Thompson v. St. Nicholas Nat. Bank

• Decision Date: 16 April 1889
• Citation: 21 N.E. 57,113 N.Y. 325
• Parties: THOMPSON et al. v. ST. NICHOLAS NAT. BANK.
• Court: New York Court of Appeals Court of Appeals

113 N.Y. 325

21 N.E. 57

THOMPSON et al.

v.ST. NICHOLAS NAT. BANK.¹

Court of Appeals of New York.

April 16, 1889.

Appeal from supreme court, general term, First department.

Action of replevin to recover 93 bonds of the par value of $1,000 each, brought by Jennie M. and John C. Thompson, executors of John B. Thompson, against the St. Nicholas National Bank. From a judgment of the general term in favor of defendant, plaintiffs appeal.

Lewis Sanders, for appellants.

Wm. Allen Butler, for respondent.

RUGER, C. J.

The uncontroverted proof on the trial established the following facts, viz.: That on the 18th day of April, 1874, Capron & Merriam, stock-brokers in New York, deposited with the defendant, a national bank, 93 coupon railroad bonds, payable to bearer, of the par value of $1,000 each, as security for any indebtedness which they then were or might become liable for to such bank, with authority to sell such securities, either at public or private sale, without advertisement or notice, and apply the proceeds in payment of such indebtedness. Upon the same day, and upon the faith of such deposit, the defendant promised to pay Capron & Merriam's checks in favor of third parties, to the amount of upwards of $236,000, and simultaneously certified checks to that amount, which were presented by and paid to the holders thereof during the same day. On Monday, the 20th of April, 1874, Capron & Merriam failed, owing the defendant a balance of account of about $72,000, arising out of the transactions of the 18th day of April, 1874. This sum was made up by charging Capron & Merriam with the amount of the checks certified and paid on the 18th of April, certain other checks, paid through the clearing-house on the morning of that day, and a balance of account remaining unpaid upon the transactions of the preceding day, and deducting therefrom the amount of their deposits, being about $211,000, made on April 18th. On the 5th day of May, 1874, the plaintiffs' testator served a written notice upon the defendant to the effect that the bonds in question were his property, and forbidding them from parting with the same, except by his order, and demanding an account showing what lien the defendant claimed to have on the bonds.

Upon the trial the plaintiffs proved that their testator, previous to April 18, 1874, owned such bonds, and on that day, and the day previous, transferred them to Capron & Merriam, to be held as margins on his individual stock transactions. No payment upon the indebtedness of Capron & Merriam to the defendant was ever made, except some small sums received by way of interest, and the receipts from sales of the bonds in question and others held as security for it. Such receipts never amounted to the sum of the indebtedness. No offer to pay such indebtedness was ever made by the plaintiffs' testator, or request to redeem the bonds in suit, or admission of any right in the bonds by the defendant. The defendant never, in terms, refused to render an account of its transactions with Capron & Merriam to the plaintiffs' testator, but it did omit to send a written statement thereof in response to his notice requiring the same. The defendant subsequently sold all of the securities held by it, either at public or private sale, using its best efforts to obtain as large a price as possible for them, and realized less than the amount of the debt due to it from Capron & Merriam. The plaintiffs' testator in October, 1879, claiming to be the owner of the bonds, demanded of the defendant their unconditional delivery to him; and in April, 1880, brought this action to recover their possession. Each party, on the close of the evidence, requested the direction by the court of a verdict, and the court granted the request of the defendant, and ordered a verdict for it. To this direction the plaintiffs excepted.

The plaintiffs also asked to go to the jury, in case the court should refuse to direct a verdict for them upon certain grounds stated, upon the fact whether the defendant was not liable for the full value of 48 certain bonds ‘which they sold without notice to plaintiffs' intestate, and he is entitled to have applied on the bank's account the highest market price which they would realize in extinguishment of the bank's claim, leaving the rest of the securities free and clear.’ This was refused, and the plaintiffs excepted. The court ordered the exceptions to be heard in the first instance at the general term.

There were some exceptions to the admission or rejection of evidence by the court taken by the plaintiffs during the trial, but none are referred to in the appellants' brief on the argument before us, and they were all unimportant. Neither has the exception to the refusal of the court to permit the plaintiffs to go to the jury on the alleged question of fact been argued or presented on the appeal. The refusal of the court was so obviously proper that it is unnecessary to spend time in discussing it.

It thus appears that the only exception in the case is to the direction of the court requiring the jury to find for the defendant. This exception presents the question whether, upon all of the facts of the case, the plaintiffs had established a right to demand the surrender of such bonds, or any part thereof, by the defendant to them. We think there was no error in the disposition made of the case by the trial court. The complaint alleges the ownership of the bonds by the plaintiff; that on or about the 18th day of April, 1874, the defendant became wrongfully and illegally possessed of the same; that upon demand it had refused to deliver them up to plaintiff; and a demand of judgment for the return of the bonds, and, in case that could not be had, a judgment for their value. The answer denied all of the allegations of the complaint except its own incorporation, and a demand of the bonds by the plaintiff, and for a second defense alleged the transfer of said bonds to it by Capron & Merriam as security for certain loans and demands made to and for said Capron & Merriam, the non-payment of the debt for which they were pledged, and a sale of such securities pursuant to the agreement under which they were pledged.

The issue in the case was thus a plain one. The plaintiff claimed to be the absolute owner of the bonds, unaffected by any right which the defendant might assert in respect to them; and to maintain the action he was bound to show that no title passed to the defendant by their transfer, or that at some time prior to the commencement of the action he had become entitled to the possession of such bonds, or some part thereof. Duncan v. Brennan, 83 N. Y. 487;Clements v. Yturria, 81 N. Y. 285; Redman v. Hendricks, 1 Sandf. 32; Ingraham v. Hammond, 1 Hill, 353;Pattison v. Adams, 7 Hill, 126.

Assuming the validity of the transaction by which the defendant became possessed of the bonds, this could be effected only by proof that the debt for which they were pledged had been wholly paid or the tender of a sufficient sum to discharge such debt. Lewis v. Mott, 36 N. Y. 395;Bakeman v. Pooler, 15 Wend. 637;Talty v. Trust Co., 93 U. S. 321.

This, confessedly, the plaintiff did not show. Various alleged equitable claims have been presented by the appellants as affecting the determination of this appeal; but, admitting their existence, the form of the action does not permit their consideration here. The action was replevin in cepit, and predicated upon the alleged wrongful taking by the defendant of the bonds in question from Capron & Merriam. The application of the deposits of the 18th day April to the extinguishment deposits of the 18th day of April to the extinguishment existing against Capron & Merriam on the morning of that day, instead of the indebtedness created by the payment of the certified checks, was properly made, and could not be questioned by the plaintiff. The demand upon which they were applied was a running account, composed of a number of items accruing at different times, all equally secured by the collaterals held by the defendant, but which were always insufficient to discharge the whole debt. Under such circumstances, in the absence of any express application of payments by the parties, the law applies them to the earliest items of the account. Truscott v. King, 6 N. Y. 147;Harding v. Tifft, 75 N. Y. 461;Webb v. Dickinson, 11 Wend. 62;U. S. v. Kirkpatrick, 9 Wheat. 720; Munger, Paym. 102.

The main contention of the appellants is that the transaction by which the defendant certified checks for Capron & Merriam, without having an equivalent amount of money on deposit to meet them, was a violation of section 5208 of the United States Revised Statutes, and that no valid debt against Capron & Merriam was created thereby; or, in other words, that the defendant did not become a bona fide holder of such bonds by reason of payments made in pursuance of such alleged illegal and prohibited arrangement. The statute is as follows: ‘It shall be unlawful for any officer, clerk, or agent of any national banking association to certify any check drawn upon the association unless the person or company drawing the check has on deposit with the association, at the time such check is certified, an amount of money equal to the amount specified in such check. Any check so certified by duly-authorized officers shall be a good and valid obligation against the association, but the act of any officer, clerk, or agent of any association in violation of this section shall subject such bank to the liabilities and proceedings on the part of the comptroller, as provided for in section fifty-two hundred and thirty-four.’

It will be seen that the statute affirms the legality of the contract of certification, and expressly prescribes the consequences which shall follow its violation. It therefore appears that, so far from making the contract of certification void and illegal, its validity is expressly affirmed, and the consequences...