Fowler v. Bowery Sav. Bank

• Decision Date: 30 April 1889
• Parties: FOWLER v. BOWERY SAVINGS BANK.
• Court: New York Supreme Court

113 N.Y. 450

21 N.E. 172

FOWLER

v.BOWERY SAVINGS BANK.

Supreme Court, New York County, New York.

April, 1889.

Appeal from a judgment of the general term in the second department, affirming a judgment in favor of the plaintiff rendered upon a trial by the court.

The facts appear in the opinion.

The Supreme Court held that a deposit in a savings bank by a husband in his name in trust for his wife, creates a trust in favor of the latter and passes the title to the depositor as trustee [citing Martin v. Funk, 75 N. Y. 134]; and after his death the bank is not protected in a payment to his executor where, before such payment, they have notice of the claim of the wife [[[distinguishing Boone v. Citizen's Savings Bank, 84 N. Y. 83]; and applied the rule that recovering a judgment against the wrong person cannot be set up as a defense by the right person, subsequently sued [citing Atlantic Dock Co. v. Mayor, etc., 53 N. Y. 64.] (The decision below is reported in 47 Hun, 399).

Defendants appealed to the court of appeals.

Carlisle Norwood, Jr., for defendants, appellants.

Eugene Burlingame, for plaintiff, respondent.

EARL, J.

On November 15, 1871, John White, the husband of Elizabeth White, deposited with the defendant, in trust for his wife, the sum of $805.93, and the deposit was entered upon a pass-book, which was delivered to him, in this way: “Bowery Savings Bank in account with John White for Elizabeth White.” This deposit remained in the bank during the life-time of John White, who died November 13, 1882, leaving a will wherein he appointed John D. Flynn his executor. The will was admitted to probate, and letters testamentary were granted to Flynn on January 23, 1883.

Elizabeth White died December 18, 1882, leaving a last will and testament in which the plaintiff was named as executor, which will was admitted to probate, and letters testamentary were issued to the plaintiff on January 11, 1883.

On January 25, the plaintiff, with his letters testamentary, called at the savings bank and notified it of his appointment as executor, and demanded payment of the deposit. He was told by one of its officers that the money would be paid to him when he came with the pass-book, which was then in the possession of Flynn, the executor of John White. Thereafter, on January 29, Flynn, having in his possession the pass-book, presented the same to the defendant, together with proof that he had been appointed executor of John White, and demanded payment of the deposit, and the defendant thereupon paid the same to him, and the pass-book was surrendered to it. Thereafter, on the same day, the plaintiff called on the defendant again in reference to the deposit, and was informed that it had been paid to Flynn.

This action was commenced in June, 1886, to recover the sum deposited with the defendant, and interest thereon.

It is clear that the plaintiff was legally entitled to receive payment of the deposit from the defendant, and that after the notice and demand by him it had no right whatever to pay the same to Flynn; and but for facts yet to be stated, the cases of Martin v. Funk, 75 N. Y. 134;Willis v. Smyth, 91 Id. 297, and Mabie v. Bailey, 95 Id. 206, 209, would be ample authority for the maintenance of this action.

After payment by the defendant to Flynn, the plaintiff, in the fall of 1883, commenced an action against him to recover, among other things, the money thus paid. Issue was joined, and the action was tried in the fall of 1884, and a verdict was rendered in favor of the plaintiff, and a judgment was thereon entered. The plaintiff was unable, however, to collect anything on the judgment, and he thereafter commenced this action.

The relation between a savings bank and a depositor therein is that of debtor and creditor, and the defendant therefore became a debtor for the sum deposited with it by John White (People v. Institution, 92 N. Y. 7). After his demand of the deposit, and the payment of the money to Flynn, there were two remedies open to the plaintiff. He could sue the defendant as a debtor for the deposit, and recover the amount thereof from it, or he could have brought an action for money had and received to and for his use against Flynn, and recover it from him. But he was not entitled to both remedies at the same time or in succession; and by electing the one he would lose the other. By electing to sue the bank he would repudiate its payment to Flynn, and his claim would be that the debt had not, in fact, been paid. By suing Flynn, he would adopt and ratify the act of the bank in making payment to him, and his claim would be that the money due to him had, in fact, been paid to Flynn, and that Flynn had received it to and for his use. Such adoption and ratification of the payment would legalize the payment as between him and the bank, and thus discharge the bank. He could not occupy the position at the same time of claiming that the bank had paid his money to Flynn, and yet that the bank was still his debtor. His election in this case to sue Flynn, and thus to treat him as his debtor, was not harmless to the bank, but in law may be presumed to have injured the bank, unless it should now be held to be discharged by its payment to Flynn. After the plaintiff commenced his action against Flynn, and thus ratified and adopted the payment by the bank to him, the bank could not during the pendency of that action, have sued Flynn to recover back the money on the ground that it had been paid by mistake, and received by him without authority, because it would have been a defense to such an action that the real owner of the fund had adopted and ratified the payment.

But, even if the mere commencement and pendency of the action by the plaintiff against Flynn would have not furnished such a defence, it is beyond doubt that, if the bank should now bring an action against Flynn to recover back the money, he could successfully defend on the ground that the plaintiff had ratified and adopted the payment, and thus discharged the bank by the recovery of a judgment against him for the money paid as the real owner thereof The two remedies--the one against Flynn and the other against the bank--are not concurrent. If the two actions could not be prosecuted at the same time, they could not in succession. Nothing could be more inconsistent than an action against Flynn on the ground that the money due to the plaintiff had been paid to him, and an action against the bank on the ground that it had not paid the deposit, and still remained debtor therefor.

If the money had been absolutely the money of the plaintiff, left on special deposit with the bank, then he could have pursued the money wherever he could trace it without losing his remedy against the bank. In such a case the plaintiff would not be barred of his right of recovery against the bank until he had either recovered his money or the value of the same. All his remedies would be consistent, being based upon the theory of a wrongful disposition of his property. So, too, where a trustee, in breach of his trust, disposes of the trust property, the beneficiary of the trust may pursue it or its proceeds wherever he can trace them, so far as the law will permit him to do so without releasing the trustee. All his remedies in such a case are consistent, and based upon the same theory, to-wit, a breach of trust; but if a trustee is bound to pay money to a beneficiary as a debt due from him to the beneficiary, then, if he makes payment to another person, he has not paid the debt, and the money paid is not in fact the property of the beneficary. In such case the beneficiary may ignore the payment, and sue the trustee as his debtor; or he may ratify and adopt the payment, and sue the person receiving the money as his debtor; but he cannot do both. There is, in such case, a breach of trust, or not, as he may elect, and his election, once effectually made, is conclusive forever ( Com. Dig. “Election,” c. 2). If one wrongfully takes and sells personal property not belonging to him, the owner has the election to sue him for the proceeds as money had and received to and for his use, and thus ratify the sale, or he may pursue the property and recover it or its value; but he cannot do both, and is bound by his election ( Pom. Rem. § 567 et seq.).

A few authorities may be cited to enforce these views.

In Priestly v. Fernie, 3 Hurl. & C. 977, it was held that where the master of a ship signs a bill of lading in his own name, and is sued upon it, and judgment is obtained against him, an action will not lie against the owner of the ship upon the same bill of lading, although satisfaction has not been obtained on the judgment against the master. Baron BRAMWELL, writing the opinion, said: “If this were an ordinary case of principal and agent, where the agent, having made a contract in his own name, has been sued on it to judgment, there can be no doubt that no second action would be maintainable against the principal. The very expression that where a contract is so made the contractee has an election to sue agent or principal, supposes he can only sue one of them; that is to say, sue to judgment.”

In Scarf v. Jardine, L. R. 7 App. Cas. 345, the facts were these: A firm of two partners dissolved. One retired, and the other carried on the business with a new partner, under the same style. A customer of the old firm sold and delivered goods to the new firm after the change but without notice of it. After receiving notice, he sued the new firm for the price of the goods, and upon their bankruptcy proved against their estate, and afterward brought an action for the price against the late partner; and it was held that the liability of the late partner was a liability by estoppel only, and not jointly with the members of the new firm; that the customer might at his option have sued the late partner or the members of the new firm, but could not sue all three together; and that, having elected...