Richardson v. Steuben Cnty.
| Decision Date | 04 March 1919 |
| Citation | 226 N.Y. 13,122 N.E. 449 |
| Parties | RICHARDSON v. STEUBEN COUNTY. |
| Court | New York Court of Appeals Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Supreme Court, Appellate Division, Fourth Department.
Action by Clinton W. Richardson against the County of Steuben. From a judgment of the Appellate Division (174 App. Div. 491,160 N. Y. Supp. 445), affirming a judgment of the Trial Term entered upon a finding, the defendant appeals. Reversed, and complaint dismissed.
Fred A. Robbins, of Hornell, for appellant.
Monroe Wheeler, of Buffalo, for respondent.
This action was brought to recover moneys claimed to have been paid by plaintiff to defendant under a mistake of fact. The moneys were so paid by plaintiff on account of his alleged liability as surety for the repayment by the George W. Hallock Bank of Bath of moneys deposited therein by the county treasurer of the defendant. The theory upon which he has been allowed to recover is that the bank in behalf of which he executed the undertaking was owned by a copartnership, and that between the execution of his undertaking and the deposit of the county moneys for which he has been compelled to respond on default of the bank, changes had taken place in the composition of the copartnership which had the effect of releasing him, and that his payment was made without knowledge of these changes.
Amongst the facts which were found were these uncontroverted ones:
On January 24, 1910, when plaintiff executed as surety the undertaking in question, there had existed in the village of Bath for over 60 years a bank known as and conducting business under the name of ‘The George W. Hallock Bank.’ On the death of the founder of the institution several years before the undertaking was executed his widow, Mary W. Hallock, and son as copartners continued to conduct the bank at the same place, under the same name, and without any changes either external or internal in its methods of doing business. On the death of the son shortly before the bond was executed a new copartnership was formed consisting of the widow and grandson, who likewise at the same place and under the same name, without changes external or internal, continued the operations of the bank, and it was this copartnership which was in existence at the time the bond was given. Thereafter and prior to May 31, 1912, other changes were made in the personnel of the copartnership, which, however, always continued to conduct the bank at the same place and under its original name without indication of any change in ownership or management.
When one Masterman was elected county treasurer of the defendant in 1910, by written instruments duly filed in the office of the clerk of the defendant and of the state treasurer, he designated ‘the then George W. Hallock Bank or Bath, N. Y.,’ as a depository for the moneys to be received by him as county treasurer, and in accordance with law there was executed by said bank as principal with plaintiff as one of the sureties, conditioned for the repayment of moneys deposited with it the undertaking which has given rise to this controversy and which it seems essential to quote in full. It reads as follows:
‘Know all men by these presents that, whereas, William G. Masterman, of the city of Hornell, of the county of Steuben and state of New York, now the treasurer of the county of Steuben aforesaid, as such county treasurer, has heretofore designated the George W. Hallock Bank of Bath, New York, as a depository for moneys received by him, as such county treasurer, and is about to deposit in such bank a sum or sums of moneys not exceeding the sum of ten thousand dollars, which said sum is hereby specified as the amount said treasurer shall be authorized to have on deposit with said bank at any one time:
‘Now, therefore, we, the undersigned, the said George W. Hallock Bank, of Bath, New York, principal and George W. Peck and Clinton W. Richardson, sureties, do hereby, pursuant to section 145 of the county law, jointly and severally undertake that the said George W. Hallock Bank of Bath, New York, shall faithfully keep and pay over on the order or warrant of the said treasurer, or any other lawful authority, such deposits and the agreed interest thereon; and also any deposit that shall be made by said treasurer, in said bank for the payment of bonds or coupons that shall by their terms be made payable at a bank or banks, and we do hereby further jointly and severally undertake to protect and save harmless the county of Steuben from any and all loss, because of the deposits and payments aforesaid, or any of them.
Then follow in proper form acknowledgments and approval of the bond.
Deposits were thereupon made by the county treasurer in said bank, but when it suspended payment in 1912, having on hand several thousand dollars of county deposits, there had been withdrawn from it all of the deposits made during the continuance of the copartnership owning and conducting the bank at the time when the undertaking was executed. Nevertheless when notice was served upon the plaintiff in behalf of the county, calling upon him under his bond to pay one-half of the county deposits remaining with the bank when it suspended payment, he complied with the demand and paid the sum of over $3,000 which thus far in this action he has been allowed to recover on the ground, as stated, that it was paid under a mistake of fact.
In addition to the facts which have been summarized and some others which perhaps amplify them without changing their effect it has in substance been found that at the time when the above-mentioned notice was served upon plaintiff and at the time when he paid thereunder and in accordance therewith, he did not know that the moneys deposited in the bank while the organization of the copartnership continued as it was at the time the bond was executed had been drawn out and fully paid, but supposed and believed that the sum which he was paying was one-half of the moneys which were deposited in said bank during the continuance of the copartnership existing at the time when he gave his bond, and that he had no knowledge that there had been any change in the personnel of the copartnership owning and conducting said bank; that his payment was made and received ‘by the mutual mistake of said county (the defendant), its said treasurer and of this plaintiff that this plaintiff was liable to the county for said payment and that the said sum of $3,041 was one-half of the balance due from the George W. Hallock Bank as composed and operated and conducted’ by the persons who constituted the copartnership at the time the bond was made; that ‘payment was made under the mutual supposition of both of them (plaintiff and the county treasurer) that nothing had occurred since its making and delivery to release plaintiff from his liability for the deposits owning at the time of the dissolution’; that ‘this plaintiff was not in any respect liable for the payment over (of the sum paid by him) by said bank to the said treasurer of the county of Steuben or to the county of Steuben.’
Then lastly there is a finding upon which appellant greatly relies as throwing a most potential light upon the interpretation to be given to the bond. This finding is:
‘That neither plaintiff nor Masterman (the county treasurer) at the time said bank was designated * * * and said bond given, or at any other time, until after the 31st day of May, 1912 (when it failed), knew whether said bank was an incorporated bank, a private bank or an individual bank, and neither of them knew or had any information as to what persons owned or were interested in said bank, and neither of them made any inquiry on that subject; that the copartnership agreement between Mary H. Hallock and William N. Hallock in April, 1908, was kept in said bank, and that neither the plaintiff nor the said Masterman, nor any person connected with said bank, knew of the existence of or terms of the same.’
The fundamental proposition upon which must rest plaintiff's right to recover is the one that his suretyship merely covered the copartnership owning the George W. Hallock Bank as it existed at the time when the bond was given, and that his liability cannot be extended to cover a copartnership of which the personnel had been changed. If he is wrong in this proposition and his undertaking is to be construed as insuring the responsibility of the George W. Hallock Bank as a continuing institution, irrespective of change in the owning copartnership, he is not entitled to recover. If in the decision of this question we were confined to a consideration of the naked written words of the undertaking, we should find it a close one. However, we are not thus confined, but have very illuminating circumstances casting their light upon the intent of the parties and the interpretation of their contract.
[1][2] The rule that the liability...
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