Atkinson v. Rochester Printing Co.

• Decision Date: 23 April 1889
• Citation: 21 N.E. 178,114 N.Y. 168
• Parties: ATKINSON v. ROCHESTER PRINTING CO.
• Court: New York Court of Appeals Court of Appeals

114 N.Y. 168

21 N.E. 178

ATKINSON

v.ROCHESTER PRINTING CO.¹

Court of Appeals of New York, Second Division.

April 23, 1889.

Appeal from supreme court, general term, Fifth department.

Action by Hobart F. Atkinson, receiver of the City Bank of Rochester, against the Rochester Printing Company, to recover the value of certain bills of exchange, alleged to have been transferred to defendant by the bank as an unlawful preference. Defendant appeals from the judgment of the general term modifying and affirming the judgment of the special term.

John Van Voorhis, for appellant.

Smith & Briggs, for respondent.

FOLLETT, C. J.

The City Bank of Rochester was incorporated under the general banking act of this state. As early as December 16, 1882, it became insolvent, which fact the president and cashire well knew. The bank continued business, paying all demands until the close of business, on the 19th of December, when it stopped payment. At a meeting of its directors, held in the evening of that day, at which the cashier was present, it was resolved that an action be begun in the supreme Court, and an application made in the action for the appointment of a receiver, and that David Hayes, an attorney, be authorized to appear for the bank in the action, and consent to the receivership. December 23d a judgment was entered in this action, dissolving the corporation, because of its insolvency, and appointing a permanent receiver with the usual powers of receivers in such cases. For some time before December 20, 1882, the defendant had kept an account with the bank, which was overdrawn on the 15th of December, but to what amount does not appear. December 16th the bank discounted for the defendant promissory notes made by its customers and credited its account with the avails; amounting to

+---------------------------------+
                ¦amounting to           ¦$5,598 05¦
                +-----------------------+---------¦
                ¦Dec. 18. Cash deposited¦173 84   ¦
                +-----------------------+---------¦
                ¦Dec. 19. Do. do.       ¦1,236 94 ¦
                +---------------------------------+
                

+-----------+
                ¦¦$7,008 83 ¦
                +-----------+
                

At the close of business, December 19th, defendant's checks had been paid and charged to the account, so that the balance standing to defendant's credit was $3,004.22. It was the custom to open the bank for business at 10 o'clock. About 9 o'clock in the morning of December 20th defendant's secretary went to the bank in response to the request of the cashier of the bank, and received from him six bills of exchange, aggregating $3,180.32, the largest one being for $983.63, and known in this litigation as the Loomis & Wood worth draft. Defendant's secretary returned to its office and drew a check for the amount of the bills, dated it December 19th, returned to the bank, and delivered it to the cashier, who entered the transaction in the books of the bank under the date of December 19th. It is said that this check overdrew the defendant's account by $79.31. There seems to be an unexplained discrepancy in the amounts given, but it does not affect the principle involved. February 9, 1883, the defendant, upon the request of the receiver, paid this alleged balance, $79.31. Subsequently the receiver learned the facts above recited, and brought this action to recover the amount of the bills, upon the ground that they were delivered by the cashier and received by the defendant in violation of sections 186, 187, c. 409, of the Laws of 1882. The defendant insisted that the transfer was not prohibited by section 186, because no one of the bills was of the value of $1,000; that receiving deposits from the defendant when the officers of the bank knew that it was insolvent was a fraud; that the bank became a trustee ex maleficio of the fund, and that the cashier had the right to make restitution; and that February 9, 1883, the parties to this action mutually stated and settled the account, and the defendant paid, and the plaintiff received, $79.31 in full settlement and discharge of all liability of the one to the other. At the close of the evidence the defendant asked to go to the jury upon the following questions: (1) Upon all of the questions of fact in the case. (2) Whether the defendant was a bona fide holder of the bills for value. (3) Whether the bank, on and after December 16, 1882, was insolvent, and its officers expected its immediate failure; and whether the receipt of the defendant's deposits on that and the subsequent days was not a fraud which prevented the bank from obtaining title to the deposits. (4) Whether the account was stated and settled. These requests were refused, and the trial court directed a verdict for the amount of the bills, with interest, upon which a judgment was entered, which was modified by the general term by deducting the Loomis & Woodworth draft for $983.63, which the defendant had been unable to collect; and, as so modified, the judgment was affirmed. From this judgment the defendant appeals.

The sections under which this action was brought provide: ‘Sec. 186. No conveyance, assignment, or transfer not authorized by a previous resolution of its...