Shattuck v. Guardian Trust Co. of New York

• Decision Date: 16 January 1912
• Citation: 204 N.Y. 200,97 N.E. 517
• Parties: SHATTUCK v. GUARDIAN TRUST CO. OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

204 N.Y. 200

97 N.E. 517

SHATTUCK

v.GUARDIAN TRUST CO. OF NEW YORK.

Court of Appeals of New York.

Jan. 16, 1912.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Edwin P. Shattuck, as receiver of the New York Investment & Improvement Company, against the Guardian Trust Company of New York. From a judgment of the Appellate Division (145 App. Div. 734,130 N. Y. Supp. 658) affirming a judgment in favor of plaintiff, granting insufficient relief, he appeals. Reversed, and new trial ordered.

Herbert Barry, for appellant.

Henry D. Hotchkiss, for respondent.

WERNER, J.

This action was brought to recover from the Guardian Trust Company of New York the amount of a certain deposit made with it in the name of the New York Investment & Improvement Company by the president of the latter. For brevity we shall refer to the corporation represented by the plaintiff as the ‘investment company,’ and to the defendant as the ‘bank.’

The complaint is in the usual form. After setting forth the corporate character of the investment company and the bank, and the appointment and qualification of the plaintiff as receiver of the former, it states that on or about the 16th day of December, 1905, the investment company deposited with the bank the sum of $75,000 which belonged to the investment company, and which the bank received upon the agreement that it would pay the same upon demand to or upon the order of the investment company, with interest at the rate of 2 1/2 per centum, and that on the 17th day of May, 1907, the plaintiff, as such receiver, duly demanded payment of the said deposit, with interest, and that the bank refused and continues to refuse to pay the same or any part thereof, except the sum of $69.04. These allegations are followed by the formal demand for judgment.

The answer, which pleads several distinct defenses, such as payment, account stated, and estoppel, admits that the bank received the deposit mentioned in the complaint; that the plaintiff demanded payment; and that the bank refused to pay any part of the deposit except the sum of $69.04, which is a balance of accrued interest due to the plaintiff and which the bank stands ready to pay.

Upon these pleadings the evidence was taken at Trial Term before the court and a jury, but by consent of the parties the case was submitted to the court for decision without a jury. The material parts of the findings are to the effect: That on December 16, 1905, the investment company, by its president, Charles L. Speir, deposited with the bank the sum of $75,000. That the investment company passed a resolution providing that all checks, drafts, or other orders for the payment of money should be signed by the president any countersigned by the treasurer of the investment company. That a copy of this resolution was delivered to the bank at the time of the deposit, together with a card containing the authorized signatures of Speir as president of the investment company, and of Alfred Lauterbach as its treasurer. That the bank thereupon issued to the investment company a passbook in the usual form, in which the former was debited and the latter credited with the sum of $75,000. That the deposit was made and received upon the agreement that the bank would hold the same for the use of the investment company and pay the same to it upon demand or upon its order, with interest at the rate of 2 1/2 per centum. That on or about December 29, 1905, the said Speir drew on said account a check for $70,000, in form as prescribed by the resolution of the investment company, but in fact genuine as to Speir's signature and forged as to that of Lauterbach, treasurer of the company, and then known by Speir to be so forged. That thereafter and prior to May 5, 1906, the said Speir drew another check for $5,000 which was in the form prescribed by the resolution of the investment company and was genuine as to Speir's signature but forged as to the signature of Lauterbach, and Speir knew that fact. That the bank paid out the money to Speir upon the faith of these two checks without any knowledge or notice of the forgery of Lauterbach's signature. That on May 5, 1906, Speir requested the bank to balance the passbook, which was done, and that when so balance it showed the debit of $75,000 with interest amounting to $69.04, less the two checks, which left a balance of $69.04 due to the investment company. That Speir at that time gave the bank a receipt in the following form: ‘Received passbook balanced to May 5, 1906, and two vouchers as per list. New York Investment & Improvement Company by Charles L. Speir, President. Dated May 5, 1906.’ That this passbook, so balanced, came into the possession of Lauterbach as treasurer of the investment company on or about May 7, 1906, but without the two vouchers, and that there has been no trace of these vouchers since their delivery to Speir. That neither the investment company nor the plaintiff as its receiver notified the bank of said forgeries within one year after the return of said vouchers.

Upon these findings of fact the trial court based the conclusions of law that the bank returned to the investment company the balanced passbook and the two checks for $70,000 and $5,000, respectively; that on May 5, 1906, the account between the bank and the investment company was stated and a balance struck fixing the indebtedness of the bank to the investment company at the sum of $69.04; that the plaintiff proved no fraud or mistake for which the account thus stated can be opened; and that the plaintiff is entitled to judgment for the sum of $69.04 . It may be stated in passing that, although the complaint demands judgment for the full amount of the deposit, with interest, the plaintiff only seeks to recover the difference between that amount and a certain sum which has been paid to him since the commencement of this action under circumstances which are not germane to the two questions which we deem it necessary to discuss for the purposes of this appeal. Upon that feature of the case it is enough to say that the plaintiff claims to be entitled to recover a sum very largely in excess of the judgment which was rendered. Our examination of the record has convinced us that the judgment rendered by the trial court and affirmed by a divided Appellate Divisionis sustained by findings of fact which are supported by evidence, and unless the trial court committed substantial errors to the prejudice of the appellant the judgment will have to be affirmed here.

The appellant's main contention upon this appeal is that the trial court erred in excluding certain evidence which, if admitted, would have tended to prove that the bank had notice of the plaintiff's claim that the money deposited with the bank had been paid by it upon checks that were forged as to the signature of the treasurer of the investment company, and that this notice was given within the year provided by the statute under which this case must be decided. If this contention is well founded, there can be no escape from a reversal of the judgment, because the whole case depended upon the vital question whether the bank had received notice of the forgery within the time fixed by the statute. This statute, which is a part of the negotiable instruments law (Consol. Laws 1909, c. 38, § 326), provides that ‘no bank shall be liable to a depositor for the payment by it of a forged or raised check, unless within one year after the return to the depositor of the voucher of such payment, such depositor shall notify the bank that the check so paid was forged or raised.’ The learned trial court found, and for the purposes of this appeal we must assume, that the two checks upon which this deposit was paid out were forgeries in so far as they purported to bear the genuine signatures of Alfred Lauterbach, the treasurer of the investment company.

[1] It has also been found that the vouchers, the two checks, were returned to Speir, the president of the investment company, on May 5, 1906, together with the balanced passbook showing the state of the account, and that Speir, as such president, thereupon signed and delivered to the bank the receipt therefor which is set forth in the findings. This latter finding warranted the legal conclusion that the vouchers had been returned to the investment company. The learned trial court further found that the balanced passbook came into the possession of Lauterbach, the...