Gillet v. Bank of America

Citation55 N.E. 292,160 N.Y. 549
PartiesGILLET v. BANK OF AMERICA.
Decision Date21 November 1899
CourtNew York Court of Appeals

OPINION TEXT STARTS HERE

Appeal from supreme court, appellate division, First department.

Action by Joseph Gillet, as assignee, etc., against the Bank of America. From an order of the appellate division (47 N. Y. Supp. 558) sustaining exceptions ordered to be heard before that court in the first instance on the direction by the trial term of a verdict for plaintiff, plaintiff appeals. Reversed.

Theron G. Strong, for appellant.

Charles E. Rushmore, for respondent.

MARTIN, J.

The plaintiff's assignors constituted the firm of Dan Talmage's Sons, and as such were customers of the defendant, which was engaged in the banking business in the city of New York. For a considerable time before the 22d day of January, 1896, the defendant had not discounted any of the commercial paper of the assignors, although they had considerable outstanding. They had, however, kept their account at this bank for years. On that day they procured a loan from the defendant of $35,000, executed a note therefor, and delivered to it certain property and securities to insure the payment of the loan. The note was a printed one, prepared by the defendant, which, in addition to the promise of payment, contained provisions as to the collateral security furnished and its application by the bank. By this instrument the loan was made payable on demand, with interest at the rate of 6 per cent. per annum. It then provided that: ‘Having deposited with the said bank as collateral security for the payment of this or any other liability or liabilities of the undersigned to the said bank, due or to become due, or which may hereafter be contracted or existing, the following property, viz.: Memorandum of Rice, per statement attached. The undersigned hereby agree to deposit with the said bank such additional collateral security as the said bank may from time to time demand; and also hereby give to the said bank a lien for the amount of all the liabilities aforesaid upon all the property or securities at any time given unto or left in the possession of the said bank by the undersigned; and also upon any balance of the deposit account of the undersigned with the said bank. On the nonperformance of the foregoing agreements as to furnishing additional collateral, or upon the nonpayment of any of the above-mentioned liabilities, then, and in either such case, the said bank is hereby authorized to sell, assign, and deliver the whold or any part of the said securities, or any substitutes therefor, or any additions thereto, or any other property at any time given unto or left in the possession of the said bank by the undersigned for safekeeping or otherwise, at any broker's board, or at public or private sale, at the option of the said bank, or of either of its officers, without either advertisement or notice, which are hereby expressly waived. If such securities or property are sold at public sale, the said bank may itself purchase the whold or any part thereof, free from all right of redemption on the part of the undersigned, which is hereby waived and released. In the case of any such sale the said bank may first deduct all the expenses for collection, sale, or delivery of the property or securities so sold, and may then apply the residue to any one or more or all of the said liabilities, whether due or not due, as either of its officers shall deem proper, making proper rebate for interest on liabilities not then due, and returning the overplus, if any, to the undersigned, who shall remain liable to the said bank for any deficiency arising upon any such sale. The undersigned do hereby further authorize the said bank at its option at any time to appropriate and apply to the payment of any of the said liabilities, whether now existing or hereafter contracted, any and all moneys now or hereafter in the hands of the said bank, on deposit or otherwise to the credit of or belonging to the undersigned, whether the said liabilities are then due or not due. The undersigned further agree that upon any transfer of this note the Bank of America may deliver the said collaterals, or any part thereof, to the transferee, who shall thereupon become vested with all the powers and rights above given to the said bank in respect thereto, and the said Bank of America shall thereafter be forever relieved and fully discharged from any liability or responsibility in the matter.’

The New York Life Insurance & Trust Company held a note, made by the assignors, for $5,000, which matured March [160 N.Y. 554]4, 1896. It was payable at the defendant's bank, and upon presentation it was not paid or charged to the maker's account, but was dishonored. Subsequently, and on the same day, the defendant purchased the note of the payee, and then sought to hold the property pledged for the security of the $35,000 loan until the $5,000 note was paid. That the defendant obtained this note by purchase and sale, and not by payment in pursuance of the implied direction arising from the note having been made payable at the defendant's bank, is plainly alleged in the defendant's answer, and fully established by its uncontradicted proof. The question in this case is whether, under any proper construction of the contract, the defendant was authorized to retain the property pledged until the $5,000 note was paid. The respondent's contention is that this agreement and note authorized the defendant to hold the property pledged not only as security for the sum loaned, and such other liabilities as were contracted or existed between them as bank and customer, but also for any and all claims against the plaintiff's assignors which it might purchase, regardless of their character, so long as they were liabilities of the assignors, and owned by the defendant. It further claims that under the contract it could have transferred the note and collaterals, and that thereupon the transferee would be entitled to retain and sell the property pledged or in its possession for safe-keeping or otherwise, not only for the payment of the liabilities of the assignors to the defendant, but also for the payment of all and any claims or liabilities of theirs held by the transferee. If these contentions are to be sustained, it must be because they are plainly stated in the contract, or necessarily implied from its express provisions. Such unusual and almost unlimited power over the property of another is not to be implied or inferred from doubtful or uncertain language. If there is any uncertainty or ambiguity as to the meaning of the agreement, it should be resolved in favor of the plaintiff, as it was the defendant who prepared this contract. If there is any doubt as to the meaning of the terms employed, the defendant is responsible for it, as the language is wholly its own. We think the principle controlling as to the construction of insurance policies and other similar instruments is applicable to this agreement, and that it should be liberally construed in favor of the plaintiff. If the language can, without violence, be interpreted to include only such liabilities to the defendant as resulted from transactions between the plaintiff's assignors as customers and the defendant as a bank, or their liabilities which came into its hands in the ordinary course of its banking business, it should be adopted. Mynard v. Railroad Co., 71 N. Y. 180;Nicholas v. Railroad Co., 89 N. Y. 370;Rickerson v. Insurance Co., 149 N. Y. 307, 313,43 N. E. 856. The reason of the rule that the language of an instrument is to be construed against the person who proposes it, rather than against the person who is invited to accept it, is that men are supposed to take care of themselves, and that he who chooses the words by which a right is given ought to be held to the strict interpretation of them, rather than he who only accepts them. Where a doubt exists as to the meaning of words, resort may be had to the surrounding facts and circumstances to determine the meaning intended. If the language of a promise may be understood in more senses than one, it is to be interpreted in the sense in which the promisor had reason to believe it was understood. White v. Hoyt, 73 N. Y. 505. In the construction of written...

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