Importers' & Traders' Bank v. Peters

• Decision Date: 07 October 1890
• Citation: 25 N.E. 319,123 N.Y. 272
• Parties: IMPORTERS' AND TRADERS' BANK v. PETERS et al.
• Court: New York Court of Appeals Court of Appeals

123 N.Y. 272

25 N.E. 319

IMPORTERS' AND TRADERS' BANK

v.PETERS et al.

Court of Appeals of New York.

Oct. 7, 1890.

Appeal from supreme court, general term, first department.

EARL, J., dissenting.

Geo. W. Wingate, for appellant.

Joseph Larocque, for respondents.

O'BRIEN, J.

On the 2d day of April, 1885, the plaintiff, a national banking association in the city of New York had on deposit to the credit of the Exchange National Bank of Norfolk, Va., the sum of $7,207.36, and on the same day the latter bank, being insolvent, failed, suspended payment, and ceased to transact business. The defendant Peters was subsequently appointed receiver. In August, 1885, when this suit was commenced, there were two actions pending against the plaintiff in the supreme court for the recovery of the fund above mentioned. One of the actions was brought by the receiver claiming to be entitled to the money as the representativeof creditors, and the other by the defendants Everett Bros., Gibson & Co., merchants at Norfolk, and who claimed to be entitled to the fund on the ground that it represented the proceeds of paper collected by the defendant bank for them, but to which paper or the proceeds the bank had no title. The plaintiff then brought this action stating in the complaint that it had the fund, but was ignorant whether it belonged to the receiver or to Everett Bros., Gibson & Co.; that it was willing and desirous to pay the same into court or to such custodian as the court might designate, and prayed that it might be permitted to do so, and that then the defendants the receiver and the Norfolk claimants be required to interplead with each other concerning their respective rights to the same. Each of the defendants answered, setting up their respective claims to the fund as above stated, and offered to allow the plaintiff to pay the fund into court. Subsequently an order, in the nature of an interlocutory judgment, was entered in the action, by which it was adjudged that the complaint was properly filed; that the plaintiff pay the fund into court, and be dismissed from further liability; that the defendants be restrained from further prosecuting their respective actions against the plaintiff concerning the fund; that the defendants litigate and settle the matters in controversy, and their respective rights to the money so paid in between themselves. Thenceforth the litigation proceeded between the defendants who claimed the fund, upon their respective answers, and the plaintiff, as an active interested litigant, disappeared from the case. The trial court held that the defendants Everett Bros., Gibson & Co. were entitled to the fund as against the receiver of the Exchange Bank. The general term modified the judgment by reducing the recovery to $5,349.45, and from this determination the receiver appeals to this court. The answer of the Norfolk claimants states, and the trial court found, certain important facts in their favor, which, in the process of working out the result reached in the courts below, were fundamental: (1) That on the 30th day of March, 1885, Everett Bros., Gibson & Co., deposited with the Exchange Bank at Norfolk, for collection only, what is designated in the case as an ‘out-of-town draft,’ to-wit, their sight draft drawn on Murchison & Co. of New York city, and payable there for $12,303.52. That this draft was indorsed by the drawers in the form in which, by agreement and custom between the parties, drafts for collection only were to be indorsed, and then mailed by the collecting bank to the plaintiff at New York on the same day that it was deposited. On the afternoon of March 31st, the draft was presented by the plaintiff to the drawees who gave the plaintiff their check for the same which, on April 1st, was collected through the clearing-house, and the amount placed by the plaintiff, on its books, to the credit of the Exchange Bank in its account. (2) That on April 2, 1885, the Exchange Bank, to which the draft had been delivered and credited as above stated, suspended payment in the morning, notice of which was not received by the plaintiff till the afternoon, and, prior to the suspension at Norfolk, no notice had been received by that bank of the collection and credit of the proceeds of the draft by the plaintiff in New York. That this suspension was due to the fact that, for more than six months before, the bank was utterly and hopelessly insolvent to the knowledge of all its managing officers, and that this state of insolvency was produced by the misconduct of its managing officers in withdrawing large sums of money from the funds of the bank for their own purposes. That this condition of the Exchange Bank was not disclosed to or within the knowledge of Everett Bros., Gibson, & Co. when the...