
    WILLIAM RICH, Respondent, v. THE NIAGARA COUNTY SAVINGS BANK, Appellant.
    
      Wi'audulent representations—contract induced by—right to rescind—Credit of interest takes principal out of statute of limitations.
    
    A party induced to enter into a contract by fraudulent representation's, has, upon discovery of the fraud, the right, if exercised promptly, of rescinding the contract.
    A credit for interest on a sum of money is a sufficient admission of indebtedness to take the entire sum out of the statute of limitations.
    Appeal from a judgment in favor of the plaintiff, entered at the Niagara Circuit, and from an order denying a new trial.
    
      The action was for money alleged to have been deposited in defendant’s bank. The cause was tried at the Niagara Circuit, in September, 1813, and a verdict was rendered for the plaintiff for $149, upon which judgment was duly entered, and defendant thereupon appealed to this court upon a case with exceptions.
    The defendant carried on business at Lockport, Niagara county. During that time Daniel Morse was the secretary and principal financial officer of defendant, and transacted its financial business and received all the deposits made with defendant.
    In the same room, over the same counter, and at the same place at the same counter, said Daniel Morse carried on a private or individual insurance, brokerage and banking business, under the name of Daniel Morse & Co., which was carried on by Morse personally, and by his clerks, who also did the business of the defendant.
    The principal question in the case, was, whether certain money deposited by plaintiff, was deposited with Morse & Co., or with the defendant.
    
      L. F. ds G. W. Bowen, for the appellant.
    
      B. J. Hunting, for the respondent.
   E. Dakwin Smith, J.

The views expressed in the opinion in the case of Shields against this defendant, decided at this term, so far as the same relates to the merits of the action, are in a large degree applicable to this case. The plaintiff should have been nonsuited at the circuit. The complaint was entirely unproved. The plaintiff did not establish that he ever deposited any of the money for which this action was brought, in the defendant’s bank, or that the defendant ever received a cent of his money. His proof, on the contrary, clearly showed that said moneys were in fact deposited with Daniel Morse & Co. His bank book was headed Daniel Morse & Co., with Wm. Rich.” Morse received his money in fact, and credited it in his pass-book, and paid his checks. There is not a particle of proof that any of these transactions were, in form or name, with the defendant’s bank. No fraud or deception is charged' in the complaint as against the defendant, and there is no pretense for the recovery of this money, as against the hank, upon the basis of any fraud in fact, or any imposition practised by the bank or its officers upop the plaintiff. Upon the face of the transaction, the plaintiff dealt and contracted with Daniel Morse. It is true that said Morse was an officer of the defendant’s bank, but it is also true that he carried on openly and notoriously a separate private banking business, at the same place, under the name and style of Daniel Morse & Co. The pass-book given to and received by the plaintiff, and in which his account of the money deposited, and checks paid, were kept, bad indorsed upon the outside of the book, and printed in large letters: Banking Office of D. Morse & Co.” The entries in this pass-book of debits for deposits, are respectively equivalent, in legal effect, to a receipt or certificate of deposit of the separate amounts, which, like a promissory note payable on demand, bound Morse to pay the amount of such deposits upon request. The first entry in this pass-book, on the debit side, is dated March 12, 1866, for thirty dollars, and this entry is followed by four other debits in that year; by six others in the year 1867, and two in 1868, with credits for checks and other items in the same years, on the other side of the account. These entries were necessarily all made on the production of the pass-book, and were, made by Morse. The plaintiff could read and write, and must be presumed to have read the entries in his pass-book, and the indorsement upon the cover of the book. He knew he was dealing with Morse, in fact, and that he deposited with him his money and took his receipt thereof in said pass-book. He knew that Morse was doing a banking business, and had known him and dealt with him for seven or eight years; and he testified that he always supposed that his business was attending to the insurance business, collecting notes, and buying notes and receiving depositsand he also testified that he did not know anything about there being a savings bank, except seeing the sign; that he saw that sign there, and the sign of D. Morse & Go., under it. It does not appear that he ever checked on the savings bank, or did any act professedly with it, or in its name. Morse, it appears, failed in April, 1868, and left the place. Plaintiff applied to him some two weeks before he left for payment of his money, and Morse promised to pay him in a week.

While in all these transactions, in form and in fact, Morse was the debtor of the plaintiff, and so treated and recognized by him, yet, I think, when, in April, 1868, Morse failed, and the plaintiff found that he and the savings bank were different persons, and that he had no contract with the bank, if he had immediately demanded his money of the bank, or a certificate or voucher admitting the receipt of his money by the bank, and disaffirmed the contract with Morse, and claimed that he had been deceived and imposed on by him, and asserted that he intended to deposit his money in the said savings bank, and supposed it was so deposited when he left it with Morse, and that the pass-book was given by and for the bank, and in its customary way of doing business, I think the bank, if the plaintiff could have proved these facts, might have been held responsible for such moneys as the principal debtor. He would have established a clear case of fraud by an officer of the bank.

In Coleman v. The First National Bank of Elmira, the plaintiff received in the bank aocertificate of deposit, signed nominally by the president of said bank, unofficially. As soon as the plaintiff found that it was not ’the certificate in proper form to bind the bank, he returned it to the bank, and disaffirmed the arrangement ' as formally made by the certificate, and demanded his money or a proper voucher. This was a clear case of fraud, as held by the court.

Hpon the assumption before mentioned, that the plaintiff had been misled and deceived by Morse, he . had the election, I think, to consider the defendant or Morse as his debtor for the money so deposited; but, as in all cases of fraud when such right of election exists, he would be bound to act promptly in disaffirming the formal contract with Morse, if he sought to hold the bank as the principal debtor. Judge Grover states the rule, as generally held in such cases, in Curtiss v. Nowell as follows : “ It is a settled principle that a party induced to enter into a contract by fraudulent representations has, upon discovery of the fraud, the right, if exercised promptly, of rescinding the contract,” etc. In Masson v. Bovet, Judge Beardsley, said: If a party defrauded would disaffirm the contract, he must do so at the earliest practicable moment before he takes any step in affirmance of it, for this will waive the fraud.

_ .This right of election to disaffirm the contract as to Morse, and hold the bank as the principal debtor, was not exercised promptly after the discovery by the plaintiff that the pass-book was not given by, and did not bind, the bank. He did not immediately elect to disaffirm said contract by any step, act or declaration, if he ever did, before or until he signed a check for the balance of his money and interest so deposited with Morse, as shown by said pass-book; which check is dated, and was presented, and -payment demanded thereon, at the defendant’s bank, on the 14th day of January, 1873.

In the meantime, during this period from April, 1868, to January 14, 1873, the plaintiff treated with Morse, and recognized him as his debtor for such deposits; demanded payment of him, and received two payments from him, on such account at different times, in response to repeated requests for payment. After these repeated acts of affirmance of the contract with Morse, it was too late for the plaintiff to disaffirm the contract, when he drew the check aforesaid, in January, 1873. He had lost his right to disaffirm the contract. He had made his election to hold Morse as his debtor, and the election, once made, was final and conclusive, This is not like the case of a factor or agent purchasing goods for an unknown principal. In such case, generally, it is well settled that the vendor may recover the price of the principal, when discovered. In such case the principal is liable for the goods, because he has received them and had the benefit of the purchase; and in this class of cases, when the vendor, with full knowledge of the facts, elects to hold the agent for the debt, he will be bound by such election, and will have abandoned his right to proceed against the principal.

In respect to the exceptions in the case, none of them, I think, are well taken, except the one taken to the charge upon the question of the statute of limitations. It was not error to admit the pass-book- in evidence. ' It was not such a contract as to preclude parol evidence in regard to all the plaintiff’s transactions which tended to bind the bank or show the conduct of its officer with the plaintiff. That rule only applies as between the parties to a contract, and does not then apply to receipts.

In respect to the statute of limitations, the judge in his charge said: “This suit was commenced January 14, 1873; six years .previous to that would be January 14, 1867; and here was a credit on the book of interest to April 4, 1867; so that here was an entry made within six years of the time .the suit was commenced; ” and this entry was held by the judge sufficient to take the whole account out of the statute. This credit of $22.49, for interest on the previous entries on debit side in the pass-book, doubtless was an admission of- indebtedness by Morse, at that point of time, of the items of the account, and was equivalent to a payment of interest by him on said items, to that amount. But this credit or payment was not made by the defendants. They had received none of these deposits; none of them were credited on their books, and all of the entries relating to these moneys, were in the private books of Morse. The entries in this pass-bpok created and constituted a contract upon its face between him and the plaintiff, but not as to the bank, and did not bind the bank as matter of contract; and these entries could not charge the bank with an admission of indebtedness, or of payment not in fact made by it, or payable from its funds. The exception to this part of the charge, therefore, is well taken.

The judgment should therefore be reversed, and a new trial granted, with costs to abide the event.

Present — Mullin, P. J., Smith and Mobgah, JJ.

Judgment reversed and new trial granted, costs to abide event. 
      
       See page 477.
     
      
       53 N. Y., 390.
     
      
       39 N. Y., 214
     
      
      
         1 Denio, 74.
     
      
       See also Stevens v. Hyde, 32 Barb., 178, and 2 Denio, 138.
     
      
       Firemen Ins.Co. v. Lawrence, 14 Johns., 55.
     
      
      
         Paterson v. Gandassequi, 15 East, 62; Pentz v. Stanton, 10 Wend., 271.
     
      
       Same case and also Addison v. Gandassequi, 4 Taunton, 574; Thomson v. Davenport, 9 Barn. & Cres., 78.
     
      
      
         Barry v. Ransom, 12 N. Y., 464; Ford v. Williams, 21 How. (U. S.), 287.
     