
    Miles M. O’Brien et al., App’lts, v. Hugh J. Grant, as Receiver, etc., Resp’t.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed December 14, 1894.)
    
    Banks—Contract for clearance.
    The payment of the checks of an insolvent bank by another bank under an arrangement in pursuance of rule 25 of the New York Clearing House, is not in violation of section 48 of the Stock Corporation Law, though made with knowledge of the farmer's insolvency.
    Appeal from a judgment, dismissing the complaint on the merits.
    
      L. Marshall, for app’lts; W. A. Butler, for resp’t.
   Per Curiam.

Judgment affirmed, with costs, on opinion of court below.

The opinion of William G. Choate, Esq., to whom the canse was referred to bear and determine, is as follows:

In this case the plaintiffs, the receivers of the Madison Square Bank, seek to recover from the receiver of the St. Nicholas Bank certain securities, the property of the Madison Square Bank, which were deposited with the St. Nicholas Bank under the circumstances, hereinafter stated, together with the proceeds of certain other securities, part of such deposit, which had been converted into money before the commencement of this action. In January, 1891, an arrangement was made between the Madison Square Bank and the St. Nicholas Bank, by which the latter bank, which was a member of the New York Clearing-House Association, became the agent to clear, through the clearing house, checks drawn upon the Madison Square Bank. The St. Nicholas Bank submitted in writing a memorandum of the conditions on which it would undertake this business for the Madison Square Bank as follows : “ The conditions under which this bank agrees to make the clearance of checks of the Madison Square Bank are as follows : $'50,000 balance to be kept at all times, to be free from interest. An allowance at the rate of two per cent per annum shall be allowed on average exceeding this amount. The Madison Square Bank is to keep with this bank $100,000 in approved bills receivable.” In a letter dated January 9, 1891, addressed by the Madison Square Bank to the St. Nicholas Bank, the cashier of the Madison Square Bank says: ‘‘ Referring to conversation of our president with your good selves, we would say that we accept the terms and conditions on which your hank agrees to clear for us as per your memorandum, namely, $50,000 balance to be kept with you at all times free of interest. Interest at two por cent per annum to be allowed us on average exceeding that amount. This bank to keep with you $100,000 of approved bills receivable. * * * We inclose copy of a letter addressed by us to the-clearing-house committee, to conform with the requirements of their circular of December 18th last.” Then follows a request that the arrangements shall be made to go into effect on the 13th of January, on which day an arrangement between the Madison Square Bank and another member of the clearing-house association was to expire. The letter to the clearing-house committee was as follows, dated December 30, 1890 : “In conformity with the terms of your circular of the 18th inst, I beg xo inform you that, at a regular meeting of the board of directors of- this company, the following resolution was adopted, namely: ‘Resolved, that the cashier cf this bank is hereby instructed to notify the committee of the "clearing house that this bank" will be open to the examination of the committee of the clearing house as often as it may deem necessary, and that a report of the condition of the-bank be forwarded to the chairman of the committee, with a, check for the annual payment of two hundred dollars, in compliance with the terms of his circular of the 18th inst.' ” The circular required the passing of a resolution submitting the bank to the examination of the clearing-house committee, as in said resolution set forth. It was verbally agreed between the parties at the time of the arrangement referred to in said letter of 9th January that other securities of equal value might be substituted, from time to time, for those first deposited, making up the $100,000 of bills receivable. It was also distinctly understood between the two-banks that the St. Nicholas Bank was to act in the matter for the Madison Square Bank, under and in accordance with the constitution and rules of the clearing-house association, which were, well known to the Madison Square Bank, and the agreement between the two banks was made with reference to such constitution and rules.

The clearing-house association was and is a voluntary association of banks and banking associations of the city of New York. The object of the association, as stated in its constitution, is “the effecting at one place of the daily exchanges between the several associate banks, and the payment at the same place of the balances resulting from such exchanges.” The St. Nicholas Bank was a member of the association. The Madison Square Bank was not so. Section 25 of the constitution was as follows: “When-

ever exchanges shall have been made at the clearing house by previous arrangements between members of the association, through one of their own number, and banks in the city and vicinity who are not members, the receiving bank at the clearinghouse shall in no case discontinue the arrangements without giving previous notice, which notice shall not take effect until the exchanges of the morning following the receipt of such notice shall have been completed.” This section was in force at and before January 9, 1891, and is still in force, and it was known to be-so by the Madison Square Bank at the time of the making of this arrangement. After the making of this arrangement, and on and after the 18th of January, 1891, the St. Nicholas Bank made the clearances at the clearing house for the Madison Square Bank up to and including the 8th day of August, 1893 ; and the Madison Square Bank deposited and kept good, as to amount and value, its deposit of bills receivable with the St. Nicholas Bank, as required by the agreement, and up to some time in July, 1893, kept good its money balance of $50,000, in addition thereto. Some time prior to the 8th of August, 1893, the St. Nicholas Bank desired to terminate the arrangements for making clearances for the Madison Square Bank. The Madison Square Bank had not kept up uniformly, from day to day, its cash balance of $50,000, from some time in the month of July to the 8th of August. On the 8th of August the St. Nicholas Bank held three promisspry notes of the Madison Square Bank for loans theretofore made by the St. Nicholas Bank to the Madison Square Bank, in the aggregate amounting to §150,000, and held bills receivable and -other securities as collateral thereto, with the agreement that they or their proceeds should be applied to any other obligations of the Madison Square Bank to the St. Nicholas Bank. On the 8th day of August, 1893, the St. Nicholas Bank gave the notice required by the twenty-fifth rule, that it would cease to make clearances for the Madison Square Bank. This was served upon the banks constituting the clearing-house association on that day. By the terms of section 25, this notice took effect upon the completion of the exchanges at the clearing house on the 9 th of August These clearances were made every day immediately after ten o'clock, and were completed before twelve o’clock. The St. Nicholas Bank paid on the 9th of August, through the clearing house, cheeks drawn upon the Madison Square Bank by depositors having amounts.to meet the same to their credit, as depositors, on the books of the Madison Square Bank, $372,000. On the 8th of August; 1893, the Madison Square Bank, after ineffectual efforts to obtain a loan to- relieve its immediate necessities, was visited by the clearing-house committee, and, its condition examined; also, by an officer of the state banking department. After this examination by the committee of the clearing house, their conclusion that the bank was not in a condition to, continue business was communicated to the officers and some of the directors of the Madison Square Bank. The committee, for the protection of the St. Nicholas Bank, took from the assets of the Madison Square Bank, with the assent of its officers, a considerable aijiount of its assets,—upwards of $300,000 in securities. These assets were, however, afterwards restored to the receivers, and no claim has been made against them on the part of the St. Nicholas Bank. This was the act of the committee alone, and not of the St. Nicholas Bank. The Madison Square Bank did not open for business on the following day. It was, in fact, insolvent on the 8th of August, 1893; and the officers of the St. Nicholas Bank knew before the exchanges were made on the 9th of August that the Madison Square Bank was insolvent, or that its insolvency was imminent, and that it had stopped business.

The sole question in this case is whether the plaintiffs, as receivers of the Madison Square Bank, have a right to recover from the St. Nicholas Bank, or its receiver, the securities remaining in the hands of the St. Nicholas Bank on the 8th of August, 1893, and the proceeds thereof, so far as the.sarne have not been required for the payment of the three notes held by the St. Nicholas Bank, aggregating $150,000, which notes were paid out of the proceeds of thesecurities held by the St. Nicholas Bank on the 27th of October, 1893, and before the commencement of this action. The amount of the securities so held by the defendant, being the same held on the 8th of August, and their proceeds after payment of the three notes above referred to, is $86,780.68, in securities at their face value, and $149,643.93 in money, on which has accrued interest to the amount of $10,567.16 up to this date. The claim of the ■defendant is that said securities and proceeds are rightfully withheld as security for the repayment to the St. Nicholas Bank of the $372,000 checks upon the Madison Square Bank, which were paid through the clearing house on the 9th of August by the St. Nicholas Bank. Prior to the commencement of the action the re-ceivers of the Madison S mare Bank demanded these securities and proceeds from the St. Nicholas Bank, which demand was refused, and thereupon this action was commenced against the St. Nicholas Bank; and afterwards, a temporary receiver of the St. Nicholas Bank having been appointed, he was, by order of the court,, substituted as defendant. The claim on the part of the plaintiffs is that the St. Nicholas Bank has no valid claim upon them as security for the payment of said checks; that the payment of said checks was prohibited by the forty-eighth section of the ;stock corporation law, which reads as follows: “No corporation

which shall have refused to pay any of its notes or other obligations when due, in lawful money of the United States, nor any of its officers, or directors, shall transfer any of its property to any of 'its officers, directors or stockholders, directly or indirectly, for the payment of any debt, or upon any other consideration than the full value of the property paid in cash. No conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any payment made, judgment suffered, lien created or security given by it or by any officer, director or stockholder, when the corporation is insolvent, or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the ■corporation, shall be valid. Every person receiving by means of any such prohibited act or deed any property of the corporation, shall be bound to account therefor to its creditors or stockholders or other trustees. No stockholder of any such corporation shall make any transfer or assignment of his stock therein to any per■son in contemplation of its insolvency. Every transfer or assignment or other act done in violation of the foregoing provisions of this section shall be void. No conveyance, assignment or transfer of any property of a corporation formed under or subject to the banking law exceeding in value one thousand dollars shall be made by such corporation or by any officer or director thereof, unless authorized by a previous resolution of its board of directors, except promissory notes or other evidences of debt issued or received by the officers of the corporation in the transaction of its ordinary business, and except payments in specie or other current money or in bank bills made by such officers. No such conveyance, assignment. or transfer shall be void in the hands of a purchaser for a valuable consideration without notice. Every director or officer of a corporation who shall violate or be concerned in violating any provision of this section, shall be personally liable to the creditors and stockholders of the corporation of which he shall be director or an officer, to the full extent of any loss they may respectively sustain by such violation.”

It is obvious from the above recital of facts that the securities in question came rightfully into the possession of the St. Nicholas Bank; and, if the action can be maintained, it must be on the ground that, by the demand and refusal preceding the action, this possession became wrongful, unless, indeed, as claimed by the plaintiffs, the original contract on which they were deposited was illegal and void, under the statute. There seems to be no doubt that if the St. Nicholas Bank, in making the clearances for the Madison Square Bank on the 9th of August, was a mere agent for the payment of its checks, and not bound to make such clearances- or payments by a valid and existing contract, either with the Madison Square Bank, or with some other party, the payment of these checks was prohibited by the statute. Ii is understood that, this position is not controverted. As a mere agent, the St. Nicholas Bank, would, of course, make no payment which would be-valid if the same payment made by its principal would have been, invalid; and on the 9th of August, 1893, at ten o’clock, when these" checks were paid through the clearing house, the failure of the Madison Square Bank, audits ceasing to do business, had been publicly announced. If these securities were held by the St, Nicholas Bank merely as the agent of the Madison Square Bank, and with no lien or claim upon them to secure the payment of said checks, then such securities constituted a part of the assets of the Madison Square Bank, in which, according to existing laws of the state, all its creditors had, in equity, an equal interest, without preference of one over another; and the real controversy in this case has been over the construction and effect of rule 25 of the-clearing house, and the nature of the contract which, in view of that rule, existed on the 9th of August, at the time of making these exchanges, between the St. Nicholas and the Madison Square Bank, and the associated banks and the clearing-house association.

It has been contended on the part of the plaintiffs that the fair and reasonable construction of section 25 did not require the payment of these checks by the St. Nicholas Bank, as the clearing agent of the Madison Square Bank, after the insolvency of the Madison Square Bank happened, and had become known to the St. Nicholas Bank; secondly, that if such was the true meaning and construction of the contract between the parties, in view of the twenty-fifth rule, then such contract, so far as relates to the clearances of the 9th of August, was invalid, and in violation of that act.

The first question is, what did the St. Nicholas Bank undertake to do, and did its undertaking extend to an obligation to pay checks drawn on the Madison Square Bank which were presented to it at the clearing house on the 9th of August ? It seems to me that the obvious purpose of section 25 was to secure to the associated banks who should present to a clearing-house bank checks upon an outside bank, witli which such clearing-house bank had made such previous arrangement to act for it, the payment of such checks up to and including the day following the giving of a notice of the termination of such arrangement. The original arrangement being made with the direct reference to this rule requiring one day’s notice, it is to be construed exactly in this case, as if it had been an agreement between two banks for the making of clearances by the St. Nicholas Bank for the Madison Square Bank up to and including the clearances of the 9th day of August, 1893. The giving of the notice on the 8th day of August, which expired by the rule on the 9th of August, marked the termination of the arrangement, as agreed upon by the parties, in the same way as if had been inserted in the original agreement. No meaning or force is given to this arrangement for the admission of an outside bank through a representation by a clearinghouse bank, unless it were the understanding of the parties that so long as the arrangement should subsist, by its terms, checks upon such outside bank, presented through the clearing house, should be paid by its representative in the same manner in which checks upon itself were required to be paid; and this agreement was impliedly made, not alone between the Madison Square Bank and the St. Nicholas Bank, but between both of those banks and each of the associate banks in the clearing-house association. At the time this arrangement was made, in January, 1891, there is no suggestion that the Madison Square Bank was not in sound condition. It was certainly not made at that time in actual contemplation of insolvency. No suggestion was made at the time of the negotiation of this arrangement as to whether it should or should not require the St. Nicholas Bank to pay checks upon the Madison Square Bank after the Madison Square Bank might become insolvent. The arrangement thus made must be considered as for the mutual benefit of all the parties who entered into it. It was obviously for the advantage of the Madison Square Bank. It paid $200 a year for the privilege of having its exchanges made through the clearing house, and it was agreed to put up the stipulated security to protect the St. Nicholas Bank in making those exchanges. As between the St. Nicholas Bank and its associates in the clearing house, it was a contract upon a valid consideration, and bound the St. Nicholas Bank to them to receive and pay, as it was to pay its own checks drawn upon the Madison Square Bank. It cannot be denied that this promise of payment or guaranty added to the value of the checks deposited with the several associate banks, and the title to which, by such deposit, was vested in them. There was thus ample consideration for this tripartite agreement. It is, however, contended that, if the agreement extended so far as to promise such payment after the insolvency of the Madison Square Bank should happen, it was an agreement which the parties had no right to make, because in violation of the statute above referred to, or that the intervention of insolvency excused the St. Nicholas Bank from making such payments, because such payments would operate, as between the depositors paid and the depositors not paid, as a preference in violation of the statute. That which is forbidden by the statute is a transfer of property or a payment after insolvency, or after insolvency is imminent, with intent to give a preference to one creditor over another creditor of the corporation. A payment made in pursuance of a prior valid agreement binding the St. Nicholas Bank to pay could not be a payment made by the Madison Square Bank, through its agent, with intent to give a preference. The' expression, “ with intent to give a preference,” implies a voluntary payment on the part of the insolvent corporation. It implies a payment which it could decline to make, or which its agent, acting for it and making the payment could decline to make. The question recurs, therefore, whether the contract, as above construed, was in itself illegal, or whether the St. Nicholas Bank was excused from the contract by the happening of insolvency. Ordinarily, the happening of insolvency does not change the contractual relations of the insolvent party with the party with whom he or it has contracted. Insolvency may, and in some cases does, excuse performance on the part of the other party, because of the resulting inability of the insolvent party to perform a contract still executory, but it does not ordinarily excuse the insolvent party from performance. Insolvency certainly cannot effect the termination or dissolution of a contract between the other party and a third party, the entering into which was the basis and condition understood and accepted by the insolvent party, upon which its own contract rested. The Madison Square Bank could not, as it well understood, have made the arrangement that it did with the St. Nicholas Bank, except on the condition that the St. Nicholas Bank should enter into the contractual relations which it did enter into with its associates in the clearing house; and by no possibility, as it seems to me, can the solvency of the Madison Square Bank excuse performance, as between the St. Nicholas Bank and its associates.

It is urged, against the construction of the twenty-fifth section claimed by the defendant, that it puts the clearing-house bank at the mercy of the outside bank for which it clears. It is very true that the arrangement made puts no limit on the amount of the checks drawn on the outside bank which the clearing-house bank is obliged to take care of on a particular day. In the present ease, checks might have been drawn against the? Madison Square Bank on the 8th of August for the whole amount, of its deposits ($850,000), for the payment of which, under theconstruetion claimed by the defendant, the St. Nicholas Bank would only have had its $100,000 of securities, and such cash balance, contemplated to be $50,000, which the Madison Square Bank had on deposit with it. It is true, also, that such an outside bank, being, to the knowledge of its officers, about to become-insolvent, might ruin the clearing-house bank, under this arrangement, if its officers should give information to depositors to a very large amount, which would induce them to draw their checks-the day before the failure. The St. Nicholas Bank undoubtedly took these risks. The present ease shows that that- risk was considerable and serious. Those risks were well known to it, and it is to be presumed that parties in this, as in all other business transactions, dealing together, trust to a great degree to the supposed good character and good faith of the parties with whom they are dealing,' as their main protection against the abuse of powers which, by the contract, are lodged in the hands of their co-contracting party. I do not think these suggestions are of sufficient weight to affect what appears to me to be the obvious meaning of the twenty-fifth rule. Practically, contracts are not made with reference to the extreme possibilities of danger or risk which they may involve, but rather upon an estimate of probable risks and probable results. The fact that the St. Nicholas Bank exacted security only for $150,000 shows that it measured its probable risks at that amount. Besides, the clearing-house bank has the matter very much in its own control. Having the power to terminate the arrangement on twenty-four hours' notice, it is not to be expected that affairs could drift into so great peril, at least without negligence' on its part; and it is to be presumed that it would keep, and intended to keep, a careful watch over the bank for which it assumes this responsiblity.

If this view is correct of the nature of the contract between the two banks, and between them and the associated banks, and indeed between the Madison Square Bank and each member of the association, then the payment of these checks cannot be considered as the payment by the Madison Square Bank with an intent to give a preference, but as a payment in pursuance of a valid contract made by it, and a collateral contract made by its agent, with its knowledge and consent, from which that agent was not at liberty to recede by reason of the insolvency of the Madison Square Bank. The agreement between these several parties certainly was not made in contemplation of insolvency. Without doubt, when it was made it was not expected that the exchanges of any day would exceed $150,000 while the contract lasted; and the very fact that this amount of security was treated as sufficient during two years tends to show that the contract was not made in contemplation of insolvency happening during its running. As originally made, it cannot be tortured into a contract with intent, m its operation and effect, to give preference to one creditor of the Madison Square Bank over another, for no such thing was within the express agreement of the parties, or apparently within the contemplated possibilities of the future. But it is said that if the parties intended, even in case insolvency should happen, that the”clearing-house banks should go on paying the checks, that would in fact give one creditor a preference over another, and therefore it must be deemed to have been their intent, from the beginning, to provide for the case of insolvency, and so to give an illegal preference, and therefore, in case that has happened, and as applied to that case, the contract was illegal. This argument, as it seems to me, is unsound. The Madison Square Bank then being in solvent condition, made a contract for the better, more economical and safer transaction of its business; and for this purpose, and for the security of its co-contracting parties, pledged part of its assets. It has enjoyed for two years all the advantages of that contract, and now it endeavors by this action to deprive its co-contracting party of the consideration which it was to enjoy for the privilege conferred. It is very true that when the contract was made a future insolvency was possible, but the contract was not made “in contemplation of insolvency,” as that term is used in the class of prohibitory statutes to which this belongs, but wholly alio intuitu,—not to provide for expected or intended solvency, but to provide for legitimate business transactions ; and no case is cited which warrants the invalidating of such a. contract because future insolvency was possible, to the knowledge of the contracting parties. When the pledge of the securities was made, therefore, it was lawful, and the possession of the pledges has not now become unlawful, either by the intervening insolvency of the pledgor, nor by the demand and refusal to redeliver the securities.

It is unnecessary to hold, as claimed by the defendant, that the drawers or holders of the checks drawn on the 8th of August had an equitable lien on these funds, or to decide whether the special remedies given by statute for the ascertainment of the validity of claims made against insolvent corporations in the hands •of receivers are exclusive of remedy by action brought, as this action was, by the plaintiffs under their general powers as receivers, and not by special leave of the court, or whether the defendant receiver can urge as a defense that he stands in a better position on the pleadings in this case than the St. Nicholas Bank, for which, as defendant, he has been substituted.

A suggestion was made on the part of the plaintiffs that the agreement between these banks should be construed as a contract continually renewed from day to day. Reference was, in this connection, made to the substitution of securities up to and asíate as the 8th of August. Such substitution, however, was provided for in the original contract, and it worked no change of value in the fund held by the St. Nicholas Bank. The same amount was released which was at any time added to the fund. The purpose of it was apparently to allow the pledgor to collect maturing obligations ; making them good by the substitution of other obligations, having further time to run. Such a provision in a contract does not alter its nature or construction, or affect its validity in case of insolvency. Cook v. Tullis, 18 Wall. 332. This contract was made.in January, 1891, and continued in force till it was terminated, August 9, 1893, in the mode provided therefor in the contract itself.

It is also claimed that the sole purpose of the clearing house is to do in one place and at one time what otherwise would have to be done at many places, and with much less safety, and with the consumption of much more time and labor on the part of the banks. Hence, it has been held that its rules are for the benefit of, and binding on, its members, and not for the benefit of, and binding on, strangers. Merchants' Nat. Bank v. National Bank, 139 Mass. 513; Overman v. Bank, 30 N. J. Law, 61; 31 id. 563. But though this is the purpose of the clearing house, as plainly stated in its constitution, it does not follow that for the effecting of that purpose the banks composing the association do not enter into positive and binding obligations, as between themselves, and with nonmembers; and the fact that the clearing-house bank is called and is the ageut, for certain purposes, of the nonmember bank for which it clears, is not at all inconsistent with its assuming other obligations and other relations, in the discharge of its duty as such agent, than the relations and obligations of a mere agent.

A question is made with regard of particular checks, and a good deal of evidence has been given of the peculiar circumstances under which some of these checks were drawn. Two checks, aggregating $250,000, were drawn by Mr. Danforth, at that time the treasurer of the state of New York, against his deposit in the Madison Square Bank of moneys belonging to the state. A check for $50,000 was drawn on the 8th of August by Frederick Uhlman, as president of, and against a deposit to the credit of, the East River Bridge Company. Mr. Uhlman was one of the directors of the bank. He was at the bank on the afternoon of the 8th of August, and knew its precarious condition. He was the president and a large stockholder in the corporation the East River Bridge Company. The Glen Ridge Quarry & Mining Company, by Simon Uhlman, its president, also drew a check on the 8th of August for $4,731.12. Mr. Simon Uhlman was a brother of Mr. Frederick Uhlman, and was in communication with him on the .afternoon of August 8, before the drawing of this check, and both the Uhlmans were interested in said corporation. All these checks which are made the subject of special inquiry were drawn late in the day on the 8th of August, were deposited' in banks which were members of the clearing association, between nine and ten o’clock on the 9th of August, and were presented by those banks for payment, through the clearing house on the 9th of August, and were honored and paid by the St. Nicholas Bank, like all other checks against the Madison Square Bank presented through the clearing house on that day. It is proved beyond all controversy that the deposit of these checks on the morning of the 9th, and their subsequent presentation at the clearing house, was not irregular, or out of the usual course of business; that is, it was proved that it was the usage and custom with the banks which composed the clearing house to pass through the clearances of the day checks—especially such as were for a large amount—received on the morning of the clearance, before ten o’clock, but bearing an earlier date than that day. Such checks are constantly received by mail from out of town correspondents, and put through the clearing house; and it was not uncommon or irregular for checks of date prior to that day to be received directly from depositors in the morning, before ten o’clock, and passed through the clearances on the same day. No doubt the contract of the parties contemplated only the clearance of checks which, according to established usage, were entitled to be cleared. There is evidence that Mr. Danforth, having determined to draw his funds some time during the 8th,—his check book being then at Albany, and the checks requiring the signature of another officer,—made his preparations, in which he succeeded, to have the checks completed before midnight on the 8th, and deposited before ten o’clock in the morning with the clearing-house banks. It is true that Mr. Blaut, the president of the bank, and Mr. McDonald, one of its directors, were sureties on Mr. Danforth’s bond; but I am unable to find from the evidence that the Madison Square Bank, through its officers or directors, or any of its officers or directors, actively promoted the drawing of these checks By Mr. Danforth on the 8th, or their presentation, through the clearing house, for payment on the 9th. On the contrary, the evidence is clear that this whole transaction, so far as these checks are concerned, wag the voluntary act of Mr. Dan-forth himself. As regards the checks drawn by the Uhlmans, there may be a question whether the corporations which were paid by these checks can rightfully hold the proceeds, especially as to the check drawn by Mr. Frederick Uhlman, a director of the bank, for $50,000; but as the other checks paid that day, including the two checks of Mr. Danforth, are more than sufficient to absorb the securities and their proceeds in question in this suit, it is unnecessary to go into those inquiries. It should, however, be observed that there is no evidence of notice to"the St. Nicholas Bank, prior to ten o’clock on the 9th of August, of the peculiar circumstances under which any of these checks were drawn or deposited. B’or these reasons, I am of opinion that the plaintiffs cannot maintain this action, and that the defendant is entitled to have judgment, dismissing the complaint upon the merits, with costs.  