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Richardson v. Cheney

Supreme Court of New York, Appellate Division

November 3, 1911

ORION H. CHENEY, as Superintendent of Banks of the State of New York, Appellant.

Page 687

APPEAL by the defendant, Orion H. Cheney, as Superintendent of Banks, etc., from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 1st day of March, 1911, upon the decision of the court, rendered after a trial at the New York Trial Term, a jury having been waived.


Roswell S. Nichols of counsel [Edward A. Craighill, Jr., with him on the brief], Rollins & Rollins, attorneys, for the appellant.

Pierre M. Brown of counsel [Armstrong & Brown, attorneys], for the respondent.


Plaintiff was a depositor with the European-American Bank. On May 26, 1910, he presented to the bank for discount two notes payable to his order, one for $2,000 due August 24, and the other for $4,000 due August 25, 1910. The bank discounted the notes and plaintiff, who had no substantial deposit at the time, was credited with $6,000 and at the same time he drew a check for $2,000 to the order of the European-American Bank and delivered it to the cashier. Said bank accepted the check, payable at the Mercantile National Bank.

The cashier testified that this was equivalent to certification; that is, the amount of the check was charged to plaintiff's account, the effect being that the bank's balance with the Mercantile National Bank was $2,000 more at all times than it was on the books of the European-American Bank while this check stood out, because it had not been presented. On the twentieth

Page 688

of July this check was paid by the Mercantile National Bank to the European-American Bank and the amount thereof was on said day credited by said bank to the plaintiff's account. Plaintiff did not know this. He had drawn out all of his account except $1.30 before the Superintendent of Banks took possession of the European-American Bank on August 6, 1910, and testified that he did not draw this $2,000 because he 'did not know it was there.' Plaintiff did not file a claim as creditor against the bank. His attorneys wrote a letter to the attorneys of the defendant, the Superintendent of Banks, making a demand for the $2,000. That demand not having been acceded to, this suit was brought. The notes were paid at maturity and so after the Superintendent took charge of the bank.

Whatever the transaction was between the plaintiff and the bank, whether the delivery of the check was as collateral security to the notes discounted, or whether, as one of the witnesses testified, it was as a guaranty for balance, the fact is that the bank agreed to and did discount the notes upon the agreement of the plaintiff that he would not draw out $2,000 from the $6,000 put to his credit upon said discount, until the maturity and payment of the notes, and made this promise effective by delivering to the bank his check to its order for $2,000.

When the bank credited the plaintiff's account with $6,000, the relation of debtor and creditor was created. When plaintiff agreed not to make use of $2,000 of that credit for a specified period, and unless a particular event happened, he did not create a trust fund for his own benefit, but made a promise for the benefit, security and protection of the bank. It had received no money from him, but had given him a credit, $4,000 of which was immediately available and $2,000 not immediately available. When, on the twentieth of July, it received from the Mercantile National Bank the $2,000 upon the presentation of plaintiff's check to its order which it had made payable at the Mercantile National Bank, which was equivalent to certification, it received no money from the plaintiff, but simply transferred its own money from its account in the Mercantile National Bank to its own account on its own books. Or, if the transaction had been in specie, took its own

Page 689

money from the vaults of the Mercantile National Bank and put it in its own vaults in its own banking house and credited the amount upon the plaintiff's account, so that if he had known of the transaction he could have drawn it out. But the situation was that it was debtor to the plaintiff, as evidenced by its books, in the sum of $2,000, and this was the situation when the Superintendent of Banks took charge.

Upon taking charge it may be assumed that he received the notes which the bank had discounted, and it may be assumed that he collected them. Being the property of the bank, the proceeds came into his hands applicable to the payment of the general debts of the bank, and upon the face of the books plaintiff was simply a general creditor to the amount of his account there standing. Upon what basis can the plaintiff, as against the Superintendent of Banks, a mere conservator and liquidator of the bank by virtue of his official position, have a cause of action? To be sure for $6,000 worth of notes, title to which plaintiff transferred to the bank, he has only received $4,000, but this situation was not created by the defendant. If the crediting of the $2,000 to the plaintiff's account on the twentieth of July, prior to the due date of the notes and without notice to ...

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