American Def. Soc., Inc. v. Sherman Nat. Bank of New York

• Decision Date: 25 February 1919
• Citation: 122 N.E. 695,225 N.Y. 506
• Parties: AMERICAN DEFENSE SOC., Inc., v. SHERMAN NAT. BANK OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

225 N.Y. 506

122 N.E. 695

AMERICAN DEFENSE SOC., Inc.,

v.SHERMAN NAT. BANK OF NEW YORK.

Court of Appeals of New York.

Feb. 25, 1919.

Appeal from Supreme Court, Appellate Division, First Department.

Action by the American Defense Society, Incorporated, against the Sherman National Bank of New York. From a judgment for defendant entered upon a directed verdict and from an order denying a new trial, plaintiff appealed to the Appellate Division, which reversed the judgment of the Trial Term and directed a judgment for the plaintiff (176 App. Div. 250,162 N. Y. Supp. 1081) and denied a rehearing (177 App. Div. 905,165 N. Y. Supp. 1075), and the defendant appeals. Affirmed.

See, also, 224 N. Y. 601, 121 N. E. 853.

Chase, J., dissenting.

Rutger Bleecker Miller, of New York City (John Kirkland Clark, of New York City, of counsel), for appellant.

Harry W. Newburger, of New York City, for respondent.

CRANE, J.

The American Defense Society, Incorporated, was a domestic membership corporation having an office at 303 Fifth avenue in the borough of Manhattan, city of New York.

George F. Sweeney was its executive secretary, Clarence S. Thompson was chairman of its board of trustees, and George Baxter was financial secretary or employed for the purpose of raising money to carry on the work of the society.

The Sherman National Bank was a national banking corporation in the city of New York in which the plaintiff had on deposit quite a sum of money. In January of 1916, the society drew three checks upon this fund payable to the order of George Baxter. In amount they were, respectively, $712.50, $1,650, and $1,200. After delivery, the checks were supposed to be lost, and payment at the bank was stopped by telegram and written notice. By its answer in this action the bank admits that the plaintiff countermanded the payment of said checks and directed the defendant to stop payment thereof.

A resolution of the society required that checks upon the defendant be signed by the secretary of the board of trustees or the executive secretary of the American Defense Society and countersigned by the chairman of the board of trustees.

Payment of the checks was stopped as above stated on January 26, 1916. The next day, one William F. Parry, in behalf of George Baxter, took a letter to the bank from the American Defense Society, Incorporated, signed by George F. Sweeney, withdrawing the directions to stop payment. The lost checks had been found. This letter was not received or recognized by the bank as it failed to have the two signatures required by the above resolution. Parry told Sweeney what the bank official had said, and after consultation with Thompson, chairman of the board of trustees, the letter was destroyed. The bank, however, failed to carry out the instructions which it had received and paid Baxter the checks. This action is brought by the depositor, the American Defense Society, Incorporated, to recover the amount of these payments. The trial court directed a verdict in favor of the defendant which has been reversed by the Appellate Division and judgment directed for the plaintiff upon new findings embodying the above facts.

It has been argued that, even if the bank failed in its duty to its depositor and paid out money on the checks after payment thereof had been stopped, yet the depositor could not recover the amount of the payment upon these facts alone, but only the damage which it suffered, and the damage must...