Schaffer v. City Bank Farmers Trust Co.

• Decision Date: 07 January 1936
• Citation: 269 N.Y. 336,199 N.E. 503
• Parties: SCHAFFER v. CITY BANK FARMERS TRUST CO. et al.
• Court: New York Court of Appeals Court of Appeals

269 N.Y. 336

199 N.E. 503

SCHAFFER

v.CITY BANK FARMERS TRUST CO. et al.

Court of Appeals of New York.

Jan. 7, 1936.

Action by Harry M. Schaffer against the City Bank Farmers Trust Company and another. From an order of the Appellate Division (244 App.Div. 463, 280 N.Y.S. 401), reversing an order of the Trial Term, which granted an order for a compulsory reference, defendant named appeals by permission of the Appellate Division, which certified a question (245 App.Div. 780, 282 N.Y.S. 250).

Order affirmed and question answered.

Appeal from Supreme Court, Appellate Division, Third department.

Neile F. Towner, of Albany, and William Harvey Reeves and Lester Kissel, both of New York City, for appellant.

George B. Smith, of Schenectady, for respondent.

HUBBS, Judge.

The appeal in this case was permitted by the Appellate Division of the Third Department which has certified to us the following question: ‘Is this action properly referable under section 466 of the Civil Practice Act?’

That section reads in part: ‘§ 466. Compulsory reference. The court, of its own motion, or upon the application of either party, without the consent of the other, may direct a trial of the issues of fact, by a referee, where the trial will require the examination of a long account on either side and will not require the decision of difficult questions of law.’

In a general way the complaint alleges that the bank account in question was opened by the respondent Harry M. Schaffer and the defendant Howard C. Lake; that the respondent at all times was and now is the owner of such bank account; that the signature card provided that the bank should honor checks when signed by the respondent only; and that there is a balance due upon that account of $15,879.14. The material allegations of the complaint are denied by the appellant's answer. The appellant as a defense and as a partial defense pleaded that the account has been paid in full or at least partially paid. That defense is based upon the fact that the bank paid out the money upon checks drawn by Pauline M. Schaffer, either individually or as administratrix of the estate of her husband, Morris P. Schaffer, deceased. It was stipulated by the parties that evidence of that fact might be received without an amendment of the answer.

The claim of the appellant is that the bank account was opened in the name of Schaffer and Lake as a matter of convenience; that all of the funds in the account as a matter of fact belonged to Morris P. Schaffer, deceased, who during the time in question was a partner of the defendant Lake and the sole owner of the account standing in the name of Schaffer and Lake; that the respondent has no interest in the account and, therefore, is not entitled to recover against appellant. The defendant Lake does not claim any interest in the account.

The bank account was made up of various deposits and was drawn out by means of fifty-six checks. There is no contest about the date or amount of each deposit or the date or amount of each check. It is quite clear from the wording of the complaint that it does not allege a long account within the meaning of the statute and that the trial ‘will not require the decision of difficult questions of law.’

The contention of the appellant is that the only way it has of proving its defense that the money did not belong to the respondent is by showing where the money came from which was deposited in each item of deposit and where the money went to and for what purpose drawn out by each check, and that to establish those facts will involve an examination of a long account within the meaning of the statute. A compulsory reference was granted at the Trial Term, but the order was reversed by the Appellate Division.

The correct answer to the question certified can be determined by an examination of the three following cases: Steck v. Colorado Fuel & Iron Co., 142 N.Y. 236, 37 N.E. 1,25 L.R.A. 67;Irving v. Irving, 90 Hun, 422, 35 N.Y.S. 744, affirmed 149 N.Y. 573, 43 N.E. 987;Snell v. Niagara Paper Mills, 193 N.Y. 433, 86 N.E. 460,25 L.R.A.(N.S.) 264.

In the Steck Case Judge Earl wrote the leading opinion upon the subject and traced the history of the practice in this state from colonial days. It was there decided that where a complaint on contract was put in issue by the answer which also set up a counterclaim consisting of a long account, a compulsory reference could not be granted. After referring to the history of the statute and to many cases, he wrote: ‘This discussion, therefore, comes to this: If the plaintiff brings his action upon a long account, then it is such as was referable prior to 1777, and as the examination of a long account is required on his side the defendant cannot defeat a reference by anything he may set up in his answer by virtue of the statutes allowing set-offs and counterclaims. If the plaintiff's cause of action be upon contract for a definite sum of money, or for damages, ex contractu, and his cause of action be not gainsaid by the defendant, and the defendant sets up a counterclaim which requires the examination of a long account, then the case is such as would have been referable under the act of 1768. But if in such actions the plaintiff's cause of action be disputed, then a case is presented, which,...