
    Charles H. Mills, as Executor, Etc., of Deborah G. P. Williams, Deceased, Plaintiff, v. The Albany Exchange Savings Bank et al., Defendants.
    (Supreme Court, Albany Trial Term,
    June, 1899.)
    Savings banks — Payment of executor of depositor where the passbook is lost — Indemnity.
    Where a savings bank has had notice for many years that the pass-book of a depositor has been lost, provisions in its by-laws, assented to by her, requiring the pass-book to be presented as a condition of any payment, and also providing that, in the case of lost pass-books, “ the bank will decide to whom payment shall be made ”, do not justify it in refusing to pay the deposit to the executor of the depositor, unless he first produces the pass-book or furnishes indemnity against its loss.
    The refusal of the bank to pay the executor after demand is unreasonable. The provisions, for exacting indemnity against lost instruments in suit (Code Civ. Pro., § 1917), refer to such as are negotiable, and the statute has no application to a savings bank passbook as it is not a negotiable instrument.
    
      Hr July, 1875, one Deborah G. P. Williams opened an account with the defendant, the Albany Exchange Savings Bank, by making a deposit therein. At the time of opening said account said Deborah G. P. Williams received from said bank a pass-book containing a copy of the act incorporating the bank, and also a copy of its by-laws.
    From time to time thereafter she made further deposits therein which were entered in said pass-book, and from time to time she withdrew money from said bank, which withdrawals were also entered in said pass-book. The by-laws of the defendant relating to the pass-book and the withdrawal of money from said bank are as follows:
    “ 7. Every deposit shall be entered on the books of the bank, and also a pass-book furnished to the depositor; and no money whatever shall be drawn out without the depositor presenting said pass-book, and allowing such sum as is drawn out to be entered therein.
    “ 12. Every depositor, on receiving his or her pass-book with these by-laws printed therein, shall be considered as assenting to them, and shall be bound by them.
    “ 14. Although the bank will endeavor to prevent frauds on its depositors, yet all payments to persons producing the pass-book issued by the bank, shall be valid payments to discharge the bank. In the case of lost books, the bank will decide as to the person to whom payment shall be made.”
    Some time prior to 1890 the said Deborah G. P. Williams lost her said pass-book and the bank was notified of such loss in the year 1890. Deborah G. P. Williams died in the city of Albany, N. Y., on or about the 1st day of May, 1893, leaving a last will and testament, which has been duly admitted to probate, and the plaintiff Charles H. Mills was appointed executor of such last will and testament and duly qualified as such executor. At the time of the death of said Deborah G. P. Williams her account in said bank amounted to the sum of $3,000 in addition to the interest credits thereon from April 1, 1889. No money has been withdrawn from said account since the loss of said book in or prior to the year 1890. Diligent search has been made for said pass-book but the same cannot be found and the loss of said pass-book is admitted. Prior to the commencement of this action the plaintiff duly demanded payment of said account to him as such executor and said bank refused to pay the account to the plaintiff without the presentation of said passbook or the furnishing by said plaintiff of satisfactory indemnity. This action was then commenced. The defendants, other than the Albany Exchange Savings Bank, are the only children and next of kin of Deborah G. P. Williams, deceased.
    Charles F. Bridge (Peter A. Delaney, of counsel), for plaintiff.
    John De Witt Peltz, for Albany Exchange Savings Bank.
   Chase, J.

The provisions which were included in the Revised Statutes (2 R. S., 406, part 3, chap. 7, tit. 3, §§ 75, 76) and the present provision of the Code of Civil Procedure (§ 1917) were designed to take the place of the ancient rule denying jurisdiction in law in actions on lost negotiable instruments and requiring all suits upon lost negotiable instruments to be brought in equity where the court would have power to require suitable indemnity to the defendant in the action. An action can now be brought upon such a lost instrument and a recovery had upon complying with the provisions of such section of the Code of Civil Procedure. The statute expressly relates to a negotiable promissory note or bill of exchange. It does not in any way relate to a non-negotiable instrument. In a suit on a lost instrument it is not necessary to give or tender a bond of indemnity unless the lost instrument sued upon is negotiable. Hinsdale v. Bank of Orange, 6 Wend. 379 (see note); Blade v. Noland, 12 Wend. 173; Pintard v. Tackington, 10 Johns. 103; Rowley v. Ball, 3 Cow. 303; Des Arts v. Leggett, 5 Duer, 156; S. C., 16 N. Y. 582; Wright v. Wright, 54 N. Y. 437; Terwilliger v. Terwilliger, 27 N. Y. Supp. 284.

The pass-book of a savings bank is not a negotiable instrument. Kummel v. Germania Savings Bank, 127 N. Y. 488; Smith v. Brooklyn Savings Bank, 101 N. Y. 58; Allen v. Williamsburgh Savings Bank, 69 N. Y. 314; Beaver v. Beaver, 53 Hun. 258; McCaskill v. Connecticut Savings Bank, 60 Conn. 300; 25 Am. St. Rep. 323.

The Banking Law provides: “The sums deposited with any savings bank, together with any dividends or interest credited thereto, shall be repaid to such depositors respectively, or to their legal representatives, after demand, in such manner and at such times, and after such previous notice, and under such regulations, as the board of trustées shall prescribe ” (§ 113).

The Banking Law also provides: “ No savings bank shall make or issue any certificate of deposit * * * or pay any interest or deposit, or portion of a deposit, or any check drawn upon itself by a depositor unless the pass-book of the depositor be produced, and the proper entry be made therein at the time of the transaction.

“ The board of trustees may, by their by-laws, provide for making payments in cases of loss of pass-book, - or other exceptional cases where the pass-book cannot be produced without loss or serious inconvenience to depositors ” * * * (§ 122).

Under these provisions of the Banking Law such reasonable by-laws regulating the withdrawal of money may be made and enforced as the board of trustees of a savings bank may deem to the interest of the bank. Such provisions of the by-laws are evidence of the contract between the bank and its depositors.. The pass-book is simply evidence of the deposit. Banking Law, § 113.

In the absence of any rules assented to by its customers a savings bank is to be governed by the same legal principles applicable to other moneyed institutions. Allen v. Williamsburgh Savings Bank, 69 N. Y. 314.

A provision in the by-laws of a savings bank to the effect that in case a pass-book is lost or destroyed the deposit shall not be repaid unless the bank shall first receive satisfactory indemnity, is a reasonable provision; and when it is so provided in the by-laws such provision becomes a part of the contract between the bank and its depositor and should be and is enforced as such by the courts. An examination of the authorities cited by the defendant bank, holding that a savings bank is not bound to pay a deposit to a depositor without production of the book, or satisfactory indemnity, will show that such decisions are based upon the contract between the depositor and the bank or by reason of some peculiar facts or circumstances applicable only to the case so decided. The by-laws of the defendant bank, in terms, provide that no money whatever shall be drawn out, without the depositor presenting the pass-book. The provision requiring the production of the pass-book at the' time of the withdrawal of any part or all of the deposit is for the benefit of the bank. The simple fact that a pass-book is produced is not sufficient to justify a savings bank in paying a deposit. The hank must use reasonable care and diligence to ascertain that the person presenting the pass-book is in fact the depositor or a person legally entitled to receive the deposit. In this case it is impossible for the depositor or any other person to produce the pass-book. It is admitted that the pass-book has been lost, and cannot be found after diligent search. The by-laws of the defendant bank recognize that it may become impossible for the depositor to produce the pass-book. The provision relating to lost pass-books is a follows: “In the case of lost books the bank will decide as to the person to whom payment shall be made.” This provision of the by-laws is a part of the contract in this case but it does not mean that the bank can decide not to pay the deposit to any person or that it will not pay the deposit without adequate indemnity. The bank has had knowledge since 1890 that the pass-book is lost and no claim has been made for the deposit, except by the depositor and the plaintiff as her executor, and its decision refusing to pay the deposit to the executor of the last will and testament of the depositor is unreasonable.

The plaintiff is entitled to judgment in the sum of $3,900 with interest thereon from September 10, 1897, besides costs, and a decision and judgment may be prepared accordingly.

Judgment accordingly.  