Straus v. Tradesmen's Nat. Bank of New York

• Decision Date: 28 October 1890
• Citation: 122 N.Y. 379,25 N.E. 372
• Parties: STRAUS et al. v. TRADESMEN'S NAT. BANK OF NEW YORK.
• Court: New York Court of Appeals Court of Appeals

122 N.Y. 379

25 N.E. 372

STRAUS et al.

v.TRADESMEN'S NAT. BANK OF NEW YORK.

Court of Appeals of New York,

Second Division.

Oct. 28, 1890.

Appeal from supreme court, general term, first department.

E. Countryman, for appellant.

Edwin B. Smith, for respondents.

BRADLEY, J.

The action was brought against the appellant and the Hanover National Bank of New York, and its purpose originally was to restrain the former from transferring or presenting for payment, and the latter from paying, a check drawn by the plaintiffs upon the Hanover Bank for $11,787.50, which had been deposited with the Tradesmen's Bank to the credit of Hiram Dixon. The claim to such relief was predicated upon the alleged ground that the check was so deposited to produce a fund to the credit of Dixon to pay a check drawn by him upon that bank for $11,775; and that the bank last mentioned sought to apply sufficient of the amount so placed to the credit of Dixon in payment of a debt or balance due from him to it of upwards of $800. The matter being partially adjusted by application upon the Dixon check of the proceeds of the plaintiffs' check in excess of the amount of such debit balance, the complaint was so amended as to reduce the controversy to the question whether the Tradesmen's Bank was entitled to retain from the fund the amount so due it from Dixon. This was dependent upon the nature of the credit to Dixon, and the character in which the bank was at liberty to assume that the deposit, furnishing the credit, was made. As a rule, a deposit made in a bank by a person on general account becomes its fund, and the relation between the depositor and the bank is that of debtor and creditor, and, in the absence of any agreement to the contrary, the bank is at liberty to apply the money upon a demand due to it from the depositor. Bank v. Hughes, 17 Wend. 94;AEtna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82;Bank v. Smith, 66 N. Y. 271. This the defendant contends was the situation, and the relation produced by the deposit in question. It appears that the Dixon check in the Tradesmen's Bank, payable to the order of the plaintiffs, was drawn by him, and delivered to them, at their request, and for their accommodation, with knowledge on their part that the drawer had no funds in the bank, and with the understanding that the plaintiffs would provide the means to meet it; and thereupon, and with that view, they drew their check upon the Hanover Bank payable to the order of one of them, who indorsed it, procured it to be certified by that bank, and sent it the Tradesmen's Bank. What took place there when the messenger delivered it to that bank for deposit to the credit of Dixon was the subject of conflict of evidence. But the trial court found that the plaintiffs' certified check was sent by...