
    Dundee National Bank, Respondent, v. Henry M. Huntington, Appellant.
    
      Payment — not effected by a transaction between the president of a bank and its debtor, also a creditor of the president,' by which both debts are sought to be canceled.
    
    A transaction had between the president of a hank and the maker of a note held by the hank, who, as an executor, held a mortgage upon real estate belonging to the president of the hank, by which the debt of the' president was to be offset against the moneys due the bank upon such note, followed by the debtor’s satisfaction of the mortgage (which had never been held by or pledged to the- . bank), the president’s return to the debtor of. his note and the substitution therefor by -the president, among the assets of the hank, of a forged note purporting to be that of the debtor, - does not establish payment of the note— especially when taken in connection with proof of subsequent delay upon the part of the debtor, upon written demands' by the bank for payment of the - note, to assert that he had paid it.
    
      Appeal by the defendant, Henry M. Huntington, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Tates on the 17th day of March, 1897, for $1,462.84, besides costs, upon the report of a referee.
    This action was brought to recover money alleged to be due the plaintiff from the defendant upon a promissory note and for money loaned and for money had and received.
    
      H. C. Harpending, for the appellant.
    
      D. A. Marsh, for the respondent.
   Hardin, P. J.:

Prior to the 6th'day of June, 1892, the defendant secured from the plaintiff a loan of $1,000, and he gave his promissory note therefor. On the sixth day of June he renewed the note and included in the renewal a small balance of indebtedness to the bank, delivering, to the bank simultaneous with the renewal his promissory note for $1,137.44, which was made payable to the plaintiff, being non-negotiable,. and maturing April 1, 1893. That note was never, in fact, paid to the bank, nor the indebtedness secured thereby repaid to the bank.

It was found by the referee that the note “ was taken from the bank by James Spicer, who was at that time president of the bank, which fact was made known to the defendant by the said Spicer; that the said Spicer deposited with the said bank another note, purporting to have been signed by defendant, for $1,300.00, dated May 1, 1895, running for one year, payable to the plaintiff, with interest,-the avails of which note were credited to the defendant, and canceled upon the books of the bank the obligation previously held against him; that the $1,300.00 note was not the genuine note of the defendant, his signature being placed thereon by some other person.” The defendant resided in Huntley, Minn.

According to the defendant’s testimony he, some time in 1893, wrote to Mr. Spicer and asked him to send the note and balance due. In response to that letter Mr. Spicer wrote to the defendant a letter on the 18th of March, 1893, referring to the note held by the bank of $1,137.44. At that time the defendant, as executor of Ms brother’s estate, held a- mortgage 'upon certain real estate executed by Hr. Spicer, and in the letter alluded to Spicer stated, viz.:: “ I have taken the note from the bank and I hold it to pay the amount due on the mortgage. The amount due on note- April 4th ■is §1,193.94. If you send on the discharge please get a clerk cif,, and upon arrival of same will figure up difference and square up.”' On the seventeenth of Hay Spicer again wrote a letter- to the defendant, in which he made a statement showing that there was. due upon the note §1,193.94, and the amount due on the “bond” was §1,299.75, and the balance, was §105.81; and in that letter he included a check for §105.81, and stated, viz; : “ I will keep the papers all together, and when you come down we will look them over and any mistakes corrected.”

The defendant, about the 20th day of Harck, 1893, executed a. discharge of the- mortgage and mailed the same to Spicer at Dundee and the referee finds as a fact “ that said discharge was given to the said Spicer upon the understanding upon the part of the defendant that the avails of- the mortgage should be applied' toward the pay-' ment of the defendant’s indebtedness to the bank; that after receiving the said discharge the said Spicer sent to the said defendant, in Hinnesota, a statement purporting to show the application of the avails of the bond and mortgage toward -the payment .of the defendant’s indebtedness; that from such statement it appeared that the-defendant’s note of §1,137.44, and the interest thereon, had been paid, and that after applying the avails of the bond and mortgage thereon there remained due the. defendant §105.81, for which sum the said Spicer sent Ills individual check, which, in due course of mail, was returned to Dundee and was paid out of the individual account of the said Spicer in the bank.”

There .was evidence given; on the trial tending to support the find-: ings of fact so far as we have quoted the same.

The referee also found : “ That the Spicer bond and mortgage-were not left•witli the plaintiff at any time as collateral security for the payment of the note, or of any indebtedness of the defendant in the bank.” That, finding is challenged by the defendant.

Hr. Shattuck, the cashier of the plaintiff, in the course of his redirect examination, testified: “ The bank had no mortgage as-collateral to the payment of this note.”

When the defendant was cross-examined he testified, after referring to the mortgage: “ It was never put up in the hank as collateral and never assigned to the bank.”

The evidence of Shattuck and of the defendant amply support the finding made by the referee, that the “ bond and mortgage were not left with the plaintiff at any time as collateral security for the payment of the note, or of any indebtedness of the defendant in the bank.”

The referee has found as a fact: “That said note of $1,187.44 was not paid by the defendant, or by any person in his behalf, to the plaintiff, and the money for which the same was given is still due and owing to the plaintiff.” The evidence abundantly supports that finding of fact. During the examination of Huntington he said “The Spicer mortgage was paid by installments. I remember receiving at one time $500 and $250. I said, the other day, that I had no recollection of sending a discharge in response to his letter. I don’t now recollect anything of the kind. Am positive I did not, I wrote then to him to send the necessary papers and he never did.” Subsequently- the witness was confronted with the discharge papers executed by him, as executor of his deceased brother, bearing date March 20, 1893, which had been recorded in the clerk’s office of Tates county. •

On the 26th of July, 1894, Shattuck, the cashier of the bank,, wrote to the defendant a letter in which he stated: “ Tour note of $1,137.44 and interest amounting to $1,193.94 on April 1st, 1893, át its maturity is still held by this bank and unpaid. I have several times in the past called Mr. Spicer’s attention to it and suggested that he had better ask- you to renew it, -if you were not in shape to-pay it, and thus save our carrying it as a past due paper, which looks objectionable in the eye of the gov’t.”

Subsequently, and on the sixth of August, the cashier addressed another letter to the defendant in'which he stated: “ The note in question you gave to the bank June 6, 1892, for $1,137.44 and interest, payable April 1, 1893. Amount at maturity $1,193.94. Mr. W. S. Booth and myself are two of the nine directors of the bank, Mr. Spicer being one. Ton know how he runs matters. Mr. B. and myself had half fancied that perhaps you had made some arrangement with Mr. S. whereby he was to provide for the payment of your note, and while our suspicions may be unjust, we did not think his. explanation of the matter or his way of treating the note hardly natural,- and at Mr. Booth’s suggestion I wrote to you . regarding it. I also show him this letter to you.” . "

On the 20th of October, 1894, the cashier again wrote to the defendant upon the subject.of the unpaid note, and added a postscript in which he stated, viz.: “ Spicer said only two days ago, when looking over the-notes, that he had just received a letter from you,"etc., etc., and that it would soon"be arranged.” -

We are of the opinion that the referee made no mistake in interpreting the- evidence when he came to the conclusion .that the debt •to the bank had never been- paid, and that' by placing a forged note in form renewing the defendant’s note, did not operate to discharge the debt due from the defendant to the bank.

Apparently" the defendant understood that -.he was having a! personal transaction with Spicer when he was negotiating, with him for the collection of the mortgage -and the liquidation, of tire indebtedness represented by the note. The transaction is wholly unlike ..the one under consideration in Yerkes v. National Bank of Port ■Jervis (69 N. Y. 383). In that ease the defendant, the bank, had in its "hands United States bonds, and the cashier for a sufficient consideration agreed to exchange the" samé for registered bonds. The bank neglected to execute the agreement and' the bonds were stolen, and it was held the defendant was liable. We think the case does not support the contention of - the defendant. ' '

The transaction revealed in this case is quite unlike the one disclosed in' Phillips v. Merchants’ National Bank (140 N. Y. 556). In that case it was held that ■ the cashier of the bank, having power to bind it by his. ■ checks for-the purpose of converting’its funds to his- own use, drew checks, as cashier; upon the defendant, with whom his bank had a deposit account, making them payable -to persons who were dealers with" the bank; “ that so far as "defendant, was -concerned the intent of the cashier was the intent of his bank.” The transaction there under consideration does not resemble the-one brought to our-attention by the record here

We think the evidence warranted the referee in reaching the conclusion “That the transaction between the defendant and Spicer in regard to the discharge of the -mortgage and applying the avails- of it to the payment of the indebtedness of the defendant in the bank, was one of a personal nature, and whatever was done in that regard by Spicer was apart from his relations as president of the bank.” And this view of the case is corroborated and strengthened by the omission of the defendant to heed the letters of the cashier, which ' were written, calling his attention to the fact that the note remained-unsatisfied ; that it was held by the-bank against the defendant, and the efforts of the cashier to secure from the defendant the payment of the note, and the delay of the defendant in taking the position which he now seeks to insist upon, strongly indicate that the referee made no mistake in the interpretation of the whole volume of the evidence before him. "We think his conclusion should be sustained.

All concurred, except Follett, J., not sitting.

Judgment affirmed, with .costs.  