
    Priscilla Chrzanowska, Respondent, v. The Corn Exchange Bank, Appellant.
    First Department,
    June 2, 1916.
    Banks — presentation of check after death of drawer— right of bank to rescind credit to depositor after discovery of death of drawer — relation of depositor to bank having branches.
    The defendant is a domestic banking corporation having various branch banks in the city of New York, and with one of these branches the plaintiff opened an account. A relative of the plaintiff also had a deposit account at another of the defendant’s branches, and drew thereon and delivered to the plaintiff a check for $1,500. He died on the' day following, and on the morning after his death the plaintiff presented the decedent’s check to the teller of the branch bank in which she had her own account and asked him to cash the same. Thereupon, after consulting with other bank officials, the teller entered the amount of the cheek on the plaintiff’s pass book and informed her that she might draw thereon. On the following day she drew $100 from her deposit and subsequently it was discovered that the amount of the decedent’s check which had been credited to the plaintiff would overdraw his account, and the bank also learned that the drawer had died before the cheek was presented by the plaintiff. Whereupon the plaintiff’s bank of deposit notified her that the check had been returned unpaid, owing to the death of the drawer, and had been charged back to her account, and she was requested to make good the overdraft caused by the withdrawal of the $100. Thereafter the decedent’s widow qualified as executrix and drew out the moneys belonging to her testator. The present action is brought to recover the amount of the plaintiff’s deposit as it stood before the decedent’s check was charged back to her.
    
      Held, that the plaintiff was not entitled to recover, but that judgment for the defendant should be entered on its counterclaim for the plaintiff’s overdraft.
    A check is not an assignment of the fund on deposit to the credit of the drawer pro tanto, and the holder is merely the agent of the drawer for the purpose of collecting it. Upon the death of the drawer before presentation, the authority of the holder is revoked and the bank is no longer authorized to pay. But on principles of necessity incident to the banking business, if the bank pays in good faith and without notice of the death of the drawer, it is protected.
    
      It seems, therefore, that if the plaintiff concealed the drawer’s death she was guilty of fraud, which- prevented a recovery, and if she acted in good faith in failing to disclose his death, the bank in crediting the cheek had acted under a mistake of material fact, which prevented a recovery.
    Where a bank opens branch banks under the authority of section 109 of the Banking Law (Laws of 1909, chap. 10), and requires its depositors to agree to draw their cheeks- on the particular branch in which they are depositors, the various branches are to be considered as separate and distinct from one another as from any other bank.
    Appeal by the defendant, The Com Exchange Bank, from an order and determination of the Appellate Term of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 31st day of January, 1916, affirming a judgment of the City Court of the City of New York in plaintiff’s favor.
    
      W. H. Van Benschoten, for the appellant.
    
      Alex. B. Greenberg, for the respondent.
   Laüghlin, J.:

The only questions with respect to the facts arising on this appeal relate to the inferences to be drawn from uncontroverted testimony. A jury was waived and the case was tried before the court. The defendant is a domestic hanking corporation, having its main banking house at William and Beaver streets and twenty-six branch banks all in the borough of Manhattan, New York. One branch, known as the “Harlem Branch,” is located at One Hundred and Twenty-fifth street and Lenox avenue, and another, known as the “181st Street Branch,” is at One Hundred and Eighty-first street and St. Nicholas avenue. On the 31st day of May, 1910, the plaintiff opened an account with the defendant at its Harlem branch with a deposit of $150. She made no further deposit until January 11,1911, at which time the balance to her credit was only $3.25. One J. Antoni Ohrzanowski, who was plaintiff’s brother-in-law, had a deposit account with the defendant at its One Hundred and Eighty-first Street branch. On the 9th day of January, 1911, he drew and delivered to plaintiff a check for $1,500 on defendant’s One Hundred and Eighty-first Street branch, and he died at midnight the day after. After his death, and at ten o’clock on the morning of the eleventh, plaintiff presented the check indorsed by her and a deposit ticket with her pass book at the receiving teller’s window of the defendant’s Harlem branch, and according to her testimony, which is not controverted, asked the teller if she could cash the check that morning as she needed the money, whereupon he asked her to wait a minute, sayingthat he would find out, and after disappearing he “came back in a little while” and said: “You are credited with this, you may draw to-day,” or “You may draw right away,” and entered it on her pass book, and it was also entered on her account on the ledger of the bank. She did not draw against it then, or that day, but returned the next day and presented a check for $100, which was paid without question according to her testimony, and as matter of favor after consultation by the paying teller with the manager of the branch bank according to the testimony of the manager.

■ The usual course of business when a check by a depositor in one of its branches was presented to another branch by a depositor in that branch, was to forward the check for collection through the main bank to the branch on which it was drawn, and the check for $1,500 was so forwarded. When it was presented at the One Hundred and Eighty-first Street branch, the manager discovered that it would overdraw the account of the drawer, whose signature appeared to be shaky,” and in attempting to communicate with the drawer he was informed of the death. The check was then returned unpaid through the same channel to the Harlem branch, and on the thirteenth of January the plaintiff was notified that on account of the death of the drawer the check had been returned unpaid, and she was further notified the next day that it had been charged back to her account, and on the seventeenth she was requested to make a deposit to make good the overdraft. On the twenty-third she requested the Harlem branch by letter to hold the matter in abeyance until she could give it attention. On the fifteenth of February she was again requested by letter to give the matter her immediate attention. The next heard from her by the bank was in 1913, when according to her testimony she called on the manager of the Harlem branch and asked the reason why the check had not been credited to her account. In the meantime the widow of the drawer, to whom by will he left all his property, had qualified as his executrix, and without notice to plaintiff had been permitted to withdraw the balance to his credit in the One Hundred and Eighty-first Street branch,, after action brought. This action was commenced on the 3d day of December, 1914, to recover the balance of the plaintiff’s account as it stood before the check was charged back to the account.

It is argued that the teller of the Harlem branch after leaving the window when plaintiff inquired whether she could cash the check before entering the deposit on her pass book, probably communicated with the One Hundred and Eighty-first Street branch to ascertain whether the drawer’s account was good for the amount, but there is no evidence of that fact, and if he had done so, it is a reasonable inference that he would have discovered that the account was not good for that amount, as that was the fact. The fact that the plaintiff did not then draw against the account shows that for some reason she conceived the idea that she would derive some special benefit or advantage if the bank would cash the check notwithstanding the fact that she did not intend to take the money, for she asked to have it cashed and that she be given credit for it, and. that, in effect, is the theory upon which her learned counsel endeavors to sustain the recovery, for he argues that the bank, in effect, agreed to cash the check, and the transaction is to be deemed the same as if it had paid the money over to her, and she had deposited it in her account. That, however, is hot the reasonable inference which the teller of the bank was justified in drawing, for instead of presenting the check and asking to have the money paid over, she presented her pass book and a deposit ticket, and asked to have the check cashed, and that she be given credit for it. Inasmuch as she did not desire the money at that time, the explanation of her conduct presented by the evidence is. that she knew that the drawer of the check was dead, and that there might be some question about the collection of it, and, therefore, she desired to have it understood that it was cashed and placed to her credit, but she failed to disclose to. the teller of the bank the fact that the drawer was dead. No one connected with the bank was at that time aware of the death of the drawer of the check.

A check is not the assignment of the fund on deposit to the credit of the drawer pro tanto, and the holder is merely the agent of the drawer for the purpose of collecting it, and upon the death of the drawer before presentation the authority of the holder is revoked, and the bank is no longer authorized to pay; but on principles of necessity incident to the banking business, if "the bank pays in good faith and without notice of the death of the drawer, it is protected. (Glennan v. Rochester Trust & Safe Deposit Co., 209 N. Y. 12.) If the plaintiff did not know the law, and acted in good faith in failing to disclose the death of the drawer, then the teller in crediting the check to the plaintiff’s account acted under a mistake of a material fact, and if the plaintiff knew the law, and purposely concealed the death of the drawer from the teller, she perpetrated a fraud on the bank, and in either case she obtained a credit to which she was not entitled, for in any event her authority to collect the check had been revoked by the death of the drawer. Much stress is laid by the learned counsel for the respondent on the fact that the check was credited to plaintiff’s account and that she was informed by the receiving teller that she could draw against it. The only significance of that is its bearing on the question as to whether the check was accepted and credited to the plaintiff’s account unconditionally, or received for collection and credited to her account subject to being charged back if not paid, for manifestly these facts present no evidence of estoppel upon which it could be held that the bank could not thereafter be heard to say that the plaintiff might not draw the undrawn balance of the credit it gave her on the check. The existence of evidence of an estoppel was one of the controlling facts in Oddie v. National City Bank of New York (45 N. Y. 735), which the learned trial court deemed decisive in favor of the plaintiff, and we have heretofore had occasion to point that out in distinguishing that authority. (See Republic Life Ins. Co. v. Hudson Trust Co., 130 App. Div. 618.) In Oddie v. National City Bank of New York (supra) the check which was credited to the account of a depositor was drawn on the same bank, and the state of the account on which the check was drawn was known when the credit was given, and in the meantime and before the check was charged back, the position of the depositor had changed. Here the accounts were kept in separate branch banks, and it appears by the evidence that neither branch had the signatures of the other’s depositors, or records of the state of their accounts. If a bank having many branches were obliged to have duplicate signatures of all its depositors in each and to pay on presentation at any branch checks drawn on the main bank or on any other branch, that would enormously increase the expense of conducting the banking business, and would be fraught with great risks to the bank. If the genuineness of signatures might be thus ascertained it would be necessary in any event to communicate with the branch on which the check was drawn and have it charged up to the account there before it could be paid in safety by another branch, and endless difficulties, inconvenience and confusion would be encountered. Section 66 of the then existing Banking Law (Consol. Laws, chap. 2; Laws of 1909, chap. 10) required that the business of a bank be conducted at the place specified in its certificate of incorporation, and section 31 prohibited a change of location even in the same city without the approval of the Superintendent of Banks. It would seem, therefore, quite clear that without express authority elsewhere conferred by statute, a bank would have no right to establish branches. The defendant had established and was maintaining and operating branch banks under and by virtue of the provisions of section 109 of the then existing Banking Law, and the statutory provisions from which that section was derived, which, so far as material, provided that a bank “ may open and keep one or more branch offices in such city for the receipt and payment of deposits and for making loans and discounts to the customers of such branch offices only.” The defendant required its depositors to agree to draw their checks on the particular branch in which they were depositors, and the checks were so drawn and the accounts were so kept. With respect to the question presented for decision, the different branches were as separate and distinct from one another as from any other bank. The Legislature did not intend, we think, either to authorize or require a bank having-branches to cash checks and make loans to a depositor at any branch at which he may see fit to call, for to do so would produce endless confusion, and the statutory provisions quoted do not require such a construction. If the check had been drawn on another bank there could be no doubt but that such other bank not only might but it would have been its duty to refrain from paying the check if it had notice of the death of the drawer. (Glennan v. Rochester Trust & Safe Deposit Co., supra.) If the check had been drawn upon and returned by another bank the rule is well settled that the defendant would have had the right to charge it up against the depositor’s account. (Balbach v. Frelinghuysen, 15 Fed. Rep. 675; Stein v. Empire Trust Co., 148 App. Div. 850; Michie Banks & Banking, § 163; Citizens' State Bank v. Cowles, 180 N. Y. 346.) I am of opinion that that rule should be applied here.

It follows that the determination of the Appellate Term and the judgment of the City Court should be reversed, with costs in all courts to appellant, and the findings of fact and conclusions of law made by the trial court inconsistent with these views should be reversed, and appropriate findings and conclusions in accordance with these views made, and judgment should be entered in favor of the defendant on its counterclaim for the overdraft of the account, together with interest thereon, .and costs of the action.

Clarke, P. J., Scott, Smith and Davis, JJ., concurred.

Determination of Appellate Term and judgment of City Court reversed, with costs in all courts to appellant, and judgment directed for defendant as stated in opinion. Order to be settled on notice.  