Nat'l Butchers' & Drovers' Bank v. Hubbell

• Decision Date: 26 November 1889
• Citation: 22 N.E. 1031,117 N.Y. 384
• Court: New York Court of Appeals Court of Appeals
• Parties: NATIONAL BUTCHERS' & DROVERS' BANK v. HUBBELL.

117 N.Y. 384

22 N.E. 1031

NATIONAL BUTCHERS' & DROVERS' BANK

v.HUBBELL.¹

Court of Appeals of New York.

Nov. 26, 1889.

Appeal from supreme court, general term, fourth department.

This is an appeal from a judgment of the general term, affirming a judgment in favor of the respondent, Hubbell, entered upon the decision of a single judge at special term. The following are the material facts, as found by the justice trying the cause. The plaintiff is a duly-constituted banking corporation, located and doing business in the city of New York. On and for many years prior to December 9, 1884, the defendants J. Forman and Alfred Wilkinson were copartners, doing business under the firm name of Wilkinson & Co., as private bankers at the city of Syracuse, N. Y. For a number of years prior to December 9, 1884, the plaintiff had been accustomed to forward to the firm of Wilkinson & Co., for collection, checks, drafts, and notes belonging to it, and made payable at different places, at the city of Syracuse and vicinity, the firm being the correspondents of the plaintiff in that portion of the state. The course of business pursued by the plaintiff and the firm of Wilkinson & Co. was as follows: The plaintiff, upon receiving checks, drafts, and notes payable at Syracuse, or its vicinity, made upon such paper an indorsement in the following form: ‘Pay Wilkinson & Co., or order, for coll. for account of National Butchers' & Drovers' Bank of the city of New York. W. H. CHASE, Cash.’ The plaintiff thereupon inclosed said checks, drafts, and notes in a letter addressed to the firm of Wilkinson & Co., which was in the following form: ‘National Butchers' & Drovers' Bank, N. Y., 188. Messrs. Wilkinson & Co.—Dear Sirs: Your favor of the _____ inst. is received, with inclosures, as stated. I inclose for collection and credit bills as stated below. Respectfully, yours, WILLIAM H. CHASE, Cashier.’ Thereupon follows an itemized statement of checks, drafts, etc., naming the bank where payable, the city where such bank is located, and the amount of the checks, drafts, etc. All above the itemized statement in the letter was in print, except the address, ‘Messrs. Wilkinson & Co.’ Thereupon the plaintiff, upon its books, charged to Wilkinson & Co. the various drafts, checks, etc., thus forwarded to them, and upon the credit side of their account credited them for whatever moneys were remitted to and received by the plaintiff from Wilkinson & Co. The charges against Wilkinson & Co. were made upon the ledger of the plaintiff day by day, as the checks, drafts, etc., were sent, and on the days they were sent. Upon receipt by Wilkinson & Co. of the checks, drafts, etc., such of them as were payable on demand were immediately, upon their receipt, credited to the account of the plaintiff kept upon the books of Wilkinson & Co. for their face value. Such paper as was not payable upon demand, but had some time to run, was not entered upon the account of the plaintiff until it was actually paid. Such of the checks, bills, and notes as were payable at banks of the city of Syracuse were thereupon collected by Wilkinson & Co. through the clearing-house. If any of the paper, however, was protested, it was charged back upon the books of Wilkinson & Co. to the plaintiff, and returned to it, and the expenses of protest charged to plaintiff. Such of the paper received by Wilkinson & Co. from the plaintiff as was payable at banks out of the city of Syracuse was forwarded by Wilkinson & Co. to their own correspondents at the cities and villages where such payments were to be made, and Wilkinson & Co. received from them the proceeds of such paper when collected. On Thursday of each week Wilkinson & Co. remitted to the plaintiff, by a draft on New York, the amount standing to the credit of the plaintiff upon their books up to that time, less about 3–16 of 1 per cent. for their services. These remittances were generally made in the morning, regardless of whether Wilkinson & Co. had at the time actually received the proceeds of all the checks, drafts, etc., which then stood upon its book credited to the plaintiff. This manner of doing business had been carried on for a number of years prior to the failure of Wilkinson & Co., and was understood by the plaintiff, and was the existing arrangement. In pursuance of this arrangement, the plaintiff, on and for a number of days prior to December 8, 1884, forwarded to Wilkinson & Co. various drafts, checks, and notes, indorsed by the plaintiff in the manner above described, inclosed in letters in the form specified, amounting in all to $14,260.36, all of which, except time collections amounting to $438.67, were credited to the plaintiff upon their books. From this total Wilkinson & Co., prior to December 9, 1884, had sent various sums for collection to other agents, leaving a balance of $13,822.43 to be accounted for. Of this sum there had been paid to, and received by, Wilkinson & Co. on and prior to December 9, 1884, the sum of $9,195.50, which sum was received by Wilkinson & Co. in divers sums from December 4 to December 9, 1884, both dates inclusive, and no part of that sum has been paid to the plaintiff, but all of it was paid out by Wilkinson & Co. in due course of business before December 9, 1884. On the 9th of December, 1884, Wilkinson & Co. executed and delivered to the defendant, Charles E. Hubbell, a general assignment for the benefit of their creditors of their property, both real and personal, and Hubbell duly accepted the trust created, and duly qualified as such assignee, and took possession thereunder on the morning of December 10, 1884, said assignment being duly recorded on the 10th day of December, 1884. Between the execution and delivery of the assignment and the 20th of February, 1885, Hubbell, as such assignee, received of the checks, drafts, etc., sent by plaintiff to Wilkinson & Co. the sum of $4,626.83, being the balance of said sum of $13,822.43. The defendant remitted to the plaintiff $438.67 of above amount, being proceeds of time paper sent for collection, as to which a different practice had prevailed, but defendant, Hubbell, as such assignee, refused to pay the balance of said $4,626.83, being the sum of $4,188.16, to the plaintiff.

Prior to a notice of the plaintiff's claim served on defendant,Hubbell, December 26, 1884, he had, as assignee of Wilkinson & Co., received from the entire estate the sum of $10,903.36, which sum included all but $295.48 of the above-named amount, $4,198.16; and the assignee, prior to receiving the notice, had paid out in the management of the estate, and in a dividend to the preferred creditors in the assignment, the sum of $10,548.57, leaving a balance of $354.79, the dividend being the sum of $10,001.71, and being made in pursuance of an order of the county court of Onondaga county. The dividend paid by the assignee to the preferred creditors of Wilkinson & Co. was made by him in accordance with the provisions of the assignment to him, and under an order of the county judge of Onondaga county, dated December 23, 1884, which directed and authorized him to make a dividend of 10 per cent. upon the first preferred claims mentioned in the assignment. All of the payments were made by the defendant, Charles E. Hubbell, as assignee of Wilkinson & Co., in good faith, and without any notice or knowledge of any claims made by the plaintiff on any of the money received by him, and without knowledge of any claim made by the plaintiff that the title to any portion of the moneys, which were the proceeds of checks, drafts, etc., sent by the plaintiff to Wilkinson & Co., was claimed to be vested in it. After the assignee had paid out the money, and on the 26th day of December, 1884, the plaintiff for the first time made any claim, or served any notice upon the assignee of any claim, to any of the moneys, drafts, checks, or securities received by Wilkinson & Co. from the plaintiff, or the proceeds of any of such drafts, checks, or securities received by him. The plaintiff had no notice of the application for the order granted by the county court or judge of Onondaga county, and was not apprised of the same until after Hubbell had paid the dividends to the preferred creditors of Wilkinson & Co., named in the assignment. After the trial of this action, the defendant Alfred Wilkinson died, leaving the defendant J. Forman Wilkinson sole surviving partner of the firm of Wilkinson & Co. Before the commencement of this action due and proper demand of payment on behalf of the plaintiff was made of the firm of Wilkinson & Co., and of said Charles E. Hubbell, as such assignee, and payment by them severally refused. The assignment was subsequently set aside as a fraud upon Wilkinson's creditors. The trial judge held that the defendant, Hubbell, was not liable for the moneys received and spent by Wilkinson & Co. prior to the assignment, nor for the money received by Hubbell himself after the assignment, and paid out by him in the payment of a dividend to the preferred creditors under the assignment, and that Wilkinson & Co. were themselves liable for the amounts collected by them as proceeds of the paper sent them for collection by the plaintiff. From an affirmance of a judgment entered to this effect by the general term in the fourth department, the defendant has appealed here.

Wm. James, for appellant.

Louis Marshall, for respondent.

PECKHAM, J., ( after stating the facts as above.)

The defendant, Hubbell, as one defense to the claim of the plaintiff, insists that Wilkinson & Co., upon the receipt by them of the various checks and drafts or other pieces of paper payable on demand, and upon the crediting of the amounts thereof to the plaintiff upon their books, without waiting for the payment of the same, became the owners thereof, and that these facts amounted to a transfer of the title to the paper or its proceeds to Wilkinson & Co. In that we think he is mistaken. The...