
    Giles H. Fowler as Executor, etc., Resp’t, v. The Bowery Savings Bank, App’lt.
    
    
      (Court of Appeals,
    
    
      Filed April 23, 1889.)
    
    1. Banks and banking — Deposit in tbust—Bights of beneeicaby — Election of bemedies.
    The relations between a savings bank and its depositors are those of debtor and creditor, and where one, "for whose benefit a deposit is made, sues a person to whom the savings bank has wrongfully paid that deposit to recover the amount of the same, this is such an election of remedies as will bar an action therefor against the savings bank. Rugeb, Oh. J., dissenting.
    2. Same—Money absolutely deposited—Remedy.
    If the money left on special deposit with a savings bank belongs, absolutely to the depositor, he can pursue the money wherever he can trace it, without losing his remedy against the bank, and in such a case he would not be barred of his right of recovery against the bank until he had either-recovered his money or the value of the same.
    Appeal from a judgment of the supreme court, general term, second department, affirming a judgment in favor of the plaintiff upon a trial by the court without a jury.
    
      Carlisle Norwood, Jr., for app’lt; Eugene Burlingame- and Benjamin W. Downing, for resp’t.
    
      
       Reversing 14 N. Y. State Rep., 515.
    
   Earl, J.

On the 15th day of November, 1871, John White, the husband of Elizabeth White, deposited with the defendant, in trust for his wife, the sum of $805.93, and the-deposit was entered upon a pass book, which was delivered to him, in this way: “ Bowery Savings Bank in account-with John White, for.Elizabeth White.” This deposit remained in the bank during the lifetime of John White, who died November 13, 1882, leaving a will wherein he appointed John D. Flynn, his executor. The will was. admitted to probate and letters testamentary were granted to Flynn on the 23d day of January, 1883. Elizabeth White died December 18, 1882, leaving a last will and testament in which the plaintiff was named as executor, which will was admitted to probate, and letters testamentary were issued to the plaintiff on the 11th day of January, 1883. On the 25th day of January the plaintiff, with his letters testamentary, called at the savings bank and notified it of his appointment as executor, and demanded payment of the deposit. He was told by one of its officers-that the money would be paid to him when he came with, the pass book which was then in the possession of Flynn,, the executor of John White.

Thereafter, on the 29th day of January, Flynn having in his possession the pass-book, presented the same to the defendant, together with proof that he had been appointed executor of John White, and demanded payment of the deposit, and the defendant thereupon paid the same to him, ■and the pass-book was surrendered to it. Thereafter, on the same day, the plaintiff called on the defendant again in reference to the deposit, and was informed that it had been paid to Flynn. This action was commenced in June, 1886, to recover the sum deposited with the defendant, and interest thereon.

It is clear that the plaintiff was legally entitled to receive payment of the deposit from the defendant, and that after the notice and demand by him, it had no right whatever to pay the same to Flynn; and but for facts yet to be stated, the cases of Martin v. Funk (75 N. Y., 134), Willis v. Smyth (91 id., 297), and Mabie v. Bailey (95 id. 209) would be ample authority for the maintenance of this action.

After payment by the defendant to Flynn, the plaintiff, in the fall of 1883, commenced an action against him to recover, among other things, the money thus paid. Issue was joined and the action was tried in the fall of 1884, and a verdict was rendered in favor of the plaintiff, and a judgment was thereon entered. The plaintiff was unable, however, to collect anything on the judgment, and he thereafter commenced this action.

The relation between a savings bank and a depositor therein is that of debtor and creditor, and the defendant, therefore, became a debtor for the sum deposited with it by John White. People v. Mechanics' and Traders' Institution, 92 N. Y., 7. After his demand of the deposit, and the payment of the money to Flynn, there were two remedies open to the plaintiff. He could sue the defendant as a debtor for the deposit and recover the amount thereof from it; or he could have brought an action for money had and received to and for his use against Flynn, and recover it from him. But he was not entitled to both remedies at the same time or in succession, and by electing the one he would lose the other. By electing to sue the bank he would repudiate its payment to Flynn, and his claim would be that the debt had not, in fact, been paid.

By suing Flynn he would adopt and ratify the act of the bank in making payment to him, and his claim would be that the money due to him had in fact been paid to Flynn, and that Flynn had received it to and for his use. Such adoption and ratification of the payment would legalize the payment as between him and the bank, and thus discharge the bank-

He could not occupy the position at the same time of claiming that the bank had paid his money to Flynn, and yet that the bank was still his debtor. His election in this, case to sue Flynn and thus to treat him as his debtor was not harmless to the bank, but in law may be 'presumed to. have injured the bank unless it should now be held to be discharged by its payment to Flynn. After the plaintiff commenced his action against Flynn and thus ratified and adopted the payment by the bank to him, the bank could not during the pendency of that action have sued Flynn to recover back the money on the ground that it had been paid by mistake and received by him without authority, because it would have been a defense to such an action that-the real owner of the fund had adopted and ratified the-payment. But even if the mere commencement and pendency of the action by the plaintiff against Flynn would not have furnished such a defense, it is beyond doubt that if the bank should now bring an action against Flynn to recover back the money, he could successfully defend on the-ground that the plaintiff had ratified and adopted the payment and thus discharged the bank, by the recovery of a judgment against him for the money paid as che real owner thereof.

The two remedies, one against Flynn and the other against the bank, are not concurrent. If the two actions could not be prosecuted at the same time, they could not in succession. Nothing could be more inconsistent than an action against Flynn on the ground that money due to-the plaintiff had been paid to him, and an action against-the bank on the ground that it had not paid the deposit, and still remained debtor therefor. If the money had been absolutely the money of the plaintiff, left on special deposit with the bank, then he could have pursued the money wherever he could trace it without losing his remedy against, the bank. In such a case the plaintiff would not be barred of his right of recovery against the bank until he had either recovered his money or the value of the same. All his remedies would be consistent, being based upon the theory of a wrongful disposition of his property. So too where a trustee in breach of his trust disposes of the trust property, the beneficiary of the trust may pursue it or its proceeds wherever he can trace them so far as the law will permit him to do so without releasing the trustee.

All his remedies, in such a case are consistent, and based upon the same theory, to wit, a breach, of trust. But if a trustee is bound to pay money to a beneficiary, as a debt due from him to the beneficiary, then if he makes payment to another, person, he has not paid the debt, and the money paid is not, in fact, the property of the beneficiary. In such case the beneficiary may ignore the payment, and sue the trustee as his debtor, or he may ratify and adopt the payment and sue the person receiving the money as his debtor; but he cannot do both. There is in such case a breach of trust, or not, as he may elect, and his election once effectually made is conclusive forever. Comyn’s Digest, Election C., 2. If one wrongfully takes and sells personal property not belonging to him, the owner has the election to sue him for the proceeds as money had and received to and for his use, and thus ratify the sale, or he may pursue the property and recover it or its value; but he cannot do both and is bound by his election. Pomeroy on Remedies, sec. 567, et seq.

A few authorities may be cited to enforce these views. In Priestly v. Fernie, 3 Hurlstone & Coliman, 977, it was held that where the master of a ship signs a bill of lading in his own name, and is sued upon it, and judgment is obtained against him, an action will not lie against the owner of the ship upon the same bill of lading, although satisfaction has not been obtained on the judgment against the master. Baron Beam well writing; the. opinion, said: If this were an ordinary case of principal and agent, where the agent having made a contract in his own name, has been sued on it to judgment, there can be no doubt that no second action would be maintainable against the principal. The very expression that where a contract is so made, the contractee has an election to sue the agent or principal, supposes he can only sue one of them, that is to say,- sue to judgment.” In Scarf v. Jardine, 7 Appeal Cases, L. R., 345,, the facts were these: a firm of two partners dissolved; one retired, and the other carried on the business with a new partner under the same style.

A customer of the old firm sold and delivered goods to the new firm after the change, but without notice of it. After receiving notice he sued the new firm for the price of the goods, and upon their bankruptcy proved against their estate, and afterwards brought an action for the price against the late partner, and it was held that the liability of the late partner was a liability by estoppel only, and not jointly with the members of the new firm; that the customer might, at his option, have sued the late partner, or the members of the new firm, but could not sue all three together, and that having elected to sue the new firm, he could not afterwards sue the late partner. In that case Lord Blackburn said that the cases “ are uniform in this respect, that where a man has an option to choose one or other of two inconsistent things, when once he has made his election it cannot be retracted; it is final and cannot be altered.” “ When once there has been an election to do one of two things you cannot retract it and do the other thing; the election once made is finally made,”

_ Lord Watsok said: “The plaintiff had the undoubted right to select his debtor, to hold either the old firm or the new firm responsible to him for the fulfillment of the contract, but I know of no authority for the position that the respondent could hold his contract to have been made with both firms, or that having chosen to proceed against one of these firms, for recovery of his debt, he could thereafter treat the other firm as his debtor.”

In Rawson v. Turner (4 Johns., 469), it was held that if a new sheriff receives a prisoner from his predecessor he is answerable for his escape, though a voluntary escape may have existed in the time of his predecessor, but the plaintiff has his election, either to consider the prisoner in execution and so charge the new sheriff for .the last escape, cu-as out of execution, and charge the old sheriff. If he has once made his election and sued the old sheriff and recovered judgment against him, it is conclusive, and a 1,ar-to any action against the new sheriff.

In Sanger v. Wood (3 Johns. Ch., 416), Chancellor Kent said: “Any decisive act of the party, with knowledge of his rights and of the fact, determines his election in the case of conflicting and inconsistent remedies.”

In Morris v. Rexford (18 N. Y., 552), there was a bargain and sale of goods for cash, and the vendee took possession, but failing to make payment, the vendor obtained a redelivery of his goods by writ of replevin, and it was held that this was a disaffirmance of the sale and evidence in bar of a subsequent action for the purchase money, and that the vendor having elected the one remedy, his right to pursue the other was extinguished.

Comstock, J.,

writing the opinion, said: “A vendor of goods, on a sale and delivery upon cash terms, if he fails to get payment, may consider the delivery absolute, and rely on the responsibility of the vendee, or he may disaffirm and reclaim his property. But he cannot do both of these things, The remedies are not concurrent, and the choice between them once being made, the right to follow the other is forever gone. The law tolerates no such absurdity as a seizure of goods by a person claiming that he has never sold them, and an action by the same person, founded on the sale and delivery of the same goods, for the recovery of the price. In peculiar circumstances a party may take either one of these courses, but having rightfully made his choice, the right to follow the other is extinct and gone.”

So, here, the law will not tolerate the absurdity of holding that the plaintiff could sue Mynn on the ground that he had received money from the bank belonging to him, and at the same time sue the bank on the ground that it still remained his debtor, and that the money paid to Flynn was not his money and did not operate as payment.

In Gardner v. Ogden (22 N. Y., 327), it was held that the clerk of a broker, employed to sell land, having access to the correspondence between his principal and the vendor, stands in such a relation of confidence to the latter that, if he becomes the purchaser, he is chargeable as trustee for the vendor, and must reconvey or account for the value of the land, and the vendor having brought suit against botli the broker and his clerk, making a claim against the broker for having fraudulently sold the land, and against the clerk for a reconveyance or accounting, the court said: “In the present case the plaintiff has elected to regard the purchaser as his trustee, and his complaint, as to him, proceeds on this basis. The plaintiff, therefore, elects to affirm the sale made by Smith. He cannot, uno flatu, affirm it as to him and disaffirm it as to Ogden. The affirmance of the sale by the plaintiff is a complete answer to the claim for damages against the firm for fraud in making the sale.”

In the Bank of Beloit v. Beale (34 N. Y., 473), it was held" that when a vendor who has been defrauded in the sale of his goods proceeds to judgment against the vendee upon the contract of sale, after he is apprised of the fraud, his election is determined, and he cannot afterwards follow the goods, or the proceeds thereof, into the hands of a third person on the ground of fraud; that if a principal, with full knowledge of a fraud perpetrated by his agent, in the disposition of property purchased with his funds, prosecute the agent to judgment for the money so misappropriated, he thereby elects to treat the goods as the property of the agent, and cannot afterwards claim their proceeds in the hands of a third party.

In Rodermund v. Clark (46 N. Y., 354), W. and defendant were joint owners of a sloop. Defendant, ignoring W.’s rights, sold the whole vessel to M. W., after the sale, took and retained possession. M. thereupon libeled the vessel as owner in the United States district court. She was seized by the marshal, and M. having obtained judgment by default, she was delivered to him. W. assigned his interest, and also his claim against defendant, to the plaintiff, who sued for conversion; and it was held that W. having elected to assert his rights by retaining possession and refusing to recognize the sale, he and his assignee were precluded from maintaining an action for the conversion ; that where a party has an election between inconsistent remedies, he is confined to the remedy which he first chooses. Folger, J., writing the opinion, said: “W. had two courses, either of which he might pursue. He could sue the defendant for the conversion, or he could assert his right of possession by keeping a permanent possession, or regaining possession if it was interrupted. The effectually taking of either of these two courses precluded him from taking the other.”

In Bowen v. Mandeville (95 N. Y., 237) it was held that where a party had been induced by fraud to enter into an executed contract for the purchase of property, he may either rescind and recover back the consideration paid, or affirm the contract and recover damages for the fraud; he cannot have both remedies, as they are inconsistent.

In Cheeseman v. Sturges (9 Bos., 246), S., one of the de fendants, held real and personal property in trust, to be used for the joint benefit of himself and the plaintiff and a third person, in specified proportions as copartners in a joint enterprise, and under an agreement that he was to make advances for carrying out the enterprise, and that all stocks or other securities than cash which should be received should remain undivided until a final settlement, and that he would not dispose of the property (other than money) without the consent of the others. He accordingly made large advances, and subsequently sold and conveyed all the property without the consent of the plaintiff, and received therefor stock of an incorporated company, and it was held that the plaintiff, by bringing an action, with full knowledge of these facts, in which he demanded a transfer of his share of the stock, and obtained an injunction against any disposal of it, pending the action, must be deemed to have made his election of that remedy and be treated as if he had consented to the sale.

In Mattlage v. Poole (15 Hun, 556) it was held, in substance, that where a vendor sells goods to the agent of an undisclosed principal, he may elect whether he will sue the agent for the price of the goods or the principal, but that he cannot have a recovery against both, and that where he has prosecuted the one to judgment, he can have no recovery against the other. In Riley v. The Albany Savings Bank (36 Hun, 513), plaintiff’s intestate, Mary Riley, had deposited with the defendant upwards of $800. The money was paid to Flannigan during the life time of Mary Riley, upon the production by him of the pass-book and Mary Rileys check It was claimed that at the time of signing the check Mary Riley was of unsound mind, and incapable of executing the same. After Riley was appointed administrator he presented a verified petition to the surrogate, under section 2706 of the Code of Civil Procedure, charging Flannigan with having corruptly procured an order from Mrs. Riley, knowing her to be insane, and having drawn the money from the bank ; and further averring that he then had the same in his possession, and

praying that he be compelled to surrender the same to the petitioner. Flannigan appeared on the return of a citation, and admitted that he obtained the money from -the bank, and that the same was in. his possession ; and a decree was entered directing him to deliver the same to the administrator. For his failure to comply therewith he was committed to the county jail, where he remained until discharged therefrom by the surrogate because of his inability from sickness to bear longer confinement; and it was held that the administrator, by claiming in his petition and procuring a decree of the surrogate’s court adjudging that the money in Flannigan’s hands belonged to the estate of Mary Biley, ratified the act of Flannigan in drawing the money, and could no longer claim that the bank still owed to him the same money, or bring an action against it to recover the amount of the deposit; that the administrator had an election to treat Flannigan’s act in drawing the money in two ways, viz., either to ratify or to disavow it; that having elected to ratify it he could not thereafter disavow it. That case was appealed to this court, and the order of the general term reversing the judgment in favor of the plaintiff was here affirmed. 103 N. Y., 669 ; 7 N. Y. State . Rep., 861.

The following authorities are to the same effect: Curtis v. Williamson, 10 Q. B. L. R., 57; Clough v. London, etc., R. R. Co., 7 Ex. L. R., 26; Raymond v. Proprietors, etc., 2 Met., 319; Sears v. Carrier, 4 Allen, 339; Cobb v. Knapp, 71 N. Y., 348; Moller v. Tuska, 87 id., 166.

This extended examination of the authorities has seemed necessary on account of some difference of opinion upon the question considered which at first existed among the members of this court. It is seen that they justify the conclusion that plaintiff’s election to sue and his recovery against Flynn furnished a defense to this action

It is, however, objected on the part of the plaintiff that the defense that the bank had adopted and ratified the payment to Flynn, is not set up in the answer, and such is the case. While the defendant alleges, in its answer, payment to Flynn, it does not allege that payment was made by the authority of the plaintiff or that he ratified or adopted it. But there was no such objection upon the trial. All the facts pertaining to that defense were proved without objection. There was no dispute about the facts, and they were found by the court. Hence the objection that the answer is defective is unavailable here.

We are, therefore, of opinion that the judgment should be reversed and a new trial ordered, costs to abide the event.

All concur, except Rttger, Ch. J., who reads for affirmance.

Ruger, Ch. J.

(dissenting).—I am unable to concur in the opinion delivered in this case. I am of the opinion that the prosecution of Flynn by the plaintiff’s intestate was not a ratification of the payment by the bank to him. Flynn, in obtaining such payment, neither represented or assumed to represent Mrs. White, and the bank did not pay the money to Flynn as the agent or representative of Mrs. White, but dealt with him as a claimant of the money in his own right. Under such circumstances there could be no ratification. Ratification is a branch of the law of agency, and cannot be held to have occurred unless there is a principal, and an act assumed to have been done by some one in his name or on his behalf. Story on Agency, § 251; The Farmer's Loan and Trust Co. v. Walworth, 1 N. Y., 433.

There were, consequently, no concurrent remedies, and no occasion for an election by the plaintiff.  