harry V. Morgan, for pl’ffs; Franh A. Bennett, for def’t.
   Dykman, J.

This is a submission of a controversy without action, and the following are the facts upon which the case is committed to the court:

In September, 1893, the plaintiffs made a written contract with the defendant, by which they undertook to sell and convey to him the southwesterly half part of lot No. 167 on a map of Washingtonville, for $500, and deliver him a warranty deed of the same, free from incumbrance, on the 25th day of September, 1893. Ten dollars was paid by the defendant when the contract was executed, and the remainder of the purchase money was to be paid upon the delivery of the deed. By the advice of counsel, the defendant refused to complete the contract, basing such refusal upon the following facts:

In February, 1864, lots Nos. .166 and 167 upon the aforementioned map of Washingtonville were conveyed to one Cornelius H. Tallman by one William D. Forshay, by deed of conveyance duly executed and recorded, and it is conceded that Tallman’s title was valid. The following is the chain of title from Tallman down to the plaintiffs: '

Cornelius H. Tallman and wife to John Augustus Page, Warranty deed, with full covenants, dated November 28, 1864, ack’d December 2, 1864, & rec’d Feb. 7, 1893, in Liber 1304 of Deeds, at page 103.

That deed conveys lots Nos. 166 and 167, Washington ville.

Cornelius H. Tallman and wife to Louisa, A. Penfield. Quit-claim deed, dated July 11, 1889, ack’d July 11, 1889, rec’d July 22, 1889, in Liber 1172 of Deeds, at page 340.

That deed conveys lots Nos. 166 and 167, Washington ville, and the following language is extracted therefrom. After the acknowledgment of the receipt of the money comes the following:

“ Have remised, released, and quitclaimed, and by these presents do remise, release, and quitclaim, unto the said party of the second part, and to his heirs and assigns, forever, all those certain lots, [then follows a full description of the premises], together with, all and singular, the tenements, hereditaments, and appurtenances thereunto belonging or in any wise appertaining, and the reversion and reversions, remainder and remainders, rents, issues, and profits-thereof, and also all the estate, right, title, interest, dower and right of dower, property, possession, claim and demand, whatsoever,, as well in law as in equity, of the said parties of the first part, of, in and to the above-described premises, and every part and parcel thereof, with the appurtenances. To have and to hold, all and singular, the above-mentioned and described premises, together with the appurtenances, unto the said party of the second part, her heirs and assigns, forever.’’

Louisa A. Penfield to Nicholas Wilhelm & Wilhelmina^ his wife. Warranty deed, with full covenant, dated July 17,1889, ack’d July 17, 1889, rec’d July 22, 1889, in Liber 1172 of Deeds,, page 328.

That deed conveys lots Nos. 166 and 167, Washingtonville.

Before accepting that deed, the plaintiffs had the title examined,, and it appeared to be valid. Down to that time, and for a long time subsequent thereto, the plaintiffs had no notice of the conveyance by Tallman to Page, or that any one made any claim by virtue thereof. At the time of the execution of the deeds from Tallman to Penfield and from Penfield to the plaintiffs, the-premises were unoccupied, unimproved, uncultivated, and unfenced. The consideration in the deed from Tallman to Penfield is $100, but the premises were sold subject to taxes and tax leases. The consideration in the deed from Penfield to the plaintiffs was $1,000, and they went into possession immediately upon the receipt of their deed, and have remained in possession since that, time.

Upon these facts, the plaintiffs demand judgment declaring their title valid to the premises, and requiring the defendant to complete his purchase. The defendant demands judgment declaring that the plaintiffs have no title to the premises, and that his deposit of $10 be returned to him.

From the facts recited, it appears that the plaintiffs are bona fide purchasers for value, without notice of the deed of conveyance to Page, and that the deed from Tallman to Penfield was recorded previous to the deed to Page. The deed from Tallman to Penfield, however, is what is ordinarily denominated a “quitclaim deed.” In more strict language, it is a deed of release; and the insistence of the defendant is that the recording act does not protect a purchaser under such a deed for a valuable consideration. The language of that act is this:

“Every conveyance of real estate within this state hereafter made shall be recorded in the office of the clerk of the county where such real estate shall be situated, and every such conveyance not so recorded shall be void as against any subsequent purchaser in good faith and for a valuable consideration, of the same real estate or any portion thereof, whose conveyance shall be first duly recorded.” 1 Rev. St. p. 756, § 1.
“ The term 1 conveyance’ as used in this chapter, shall be construed to embrace every instrument in writing by which any estate or interest in real estate is created, aliened, mortgaged, or assigned, or by which the title to any real estate may be affected in law or equity.” Id. p. 762, § 38.
“Deeds of bargain and sale and of lease and release may continue to be used and shall be deemed grants, and as such, shall be subject to all the provisions of this chapter concerning grants.” Id. p. 739, § 142.

As we have already said, an ordinary quitclaim deed is a deed of lease and release, and by this statute is deemed to be a grant. Moreover, the terms “remise, release, and quitclaim,” employed in this deed in question, accompanied by a valuable consideration, as in this case, are sufficient in law to pass any interest or estate which the person making the instrument had at the time of its execution. Jackson v. Fish, 10 Johns. 456; Striker v. Mott, 28 N. Y. 92. An instrument containing those operative words has been held to be a valid deed of bargain and sale. Jackson v. Root, 18 Johns. 60; Lynch v. Livingston, 6 N. Y. 434. Quitclaim deeds are by no means uncommon in practice, and we may assume that many titles are held under them; and it is too late, now to hold that they are not conveyances, within the meaning of the recording acts. It is quite remarkable that the question has not been decided in this state, but, so far as we can ascertain, it has not. There is certainly no reason why the deed from Tallman to Penfield should not be declared a valid instrument for the conveyance of the title. It was so intended by the parties, or at least by the grantee, who paid a valuable consideration, without notice of the prior deed. Our conclusion is, therefore, that the deed is a conveyance, within the recording statutes, which protect the purchaser, and render the deed to Page valid, as against Penfield, the grantee. This conclusion validates the title of the plaintiffs, and the defendant must be required to complete his purchase. As each party asks for costs, they must be awarded to the plaintiffs. Let judgment be entered according to the foregoing views.

All concur


author: Bykman, J. Pratt, J.

text:
    The People ex rel. Henry Lotz, Resp’t, v. James Norton, Sheriff of Queens County. The People, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed February 12, 1894.)

    1. Pleadings—Complaint—Excise Law.
    A complaint, under the excise law, which specifies no mode of sale or gift withiii the prohibition of the statute, is insufficient.
    A Special sessions—Change of magistbate.
    Another magistrate cannot be substituted to hold the court of special sessions after its organization.
    Appeal from an order discharging relator from imprisonment.

      John Fleming, Hist. Atty, for the people; Henry A. Monfort, for resp’t.
   Bykman, J.

This is a proceeding under habeas corpus for the discharge of the relator from imprisonment. The relator was charged before George Wallace, a justice of the peace of the town of Hempstead, in Queens county, with violating the excise laws of the state “ by selling or giving away intoxicating liquors without having a license therefor.” Upon the reception of such complaint, Justice Wallace issued a warrant for the arrest of the relator, and he was arrested by virtue thereof, and brought before the same justice, where he- was arraigned and pleaded not guilty. The relator demanded a trial by jury, and the case was adjourned several times. The venire for the jury was issued by the same justice, and the final adjournment was until the 28th day of June, 1893, when the parties appeared, Justice Wallace took his seat, impaneled the jury, and administered the oath to the jurors after they were selected. Thereupon Justice Wallace called upon George W. Smith, another justice of the peace of Queens county, to take his place, and he did so. Justice Wallace thereupon retired, and Justice Smith proceeded with the trial. Such substitution was with the assent of all the parties and their counsel. The relator was convicted, and sentenced to pay a fine of $25, and, in default of payment, was committed to the county jail. This proceeding was instituted to procure his discharge from such imprisonment.

In the first place, it is to be noted that the complaint against the relator charges no criminal act. It is not an offense, against the statute to sell or give away strong or spiritous liquors unless it be done in the manner .prohibited -by statute, and this complaint specifies no mode of sale or gift within such prohibition. The justice of the peace, therefore, was furnished with no authority for the issuance of a warrant for the arrest of the relator, because he was charged with the commission of no crime. The case is equally strong in favor of the order of discharge upon the merits. In each warrant for the arrest of a person upon a criminal charge there is inserted a direetion to the executive officer to bring the defendant before the magistrate issuing the warrant, or, in case of his absence or inability to act, before the nearest or most accessible magistrate in the same county. Code Cr. Proc., § 151. But, even without such a provision in the warrant, the defendant may be taken before the nearest or most accessible magistrate, if the one who issued the warrant be absent or unable to act. Id § 164. These are after the organization of the court and the reception of the return of the warrant and the plea of the defendant full jurisdiction is obtained, and no change is permissible. When the defendant is brought before the magistrate he organizes a court of special sessions for the trial, receives the returns of the warrant, takes the plea of the defendant, and proceeds with the trial; and there is no authority for the substitution of a second magistrate to hold the court after its organization. If the magistrate who organizes the court is absent or unable to act, there must be an adjournment, or the prosecution falls. Courts of special sessions, like all inferior courts, must act within their jurisdiction. Neither ■did the consent of the parties confer jurisdiction. The evil was radical and incurable. The order should be affirmed.

Cullen, J., concurs.

Pratt, J.

(concurring). It is a general rule that a habeas corpus cannot be used to review trials before magistrates. If it appears that the magistrate had jurisdiction of the person and the subject-matter, and the mittimus shows upon its face those two facts, the writ will be dismissed; but in this case a sortof trial was had before the magistrate, and from that it seems the relator was not charged with any offense. If the relator had also sued out a writ of certiorari, he would be entitled to a discharge, as the record neither shows any charge nor conviction of a crime.. We think it was irregular to go into proof before the county judge, except to traverse the return; in fact, all the proceedings seem to have been irregular, from beginning to end. However, if all the matters are taken into consideration, I think the county judge did right in ■discharging the relator. Order affirmed.


text:
    Michael Mulligan, App’lt, v. John D. Crimmins, Resp’t.

      (Supreme Court, General Term, Second Department,

      Filed February 12, 1894.)

    Master and servant—Negligence.
    The mere fact of accident does not raise the presumption of negligence, where a reasonable examination of the appliances used would not have disclosed any danger.
    Nonsuit was ordered at circuit, and plaintiff’s exceptions were ordered to be heard at general term in the first instance.

      Henry A. Monfort, for pl’ff; Ohas. G. Nadal, for deft.
   Pratt, J.

There are cases where the accident raises the presumption of negligence, but we do not think the present such a one. We are not able to say that a spicula would not be dislodged from a chisel by the blow of a heavy sledge when the chisel was in good order. There was no proof that the condition of the chisel, before the blow was struck, was a dangerous still less, that a reasonable examination would have disclosed danger. We are therefore of opinion that plaintiff failed to prove negligence on the part of defendant. Judgment for defendant.


text:
    Bernard Keilt, Resp’t, v. Staten Island Rapid-Transit Company, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed February 12, 1894.)

    1. Negligence—Gate. .
    Having a gate suspended above the passageway, rapid in its fall and uncontrollable by the operator, is clear proof of negligence.
    3 Same—Contributory.
    The facts, in this case, were held not necessarily to show contributory negligence.
    Appeal from a judgment entered on a verdict in favor of plaintiff and from an order denying a motion for a new trial.

      Tracy, Boardman <& Platt, for app’lt; Maguer & Hughes, (Thomas F. Maguer, of counsel), for resp’t.
   Pratt, J.

The plaintiff having prevailed before the jury, we must regard his version of the facts as established. He testified that he first saw the gate descending upon him when it was about 18 inches above his head, and á little in front of him. He was going fast,—upon a “dog trot,” as he described it. He continued to advance, but, before he could clear the gate, it fell upon him, and inflicted injury. The defense argue that this recital convicts plaintiff of negligence, in that he did not stop before going under the gate. The jury did not take that view; neither do we. The time that elapsed from the time he saw the gate until it struck him was probably less than a second, and he might well judge that the safest way to avoid the gate was to hasten forward. The crowd behind him" might well impede any effort to return, and it would seem that his safest plan was to hurry forward. The charge of the court was as favorable as defendant had a right to ask. The negligence of defendant is clear in having a gate suspended above the passageway, which would fall so rapidly, and which could not be controlled by the operator. Judgment affirmed.


author: Brown, P. J.

text:
    The People ex rel. John L. Ryder, Resp’t, v. Clerk of Board of Supervisors of Kings County, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed March 6, 1894.)

    Towns—Term oe officers.
    Under chap. 669 of 1890, the term of office of supervisors in the towns of Kings county was one year.
    Appeal from an order directing the issuing of a' peremptory writ of mandamus.

      Jas. C. Church, for app’lt; Geo. F. Elliott, for resp’t.
   Brown, P. J.

This appeal presents, the question whether, under the general town law, (chapter 569, Laws 1890), the term of office of supervisors in the towns of Kings county was one or two years. Inasmuch as the legislature, by chapter 387, Laws 1893, expressly provided that such supervisors shall hold office for the term of two years, the question is not now of any general importance. Richard L. Baisley was elected at the general election held in November, 1892. If the term of office at that time was one year, the relator was properly elected in November, 1893, and the order appealed from must be affirmed. Under chapter 119, Laws 1864, the term of office was fixed at two years, commencing January 1st next after the election, and the election was had at the annual town meetings. Chapter 564, Laws 1881, changed the date of the election from the annual town meetings to the general election held in November, and provided that the term of office should commence and determine on the 1st day of January. Neither in the title nor body of this act is any mention made of the duration of the term, and it continued to be two years. The general town law of 1890 re-enacted, substantially, the provision of the act of 1881 as to the time of the election, and provided that “ the term of office of persons so elected shall commence and terminate on the first day of January each year,” and it repealed all general and special acts inconsistent therewith. Substantially, the same provision was enacted in the amended law of 1892. No effect can be given to the words “ each year,” in the sentence quoted, other than an intention to reduce the terms of office to a single year. The section of the law in which they appear is entitled, “Election of and Term of Town Officers.” The words “ each year ” had reference to the duration of the term. They cannot be made to refer to each year in which a two years’ term would begin and end, as the purpose to begin and end such term on the 1st day of January was accomplished by the law of 1881; and the words, under such a construction, would be mere surplus-age, and would add nothing to that act. They were added to the law then existing to accomplish some purpose with reference to the duration of the time, and I can conceive of none except the intention to make the term of office begin each year and end each year. The fact that the law of 1864 does not appear in the schedule of laws repealed by the town laws of 1890 and 1892, in connection with the legislative direction to the commissioners to specifically provide for the repeal of all laws which should be superseded by their revision, is quite strong evidence that it was not intended by the revision commissioners or the legislature that the law of 1864 should be repealed. Section 229 of the town law tends to support that view. But these things are not conclusive. The law of 1864 may have been omitted from the schedule of repealed laws through inadvertence. We must look for the intention of the legislature in the language of the latter act. While repeal by implication is not favored by the courts, if the language of a statute is so inconsistent with a prior law upon the same subject that both cannot stand, the former is deemed repealed, and the latter law must prevail. The language quoted from the Law of 1890 with reference to the term of the office of supervisor cannot be made consistent' with a two-years term, and the Law of 1864 must therefore be held to be repealed. The order appealed from is affirmed, with costs.


author: Per Curiam.

text:
    The People, Resp’t, v. Frederick Kunz, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed March 6, 1894.)

    Evidence—Rape—Corroboration.
    A conviction of rape, on the uncorroborated testimony of the complainant, will he reversed.
    Appeal from judgment of conviction.
    Thorton, Earle & Kiendl, for app’lt; Daniel Noble, Dist. A tty. for the People.
   Per Curiam.

A careful examination of the evidence in this case has failed to disclose any testimony corroborative of the complainant’s story. The conviction rests upon her testimony, uncorroborated by other evidence. The judgment must be reversed, and a new trial had.


text:
    In the Matter of the Board of Commissioners of Charities and Correction of Kings County. In the Matter of the State Commission in Lunacy.

      (Supreme Court, General Term, Second Department,

      Filed March 6, 1894.)

    Appeal—Appealable.
    An appeal does not lie from the refusal of the judge to revoke his approval of an order of commission in lunacy.
    Appeal from an order denying a motion to vagate approval of an order made by the state commission in lunacy.

      John A. Quintará, for app’lt; S. W. Rosendale, Atty. Gen., for resp’t.
   Brown, P. J.

There is no authority for this appeal, and it must be dismissed. Appeals lie to the general term from an order made in an action or special proceeding, in the cases specified in the Code. Code Civ. Proc. §§ 1347,1348,1356. This is neither an action nor special proceeding. Id. 3333, 3334. It is not prosecuted for the enforcement or protection of a right, the redress or prevention of a wrong, or the punishment of a public officer. It was instituted by the service of a notice of motion, and its purpose was to secure from Mr. Justice Cullen the revocation of an appeal theretofore given by him to an order of the state commission in lunacy. The statute authorizes the issuing of an order by the commission in the cases therein enumerated, and provides that “ before such order is issued it must be approved by a justice of the supreme court.” The order derives its efficacy from the approval of the justice, but it does not thereby cease to be an order of the commission in lunacy, and it does not become an order of the court. No authority "is given in the statute for an appeal from such an order to the supreme court, and none exists. It is very clear that, if a justice of the supreme court refuses to approve of the order, no appeal lies from such refusal to the general term. Application may be made to other justices, but no appeal can be taken to this court if all refuse. If the order refusing approval should be reversed, the order of the commission in lunacy would derive its efficacy from the approval of the general term—a thing that is not contemplated by the statute. It is equally clear, I think, that, when the order is approved, it is valid until the approval is revoked, but, if the justice refuses to annul his approval, no appeal lies from such refusal. No such power is given to the general term by the statute; and the effect of a reversal of the order would be to annul the action of the commission, although it had the approval of the very officer named in the statute. The supreme court is not a general arbiter of all disputes and controversies between parties. It can act only under the forms of law, and authority for its order must be found in the laws of the state. The general jurisdiction in law and equity given to it by the constitution must be exercised in an action, and, to give validity to matters in which its orders are sought in other forms and proceedings, statutory authority must exist for its action. We have not been referred to any law which gives to the court supervision over the orders of the commission in lunacy, and a careful search has failed to find any. It is not intended to decide that a justice of the court who approves an order of the commission may not subsequently annul or revoke that approval. We express no opinion upon that question. But, assuming he-has such power, his refusal to revoke his approval is not appealable to this court. The appeal is dismissed.

All concur.