Peoples Trust & Guar. Co. of Hackensack v. Genden

• Decision Date: 07 January 1936
• Parties: PEOPLES TRUST & GUARANTY CO. OF HACKENSACK v. GENDEN et al.
• Court: New Jersey Court of Chancery

182 A. 25

PEOPLES TRUST & GUARANTY CO. OF HACKENSACK

v. GENDEN et al.

Court of Chancery of New Jersey.

Jan. 7, 1936.

Syllabus by the Court.

1. The burden of sustaining exceptions to a master's report is upon the exceptant.

2. A court of equity will not disturb the master's conclusions upon factual questions submitted to him, unless it clearly and satisfactorily appears that he has erred in reaching them.

3. The relation between a bank and its depositor of negotiable paper is converted from that of principal and agent to that of debtor and creditor immediately upon the payment or clearance of said deposited items.

4. A bank upon which a negotiable instrument is drawn must at its peril ascertain and satisfy itself as to the genuineness of the maker's or acceptor's signature thereon and, upon payment thereof to or for the account of the bona fide holder thereof, is precluded by its act and estopped from repudiating the instrument or recovering the money paid by it thereunder.

Suit by the Peoples Trust & Guaranty Company of Hackensack, New Jersey, against Bessie Genden and the Guaranty Trust Company of New York.

Decree in accordance with opinion.

George F. Losche, of Hackensack, for complainant.

Bozza, Bozza & Bozza, of Newark, for respondent Bessie Genden.

Morrison, Lloyd & Morrison, of Hackensack, for respondent Guaranty Trust Co. of New York.

LEWIS, Vice Chancellor.

By a consent order entered April 3, 1933, a reference was made to the late Justice Minturn, as one of the special masters of this court, to take testimony and report thereon what decree should be made and entered herein, pursuant to which he has filed his report to which the interpleader and defendant banks have interposed the exceptions now urged against its confirmation.

The pertinent facts culminating in litigating the controversy in this court are: Based upon her asserted claim of $4,650, defendant Bessie Genden, on April 8, 1932, caused a writ of attachment to issue out of the Supreme Court against one Martin E. Foyer, all of whose moneys, credits, rights, and effects in the interpleader bank were thereupon attached by virtue thereof. Thereafter judgment for $4,729 was entered in her favor, which was followed by the issuance of a writ of execution and a subsequent levy upon all of the said judgment debtor's previously attached moneys, credits, rights, and effects in the interpleader bank. A claim of property in and to the funds and credits thus levied upon having been filed by the defendant bank, defendant Genden instituted scire facias proceedings in the nature of a rule to show cause why said funds and credits should not be applied towards the payment of her execution, whereupon the interpleader bank filed its present bill of interpleader, with the result that the proceedings then pending at law were restrained, the defendants, as directed, filed their respective statements of claim, the aforementioned order of reference was made, and the report of the said special master, finding in favor of defendant Genden, eventually filed and excepted to.

Aside from those addressed to mere casual and incidental observations of the special master, all of the exceptions here urged revolve about and center upon two checks, in the sums of $3,700 and $4,500, respectively, purporting to have been signed and drawn by one Sarah G. Keenan upon her account in the defendant bank to the order of said Foyer, which he deposited to his account in the interpleader bank, and upon both of which checks her signature is claimed to have been forged.

It is here contended on behalf of the defendant bank that it is entitled to the $714, conceded by the interpleader bank as being the balance of the $3,700 check still remaining in Foyer's account with it; and it is further contended on behalf of both the interpleader and defendant bank that Foyer, and hence defendant Genden, is not entitled to the proceeds of the $4,500 check in question because, as claimed by them, it was a forgery, was never paid, and never was collected or cleared, and consequently the special master erred in finding and reporting to the contrary.

It is now firmly settled that the burden of sustaining exceptions to a master's report is upon the exceptant, National Bank of Metropolis v. Sprague, 23 N.J. Eq. 81, Fish v. Harrison, 87 N.J.Eq. 103, 100 A. 185, affirmed Fish v. Harrison Milling Co., 89 N.J.Eq. 212, 103 A. 1052, and that this court will not disturb the master's conclusions upon factual questions submitted to him, unless it clearly and satisfactorily appears that he has erred in reaching them, Sinnickson v. Bruere, 9 N.J.Eq. 659, and this upon the principle that where he has had the opportunity to see and hear the witnesses, and thus better weigh their testimony, his conclusions will be entitled to great weight and respect, and, where supported by competent credible evidence, will not be set aside; even though there...