Noah v. Bowery Sav. Bank

• Decision Date: 14 January 1919
• Citation: 122 N.E. 235,225 N.Y. 284
• Parties: NOAH v. BOWERY SAV. BANK.
• Court: New York Court of Appeals Court of Appeals

225 N.Y. 284

122 N.E. 235

NOAH

v.BOWERY SAV. BANK.

Court of Appeals of New York.

Jan. 14, 1919.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Ernestine Noah against the Bowery Savings Bank. From a judgment of the Appellate Division (171 App. Div. 912,155 N. Y. Supp. 1128), affirming a judgment of the Trial Term, entered upon the verdict of a jury in favor of defendant, plaintiff appeals. Reversed, and new trial granted.

Harold Nathan and Mortimer Brenner, both of New York City, for appellant.

George Coggill, of New York City, for respondent.

CRANE, J.

On the 3d day of September, 1912, Ernestine Noah had to her credit in the Bowery Savings Bank the sum of $2,364.26. The passbook issued to the plaintiff showing this amount on deposit had printed upon it the following rule:

‘13. Should any depositor lose his book, he is required to give immediate notice thereof to the bank. Books must be presented to be written up before interest can be drawn. All payments made to persons producing deposit books shall be deemed good and valid payments to depositors respectively.’

The plaintiff's son, Sidney Noah, stole his mother's bank book and by forged orders drew out of this account $2,000, which he spent on himself. On September 3, 1912, he presented to the bank the passbook and an order, purporting to be signed by the plaintiff, directing the bank to pay to Sidney Noah, or bearer, the sum of $300. On the 16th day of September, 1912, he again presented the bank book and another order, purporting to be signed by the plaintiff, directing the bank to pay to Sidney Noah or bearer the sum of $500, and on the 4th day of October, 1912, the order, presented with the bank book and apparently signed by the plaintiff, directed the bank to pay to Sidney Nichols, or bearer, the sum of $1,200. After certain questions were asked by the teller of Sidney Noah, and the signature on the orders compared with the genuine signature in the possession of the bank, the money was paid to the son and wrongfully used by him.

Ernestine Noah claimed that she never authorized these withdrawals, that her name was forged, and that she never received the money. Sidney Noah was indicted for forgery, pleaded guilty, and was sent to Elmira. The bank having refused to pay these moneys to the plaintiff on demand, she has brought this action.

[1] In her complaint, she alleges the amount on deposit as above stated, her demand for the payment of $2,000, and the refusal of the defendant to pay it. The defendant by answer admits the deposit, the demand, and its refusal to pay, and sets up the payments to Sidney Noah as a separate and complete defense. It may be doubtful whether the allegations of due care and diligence are sufficient, as the defendant merely states that Sidney Noah made correct answers to the questions asked of the depositor when the deposit was made, and that the defendant exercised due diligence in examining the signature of said depositor. There is no rule of law, that I know of, which makes the asking of such specific questions and the examination of the signature a complete defense as a matter of law in all cases. Circumstances might require other things to be done to establish care and diligence. The defendant, instead of pleading that it took care to do a specific thing, should have pleaded that it did all things that a reasonably prudent person would have done under the circumstances and conditions presented. However, no question has been raised as to the pleadings, and the trial proceeded upon the theory that the defendant, in making payments to Sidney Noah, was bound to exercise reasonable care.

[2] The rule is well established that the bank cannot rely in making payment solely upon the possession and presentation of the bank book as stated in rule 13 above quoted, but must exercise ordinary care and diligence to ascertain that the person receiving the money is entitled to it. Kelley v. Buffalo Savings Bank, 180 N. Y. 171, 72 N. E. 995,69 L. R. A. 317, 105 Am. St. Rep. 720.

[3] On the trial the judge satisfactorily charged this rule of law, making it quite clear and plain, but fell into error in charging that--

‘The plaintiff has the burden of proof, and must prove to your satisfaction by a preponderance of evidence that the bank failed to exercise the ordinary care which they were required to exercise under the circumstances of this case.’

The action was for money which the defendant owed to the plaintiff. The debt was admitted. The defense was payment to a third party under such circumstances of care and diligence as to relieve the bank from liability. The burden, therefore, was upon the bank to prove this defense, and that it exercised due care and diligence in making payment to Sidney Noah. Payment in a case like this is an affirmative defense to be proved by the party alleging it. Conkling v. Weatherwax, 181 N. Y. 258, 73 N. E. 1028,2 Ann. Cas. 740;Dowling v. Hastings, 211 N. Y. 199, 105 N. E. 194;Lerche v. Brasher, 104 N. Y. 157, 10 N. E. 58.

There is no fact in this action which should make it an exception to this general rule. The authorities involving the question of payment by savings banks also indicate that the burden of proving care and diligence is upon the defendant pleading it. In Gearns v. Bowery Savings Bank, 135 N. Y. 557, 562,32 N. E. 249, 250, it was said:

‘It is well settled, however, that payment made to a person who is not in fact entitled to draw the deposit, though he may have possession of the book and present it at the time of payment, will not discharge the bank, unless it exercised at least ordinary care and diligence in paying the money to the wrong person.’

See, also, Allen v. Williamsburg Savings Bank, 69 N. Y. 314;Kummel v. Germania Savings Bank, 127 N. Y. 488, 28 N. E. 398,13 L. R. A. 786;Mahon v. South Brooklyn Savings Institution, 175 N. Y. 69, 72,67 N. E. 118, 119,96 Am. St. Rep. 603. In the latter case the opinion contains this statement of the rule:

‘When through a depositor's carelessness his bank book gets into the hands of a third person, who presents it to the bank, the latter may show its care and diligence in making payment to the person presenting the passbook, and thus protect itself against a second demand for payment by the careless depositor.’

[4] How a jury may be impressed by the charge of a court as to the burden of proof, of course, no one knows except the jurors themselves. Upon whom rests the burden of proving a fact cannot be said to be immaterial, and frequently is of great moment. The only practical course to follow is to state clearly to a jury the law as it is. The error in this particular requires a new trial.

[5] There was also evidence admitted in this case which we think improper as bearing upon the question of the paying teller's neglect. One William E. Knox, the comptroller of the Bowery Savings Bank, was made an expert witness as to the mental action of bank clerks. The depositor's name was Ernestine; the order as presented by her son was signed Ernestina. After qualifying through an experience of years at the signature window and the examination of hundreds of names daily, the witness was asked this question:

‘Now, I ask you to tell us whether or not, in your opinion, if a depositor opens an account in her name as ‘Ernestine’ somebody or other, and a draft is presented signed ‘Ernestina’ somebody or other, purporting to come from her, that that circumstance would tend to excite suspicion in the mind of the ordinarily competent signature clerk?'

Over objection and exception the witness answered:

‘In my opinion it would not excite any suspicion.’

It will be noted that this witness is not asked, as an expert familiar with the banking business, to give the usual and ordinary methods employed in the savings bank business in dealing with signatures and identification, but is asked his opinion regarding the mental operation of another; he is called upon to state what...