Cutler v. American Exch. Bank

• Decision Date: 04 June 1889
• Citation: 21 N.E. 710,113 N.Y. 593
• Parties: CUTLER et al. v. AMERICAN EXCHANGE BANK.
• Court: New York Court of Appeals Court of Appeals

113 N.Y. 593

21 N.E. 710

CUTLER et al.

v.AMERICAN EXCHANGE BANK.¹

Court of Appeals of New York.

June 4, 1889.

Appeal from superior court of New York city, general term.

The plaintiffs were depositors with the defendant bank. Desiring to remit a sum of money to one Hall, in Leadville, Colo., they asked of the defendant's officers if they could do it for them. They said they could, but refused to give the plaintiffs a draft on a bank in Leadville, saying they could not do that, but they would give plaintiffs a letter of advice, which, as they stated, was their way of doing business. To this plan plaintiffs assented, and paid in to the defendant the sum of $500. They then received back from defendant the following writing: ‘New York, July 20, 1883. Bank of Leadville, Leadville, Colorado: Your account is credited this day five hundred dollars, received from Cutler, Hall 3 Co., for the use of J. Seymour Hall. E. BURNS, Cashier.’ Plaintiffs forwarded this letter to Hall, but before he received it the Leadville bank had failed, and had gone into a receiver's hands, who refused to pay any money. Plaintiffs thereupon received back the letter, and then demanded that the defendant carry out its undertaking to transmit the money to Hall, or to pay back the money. Upon its refusal this action was brought.

L. B. Bunnell, for appellant.

Dudley R. Horton, for respondents.

GRAY, J., ( after stating the fact as above.)

This appeal turns upon the understanding and agreement between these parties. That they made a distinct compact is not to be doubted, and the plaintiffs' construction of it seems to us as logical as it is natural. The agreement must control the respective rights and duties, and is to be determined by what was said and done between the parties when the plaintiffs paid their money to the defendant. The plaintiffs wished to make a payment to a certain person in a distant state, and the defendant undertook to effect it for them, in its own way. When the plaintiffs assented, and paid in the sum desired to be remitted, they received the paper writing in question. From that moment the defendant became a depositary of a fund which was, by its own agreement, devoted to one particular purpose, and to no other. If that purpose failed, or became incapable of being effectuated, or was recalled by the plaintiffs, the absolute right to the moneys was in them, and in no one else. The defendant's undertaking was to effect the payment of the sum deposited by plaintiffs to Hall, and at no time did the moneys become merged in the general funds of the defendant, or cease to be under its dominion for the purpose of its assumed agency. It so-called letter of advice was equivalent to its certificate to its western cor-respondent of the deposit of a sum of money by the plaintiffs for the use of the person mentioned therein. The paper was worthless in the hands of any person until it was accepted by the Leadville bank, to which it was addressed. By its contract the defendant agreed with the plaintiffs, in effect, that the Leadville bank would pay $500 to Hall upon the presentation of its letter of advice. When that payment was refused, and the letter of advice was returned to the plaintiffs, the defendant became at once liable to repay the money to the plaintiffs. The defendant seeks to avoid what seems to be this very plain liability on its part, on the ground that by the credit of the sum to the Leadville bank's account on the books the defendant became a debtor to that bank for the money, and that the plaintiffs had assented that it should be so credited. But that was not the agreement, and no such construction is possible. The plaintiffs paid the money to defendant as a conduit for its transmission to Hall, and its undertaking was that Hall should get it. The letter of advice which plaintiffs received, by its terms, limited the use of the money to him alone. The defendant became the special depositary of the fund, and bound itself to retain it until drawn out under the authority of the letter. The letter was Hall's warrant for demanding payment of the bank to which it was addressed, and, upon payment, became the bank's voucher for reimbursement by the defendant. The form of the writing in question is not material, if its meaning is unobstructed and clear. In stating therein that the foreign bank's ‘account was credited’ with the money, those words were controlled in their general application and sense by the remainder of the clause, but it was ‘for the use of Hall.’ Thus the meaning of the instrument was obvious to the plaintiffs, to Hall, and to the...