
    Ann Campbell, Respondent, v. Schenectady Savings Bank, Appellant.
    Third Department,
    June 27, 1906.
    Savings bank — rules binding on depositors — when payment to third person holding hank hook not negligent.
    The rules as to the liability of a savings bank and a commercial hank differ. In savings hanks the relations of a depositor with the bank are governed by the rules thereof when brought to the knowledge of the depositor.
    A rule of such bank printed in the deposit hooks and conspicuously posted, providing that “payments made to persons presenting any passbook shall be deemed good and valid payments to the owner of the deposit” is binding upon the depositor, and when such depositor leaves the hook in the possession of others a payment to them on a check apparently regular is good unless the hank was guilty of negligence. The liability of such bank in paying unauthorized checks, if done in conformity with its rules, must be based upon negligence.
    When it is shown that a depositor who could neither read nor write has drawn bona fide checks through the agency of her niece, who witnessed the depositor’s mark before the hank officials, and that she subsequently left her hook with her attorney, who delivered it to the niece, who presented the hook and made other withdrawals on checks executed similarly to those acknowledged to have been bona fide, there is nothing to put the bank upon inquiry as to the genuineness of the latter checks, and it is not chargeable with negligence in paying them.
    The fact that the last checks were larger in amount than the former checks is insufficient to charge the hank with negligence.
    Appeal by the defendant, the Schenectady Savings Bank, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Schenectady on the 25th day of April, 1905, upon the verdict of a jury rendered after a trial at the Schenectady Trial Term, and also frbm an order made at the close of the trial denying the defendant’s motion for a new trial made upon the minutes.
    This is an appeal by the defendant from a judgment upon the verdict of a jury, and from an order denying its motion for a new trial upon the minutes of the court. The plaintiff, an old lady who could neither read nor write, deposited with the defendant, about January 3, 1901, $400. This deposit was made by her and her attorney, who was acting for and with her at the time. The rules of the bank, as required by law, were conspicuously posted in the bank and pasted in the depositor’s book which was -given her and signed by her at the time.. The 7th rule provides, “ All payments made to persons presenting any passbook shall be deemed good and valid payments to the owner of the deposit evidenced thereby,” unless notice of the loss or theft of the passbook is given to the bank. The 9th rule provides: “ If the officers of the bank shall doubt the identity of any person presenting a passbook and claiming a deposit, or the right of any one claiming to be' representative of any deceased or other depositor, they may require satisfactory proof and indemnity before paying such deposit or any part thereof.” The defendant has about 17,000 depositors.
    It is not claimed by the plaintiff that she was ignorant - of these rules or that she did not assent to them. She made several small deposits. The first money drawn by her, fourteen dollars and twelve cents, was about fourteen months after the first deposit. She went to the bank with her niece, Mrs. Haight, presented her book, signed her name by making a mark, which was the manner in which she indicated her checks would be signed in the signature book at the bank when she made the deposit, and Mrs. Haight witnessed the signature. This money was paid by her to Mrs. Haight at the time. About May 5, 1903, her book was with her then attorney, Mr. Sanders, in his safe. She gave a tliirty-dollar check to her physician, had Mrs. Haight witness it, and told him to go and get the book from Mr. Sanders and take it to the bank. This was done, the money withdrawn, and the book was by him returned to Mr. Sanders. No other moneys were withdrawn from this account until June 6, 1903, and from that time to December 4, 1904, nine different checks were drawn, purporting to be signed by the plaintiff’s mark, payable to the order of Mrs. Haight, witnessed by her husband, and Mi’s. Haight presented the book to the bank and drew the moneys therefrom. The entire amount drawn upon these last nine checks was $524163. The plaintiff has recovered from the bank that sum, with interest, upon the theory that the book was presented without her knowledge and the checks were not signed or. authorized by her, and that the bank was guilty of negligence. The attorney, who had the book in his office, swears that the plaintiff told him to deliver the book to the doctor or the Haights, and that after-wards he told the plaintiff that he had delivered the book to them. She does not definitely deny that she told him he might so deliver the book, but has no recollection of his having told her that he had delivered it to them. Upon this point she says: “ I cannot remember that Mr. Sanders came up or drove up to Mr. Haight’s house while I was staying there and tell me that he had given my bank book to the Haight's; I cannot remember; that is all that I can say; I do not know as 1 would remember if he had told me he had given the book to the Haights.”
    
      Miller & Golden [John D. Miller of counsel], for the appellant.
    
      Louis M. King [John H. Gleason of counsel], for the respondent.
   Kellogg, J.:

It is recognized that the rule of liability of a savings bank and that of a commercial bank is different where payment of the depositor’s money is made to the 'wrong person, for the reason that in the commercial bank the depositor ordinarily has frequent transactions and is more or less personally acquainted with the officials of the bank, while in a savings bank the depositor is usually not a business person, the transactions are not so frequent and there are so many depositors who visit the bank at such rare intervals that it is not to be supposed that its officials would have personal acquaintance with or knowledge of all its depositors. The one account is more or less active and for business people; the other account is more or less dormant and usually for people unacquainted with business. While in the case of the commercial bank the ordinary rules of commercial law apply, in the case of the savings bank the relations of the depositor with the bank with reference to a withdrawal of the fund depend almost entirely upon the rules of the bank which are brought home to the knowledge of the depositor. The savings bank has no stockholders, but is in fact an aggregation of depositors, doing business for their own benefit and realizing such income from their deposit as the general business earns. Section 113 of the Banking Law (Laws of 1892, chap. 689) provides that the sums deposited with any savings bank shall be repaid to such depositor in such manner and at such times and under such regulations as the board of trustees shall prescribe, such regulations to be printed in the passbook and conspicuously posted in the banking office and “shall be evidence between the corporation and the depositors holding the same of the terms upon which the deposits therein acknowledged are made.” The rule of this bank, therefore, that “ all payments made to persons presenting any passbook shall be deemed good.and valid payments to the owner of the deposit,” is the contract between the parties and is binding upon them. In this case it is evident that the loss of the plaintiff’s money comes from the fact that she was negligent in the care of the passbook by consenting that it be delivered to the Haights, or allowing it to remain with them after her knowledge of the fact, or from the carelessness of the attorney in* delivering it to the Haights without her authority. Her loss, therefore,- comes upon her primarily from her carelessness, and should not be visited upon' the -other depositors of the bank unless the officials of the bank are guilty of negligence. This may fairly well be said to be the rule : “ If at the time a fact or circumstance was brought to the knowledge of the defendant’s officers, which was calculated to and ought to have excited the suspicion and inquiry of an ordinarily careful person, it was clearly their duty to institute such inquiry, and their failure to do so ¡presented a question for the consideration of the jury.” (Gearns v. Bowery Savings Bank, 135 N. Y. 557, 562.) The relations between the depositor and the savings bank, and the reasons why the bank is only held for negligence in payment of the money to the wrong person, is well shown in Kelley v. Buffalo Savings Bank (180 N. Y. 177), the court saying (at p. 178): “ Upon reflection it becomes obvious, therefore, that the only practicable general rule to which savings banks can be safely held in such dealings is the rule of ordinary care, leaving it to be applied in the light of the special circumstances that characterize each separate case. This is the rule that has been laid down by this court in a variety of similar cases.” In reading the books upon this subject care must be taken that the rules of the bank do not charge upon it more than ordinary care in the payment of the money where circumstances exist which should ordinarily arouse its suspicions.

In this .case the rules of the bank contain no provision except the broad one that a payment upon presentation of the book is good. The question then is, did the officers of the bank fail to exercise ordinary care for the protection of the plaintiff at the time these various payments were made? Did any fact appear which would call to the mind of the ordinarily prudent man a doubt or a suspicion that the transaction was not, an ordinary business transaction in the manner in which this book was presented ? The bank officials who paid the various checks swear that all the customs and rules of the bank were observed when these particular payments were made, but in most cases they admit that they have no definite recollection of the particular transactions, but are swearing from the method which was always pursued in such cases. Where the book is presented by a person other than the depositor, the officials look to the signature book to see in what manner the signature is written. That precaution was frequently observed in this case, and it was discovered that the signature was properly made by mark. If the book is presented and the receipt signed by a person other than the payee, then unless ttie payee or payee’s signature is known it is required that he be sufficiently identified. In this case the first two checks bearing Mrs. Haight’s name are conceded to be genuine, and the payments made upon them were entirely proper. When the third check was presented, reference was made to the signature book and to the former check signed by Mrs. Haight. She was then asked if she saw the plaintiff sign the check, and she replied that she did. This seemed to comply with the rules and the requirements and practices of the bank. This method was adopted in most of the cases, except in some cases the clerk swore that he compared Mrs. Haight’s signature with that upon which the bank had made payments, and found it the same; and as to some of the checks, the clerk swears that he knew Mrs. Haight from her prior dealings with the bank in reference to these checks, and required no further identification. It is difficult to say upon, what particular point the negligence of the bank is predicated. It is evident that the plaintiff was not prejudiced by a failure to make inquiries of Mrs. Haight as to the reason why the plaintiff did not come to the bank in person, or where she was, or her relationship to the plaintiff. If the bank did not already know these facts, the answer is apparent that it would have been stated that she was the aunt of Mrs. Haight, living in her family, was sick at her house with an ulcerated leg, and was being supported and cared for by Mrs. Haight and her husband as a part of their family.' These were the facts, and if the bank did not know them its inquiry would have undoubtedly elicited such answers. The failure to obtain such answers could not prejudice the plaintiff.

But it is suggested that the fact that this account was practically dormant, that but two checks had been drawn upon it for about wenty-eight months, and then within the period following nine checks aggregating about $500 were drawn in six months, was enough to put the bank upon its inquiry. But all classes of persons malee deposits in savings^ banks, and the particular reason for which each person is saving up such moneys is not known to the bank, and the fact that after a period of time the money is drawn in a lump, or in different checks, does not seem to be so unusual or improbable a transaction as to charge the officers with negligence in making such payments. What could it have done in this case otherwise than it did do ? It is evident that when these checks were presented with the book, by the niece of the depositor whom the depositor had first brought into relation with the bank and in whose house she was then living, and who had been the witness on previous checks which were concededly genuine, it would have apparently been a violation of the duty of the bank, without any further information or suspicion than it had, to refuse to pay such checks. The bank cannot act unreasonably or capriciously in refusing to pay a customer’s check upon presentation of the book, and for an unreasonable refusal would be clearly liable to any damages which might result. The defendant’s rules provide that it may require proof or indemnity in case of doubt, and honest doubt can only justify refusal to pay when the book is presented. In considering the right of the bank to make these payments we must also consider the duty of the bank to make a payment when the book is presented in the ordinary course of business, without suspicious circumstances. The first check here alleged to be irregular was for,a small amount and was well in line with the previous withdrawals by the plaintiff. The same may be said about the other small checks preceding the large check of §275. And perhaps until that time it would not seriously be claimed that the bank was called upon to exercise any greater care than it had been exercising. That check was fourth in number of the nine checks, the ones preceding being for $40, $16 and $10, respectively. But is it such an unusual circumstance that a customer who has drawn several small checks upon her account should draw a check for $275 and have it .presented to the bank by her niece with the bankbook ? If the bank were to raise up such suspicion's and act upon them, it is probable that many people would be deprived of the benefits of their moneys in the bank which they desire for immediate use.

Upon a careful consideration of the evidence and all the attending circumstances I cannot see that this bank has failed to exercise ordinary care for the protection of the plaintiff, and I do not see any fact, as the situation then appeared to it, which would have justified it in refusing to make the payments. A refusal would have rested upon a mere guess and not upon a doubt, or upon the presence or absence of any fact which should have aroused a suspicion.

In addition to these suggestions, which show that the bank was not negligent, the jury have found that the Haights were not authorized in drawing all these moneys, and in respect to some of the larger payments the finding may be justified, but it is still quite evident that some of the former and smaller payments seem fairly to have been authorized by the plaintiff and the book intrusted to them. Mrs. Haight swears that the first of the nine cheeks was used in part to pay Dr. Wilson the balance of his bill after the plaintiff had discharged him. She admits his discharge and that she did not pay him, and the doctor swears he was paid his money. The plaintiff swears the first payment of fourteen dollars and tjvelve cents drawn by her from the bank, and when she was not living with Mrs. Haight, was drawn for the purpose of getting Mrs. Haight some money on account of her serious needs. If that fairly represented her financial condition it would not seem probable that she could have taken the plaintiff into her family and fallen care of her for months without any compensation. While she and Mrs. Haight do not agree as to the extent of her helplessness, Mrs.. Sanders informed the plaintiff just before she went to the Haights that she must leave her home as she did not have the time to attend to her. This fact is sworn to by the plaintiff herself. The plaintiff is old and forgetful, and I think the evidence fairly tends to show that some of these small checks, at least, were made or authorized by her and that she was wronged by the Haights with reference to some of the checks which were not authorized by her. Upon the whole case I am satisfied there was no evidence before the jury tending to show that the defendant paid this money otherwise than in the ordinary prudent conduct of its business, and that it exercised at least ordinary care for the preservation of the plaintiff’s money. The defendant’s motion for a nonsuit should, therefore, have been granted. The judgment and order are, therefore, i'eversed and a new trial granted, with costs to_ the appellant to abide the event.

All concurred.

Judgment and order reversed and new trial granted, with costs to appellant to abide event.  