Erb v. Napoli

• Decision Date: 25 May 1926
• Citation: 243 N.Y. 45,152 N.E. 460
• Parties: ERB v. BANCO DI NAPOLI.
• Court: New York Court of Appeals Court of Appeals

243 N.Y. 45

152 N.E. 460

ERB

v.BANCO DI NAPOLI.

Court of Appeals of New York.

May 25, 1926.

Action by Geneva Erb against the Banco di Napoli. From the judgment of the Appellate Division (213 App. Div. 265, 210 N. Y. S. 149), reversing the determination of the Appellate Term (121 Misc. Rep. 668, 201 N. Y. S. 697), and affirming the judgment of the municipal court for plaintiff, defendant appeals.

Judgment of the Appellate Division reversed, and determination of the Appellate Term affirmed.

Appeal from Supreme Court, Appellate Division, First Department.

Ralph Atkins and Carroll G. Walter, both of New York City, for appellant.

Henry Amerman, of New York City, and J. B. Erb, of Chicago, Ill., for respondent.

CRANE, J.

The Appellate Division has certified that we should review the law in this case. The agreed statement of facts was submitted to the Municipal Court, which gave judgment for the plaintiff. The Appellate Term reversed that judgment and dismissed the complaint. The Appellate Division has reversed the Appellate Term and sustained the Municipal Court. We have determined that the submitted facts do not go far enough to sustain the plaintiff's claim, and that the complaint should be dismissed. I will state our reasons.

The kingdom of Italy issued bonds which were negotiated or sold in the state of New York. On their face they provided:

‘Such principal and interest will be paid at the office of the Banco di Napoli in the borough of Manhattan, city of New York, United States of America, in gold coin of the United States of America, of the standard of weight and fineness existing on January 1, 1920.’

The coupons attached to the bonds read as follows:

‘The government of the kingdom of Italy promises to pay to bearer at the office of the Banco di Napoli, in the borough of Manhattan, city of New York, United States of America, $32.50 in gold coin of the United States of America, without deduction for Italian taxes, present or future, being six months' interest then due on the government of the Kingdom of Italy, six and one-half per cent. gold bond No. M2337.’

The plaintiff possessed three of these coupons dated August 1, 1922, which were lost and destroyed by dropping through the trolley slot of the Broadway Street Railway.

The kingdom of Italy had provided funds to meet its obligations. The agreed facts contained this statement:

‘That the kingdom of Italy has supplied the defendant with the funds wherewith to pay these coupons in the city of New York, on their presentation, and surrender to it, but not otherwise. Defendant is without authority from the kingdom of Italy to part with said funds for or on account of such interest coupons, except on their presentation and surrender.’

In thus providing the defendant bank with money to pay the accruing coupons upon its bonds, did the kingdom of Italy change the conventional relationship which exists between a bank and its depositor into one of trust, so that the plaintiff, the holder of the coupons, can sue directly the alleged trustee having the funds?

The plaintiff has obtained a recovery upon the doctrine of Lawrence v. Fox, 20 N. Y. 268. As has been repeatedly stated, the fundamental fact in that case was the agreement made upon consideration to pay money received to a third party. We find no such agreement to pay contained in the agreed statement of facts in this case. Directions standing alone to a bank or to an agent do not constitute an agreement by the bank or the agent for the benefit of a third party. In AEtna National Bank v. Fourth National Bank, 46 N. Y. 82, 7 Am. Rep. 314, it was decided that the relation of banker and depositor is that of debtor and creditor, and has in it none of the elements of a trust. For a breach on the part of the bank of its obligation, the depositor alone can sue. This court said:

‘Lawrence v. Fox, 20 N. Y. 268, was upon an express promise, to pay a sum of money received by the defendant, from a debtor of the plaintiff, to the plaintiff; and the promise was the consideration upon which, and upon which alone, he received the money. The money was appropriated by the debtor, to the payment of the debt to the plaintiff, and intrusted to the defendant upon an express promise to pay that debt.’

The facts as presented in the statement bring these lost coupons under the rule applicable to notes and checks to pay which money has been deposited with or sent to a bank. The holder cannot sue the bank. Baldwin's Bank of Penn Yan v. Smith, 215 N. Y. 76, 82,109 N. E. 138, L. R. A. 1918F, 1089, Ann. Cas. 1917A, 500. The case of Noyes v. First National Bank of New York, 180 App. Div. 162, 167 N. Y. S. 288, affirmed 224 N. Y. 542, 120 N. E. 870, seems to be directly in point. There it was held that money sent to a bank to pay interest coupons...