McLoghlin v. Nat'l Mohawk Val. Bank

• Decision Date: 24 October 1893
• Citation: 34 N.E. 1095,139 N.Y. 514
• Parties: McLOGHLIN et al. v. NATIONAL MOHAWK VAL. BANK.
• Court: New York Court of Appeals Court of Appeals

139 N.Y. 514

34 N.E. 1095

McLOGHLIN et al.

v.NATIONAL MOHAWK VAL. BANK.

Court of Appeals of New York.

Oct. 24, 1893.

Appeal from supreme court, general term, fourth department.

Action by Thomas McLoghlin and John J. McLoghlin, as executors of the will of B. F. McLoghlin, deceased, against the National Mohawk Valley Bank. From a judgment of the general term (20 N. Y. supp. 171) affirming a judgment entered on the report of a referee, defendant appeals. Reversed.

J. B. Rafter, for appellant.

John CourtneyJr.,(Wm. P.Goodelle, of counsel,) for respondents.

EARL, J.

This action was brought by the plaintiffs to recover money deposited by their testator with the defendant. The amount of the principal sum claimed is $2,511.31. The testator opened an account with the defendant in August, 1853, and from time to time made deposits in the bank, and drew checks against his account until May, 1865, when the amount now claimed was the balance due him. The testator died in November, 1888, and from May, 1865, until that time, there was no entry of debit or credit in his account. Before the commencement of this action the plaintiffs demanded of the defendant the balance of principal due them, with interest thereon from May 25, 1865, to the date of the demand. The defendant offered to pay the principal, but refused to pay interest, and the controversy between these parties is whether, upon the facts proved, it was bound to pay interest upon the balance claimed.

The sole evidence given by the plaintiffs to prove any agreement to pay interest upon the money deposited by the testator was the entries in his account kept in the books of the bank and in the pass book held by him of credits, from time to time, of interest. It appears from the account that interest was credited upon the balances for a portion of the time at the rate of 5 per cent., for another portion at the rate of 3 3/4 per cent., and for another portion at the rate of 2 1/4 per cent. The referee held that these credits were sufficient to show that the account was an interestbearing account, and he reported in favor of the plaintiffs, giving them judgment for the principal sum, with interest thereon from the 25th of May, 1865, to the date of his report, at the rate of 3 per cent. When the account was opened, and until 1867, Mr. Pomeroy was cashier of the bank, and for many years before and after 1867, Dean Burgess was its president; and after the death of Pomeroy, in 1867, Henry D. Alexander was its cashier. The referee found that in the latter part of the year 1867 the testator had an interview with Burgess, at which two of the directors of the bank were present, at its banking house, during the usual business hours of the day. That Burgess, speaking to the testator concerning his deposit, said in substance, ‘You must draw your money; we can pay no interest;’ to which the testator replied, in substance, ‘that the bank would be crippled by the defalcation, [having reference, probably, to the defalcation of the previous cashier,] and they could not afford to pay him interest; that it was not necessary for him to have the money.’ That burgess answered ‘that it was contrary to the rules of the bank to pay interest; that the bank did not pay interest on deposits, and he must withdraw his money; that they could pay no interest.’ That afterwards, in the year 1869, the testator had an interview with the cashier, Alexander, at the defendant's banking house, during the usual hours of business. That the testator said to Alexander that ‘he had called there some time ago, and had talked about his deposits with the old gentleman, [meaning Burgess,] in the back room, who said they could not pay him interest.’ That Alexander replied: ,‘that is so. We don't pay anybody interest now. If you desire to deposit your money where they pay interest you had better take it to a savings bank;’ and the testator said that ‘He would leave his money there until he could get some other place to put it.’ That alexander answered: ‘All right. You can have your money any time you want it.’ That some years afterwards the testator met the cashier, Alexander, in the village of Mohawk, after business hours, and asked him if they had concluded to pay him any interest on his account, and Alexander replied ‘they had not; that they could not do it.’ Notwithstanding these facts, proved to the satisfaction of the referee, and found by him, he held that there was a continued obligation on the part of the bank to pay interest on the balance of this account.

While it is true that the entries of interest in the bank's account with the testatorest furnished prima facie evidence that the interest was allowed in pursuance of some arrangement or agreement, they furnished no evidence as to the precise character of that agreement. They did not show what the rate of interest was to be, nor for what length of time, nor under what circumstances, interest was to be paid. They certainly furnished no evidence that interest was to be paid to the testator on the balance of his account so long as he chose to leave his money on deposit there. It is perfectly consistent with the entries of interest in the account that the arrangement for the deposit and for the payment of interest was terminable at the option of either party. In 1867, when the testator had the interview with the president of the bank, it is clear that there was no subsisting arrangement for the payment of interest. He was then at the bank, seeking for a promise from the bank to allow him interest, and it positively refused. In the subsequent conversation with the cashier it again clearly appears that there was no subsisting arrangement for the payment of interest, as the testator was seeking to make one. So that, upon the facts found by the referee, it seems to us that, if some kind of arrangement for the payment of interest prior to May 25, 1865, could be found to have existed, that arrangement was...