First Nat. Bank of Waterlood v. Exch. Nat. Bank of Seneca Falls

• Decision Date: 29 April 1919
• Citation: 123 N.E. 368,226 N.Y. 633
• Parties: FIRST NAT. BANK OF WATERLOOD v. EXCHANGE NAT. BANK OF SENECA FALLS et al.
• Court: New York Court of Appeals Court of Appeals

226 N.Y. 633

123 N.E. 368

FIRST NAT. BANK OF WATERLOOD

v.EXCHANGE NAT. BANK OF SENECA FALLS et al.

Court of Appeals of New York.

April 29, 1919.

Appeal from Supreme Court, Appellate Division, Fourth Department.

Action by the First National Bank of Waterloo against the Exchange National Bank of Seneca Falls and another, as trustee in bankruptcy of Francis Bacon. From a judgment of the Appellate Division (179 App. Div. 22,164 N. Y. Supp. 1092), unanimously affirming a judgment at Special Term for plaintiff (179 App. Div. 22,153 N. Y. Supp. 818), defendants appeal. Judgment modified, and as modified affirmed.

George E. Zartman, of Waterloo, pro se.

H. A. Carmer, of Seneca Falls, for appellant Exchange Nat. Bank of Seneca Falls.

W. Smith O'Brien, of Geneva, for respondent.

PER CURIAM.

Several of the questions sought to be raised by the appellants are conclusively settled by the unanimous affirmance by the Appellate Division of the judgment of the Special Term. A careful consideration of the other questions argued fails to disclose any substantial error which would justify the reversal of the judgment. There is, however, one error in the form of the judgment which necessitates a modification of it.

It appears that from October 1, 1908, to April 1, 1915, the First National Bank of Waterloo has declared on the stock pledged to it 14 dividends of 2 1/2 per cent. each, making a total of $4,427.50, and in the thirteenth subdivision of the judgment it is provided that the purchaser or purchasers of such stock upon the sale directed to be made shall be entitled to all the dividends which have been declared upon said stocks or any of them and which remain unpaid, together with any dividends which may be declared and remain unpaid prior to such sale. This is contrary to the general rule. It is well settled that, under circumstances similar to those here established, it is the right and duty of the pledgee of stock to collect the dividends declared thereon and apply them towards reduction of the indebtedness for which the stock is held as security. This rule was reiterated recently by this court. See Brightson v. Claflin, 225 N. Y. 469, 122 N. E. 458, and authorities there cited. The dividends declared upon the stock of the plaintiff remain in its possession and are not subject of a sale, but should be applied, prior to the sale, in reduction of the indebtedness found due. If at the time of the sale a dividend has been declared on the stock which...