
    John Delahunty, as Receiver of William Campbell and Samuel S. Stewart, as Copartners, Doing Business under the Name, Style and Firm of William Campbell & Company, Appellant, v. The Central National Bank of the City of New York, Respondent.
    
      Bank deposit —what is sufficient evidence of the hank's refusal to pay it—an objection not taken is icaived.
    
    The receiver of a firm wrote to a bank stating the fact of his appointment and that the firm had a certain amount on deposit with the bank, closing with the words, “ Will you please send me that amount, and let me know what papers you require for vouchers, showing my appointment, and I will prepare and send them to you,” to which letter the attorneys of the bank replied, saying, the bank “ has referred to us your letter of yesterday requesting us to attend to it. You are probably not aware that the bank is itself a creditor of Campbell & Co. (the firm) to an amount far exceeding these moneys mentioned in your letter to-day.” The receiver, hearing nothing further from the bank for a period of about six months, brought an action against the bank to recover the amount of the deposit.
    
      Held, that he was justified in inferring that the bank, under a claim of right, intended to retain the moneys and apply them to the payment of the indebtedness due to it from the firm; and that it was error to dismiss the complaint on . the ground that the plaintiff had failed to show a demand and refusal. jRumsey, J., dissented.
    
      Semble, that the objection that the receiver had no right to require the bank to send the money to him, was waived by a failure to assert it at the time.
    Appeal by the plaintiff, John Delahunty, as receiver of William Campbell and Samuel S. Stewart, as copartners, doing business under the name, style and firm of William Campbell & Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 31st day of May, 1898, upon the dismissal of his complaint by direction of the court after a trial at the New York Trial Term.
    The plaintiff, as receiver, sued to recover a balance of account in favor of the firm of William Campbell & Co., who were depositors with the defendant. The answer, besides setting up an affirmative defense, admits that a certain balance in favor of the said firm existed at the date alleged, but denies the demand and refusal to pay. On the trial the only question passed upon was, whether a sufficient demand had been made before the commencement of the action. Upon that question the plaintiff offered the following letter, the receipt of which was admitted by the defendant:
    “New Yobk, May 12th, 1897.
    “ Central National Bank of New York :
    “ Gentlemen.— I have been appointed receiver of the late firm of William Campbeh & Company, which has on deposit with you the sum of. $1,138.08. Will you please send me that amount, and let me know what papers you require for vouchers, showing my appointment, and I will prepare and send them to you.
    “ Yours truly,
    ' “ (Signed) JOHN DELAHUNTY,
    “ liedrP
    
    The answer to this letter by the defendant’s counsel is as follows :
    “New York, May 13th, 1897.
    
      “ John Delahunty, Esq.:
    “Dear Sir.— The Central National Bank of New York has referred to us your letter of yesterday, requesting us to attend to it. Yon are probably not aware that the bank is, itself, a creditor of Campbell & Co. to an amount far exceeding these moneys mentioned in your letter to it.
    “ Yours truly,
    “DUER, STRONG & JARVIS.”
    After the admission of these letters and an attempt to introduce some other evidence on the subject of demand, which, because immaterial, was excluded and need not be considered, the plaintiff rested. Thereupon the defendant moved for a nonsuit on the ground that no sufficient evidence of demand and refusal had been given, which motion was granted, and the plaintiff excepted. And it is from the judgment thereafter entered that this appeal is taken.
    
      J. Woolsey Shepard, for the appellant.
    
      George A. Strong, for the respondent.
   O’Brien, J.:

It must be regarded as settled that as to moneys deposited in a bank, before the same can be recovered in a suit, it is a condition precedent that a demand should be' made therefor. This flows from the relation between a depositor and the bank, and from the promise which the law implies that the deposit will be returned after demand. The contract, therefore, is that the bank is entitled to retain the deposit until some suitable request is made for its. return. The authorities are far from uniform as to the precise nature of the demand, some using the expression that a demand in some form is necessary, leaving its sufficiency to be determined by the facts appearing in each case. Where, however, the bank by refusal, or by an appropriation of the money, or any other act, shows an indisposition to honor a demand, the cases hold that under such circumstances a demand is unnecessary. So, too, if “ when a. demand is made, a specific objection is made as a reason for not complying with the demand, all other objections, which if made might be readily obviated, are waived. And where the demand is not made of the proper person, or in the proper manner, or is made by the wrong person, objection should be taken at the time.” (5 Am. & Eng. Ency. of Law [1st ed.], 528g).

The question, therefore, turns upon whether the letter of the receiver was a proper demand, and, if not, whether the anstver thereto can be construed as of a nature to justify the failure to make further demand. There can be no doubt that the receiver wanted and requested of the bank a return of the deposit; and while the-requirement that it should be sent to the receiver’s office was one that the bank was not obliged to comply with, it was an objection which should have been taken at the time. The receiver made his request in the form outlined in his letter, and if it was the intent or pui’pose of the bank, before honoring the demand or paying the money, to insist that the receiver should draw his check in the usual way against the account, and, either personally or through some other medium, present it with evidence of his authority, it seems but reasonable that it should then have taken that objection and so notified the receiver. It did not, however, take the objection that the receiver had no right to ask the bank to send the money to him, but,, instead of meeting the request as made, the bank turned the receiver’s letter over to their attorneys. AVe are thus brought to a consideration whether or not such action on the part of the bank,,, coupled with the subsequent letter of the attorneys, was a refusal.

That the bank did not intend to comply is reasonably to be inferred, because the letter received was turned over to its attorneys, who subsequently, on its behalf, answered it, and in such answer, instead of making any point about the manner of the demand or the place where the money was to be paid, or the failure to show authority or warrant to receive it, the attorneys stated that the receiver was “ probably not aware that the bank is itself a creditor of Campbell & Co. to an amount far exceeding these moneys mentioned in your letter to it.” There is certainly nothing in this letter from which the inference can be drawn that the bank intended to comply with the request, or that if the receiver went to the bank it would pay the money. On the contrary, we think the receiver had a right to conclude that the position taken by the bank was that it was entitled to appropriate the deposit in payment of an indebtedness due it from Campbell & Co., and that this attitude rendered useless or obviated the necessity of any further or more formal demand. The receiver, therefore, having waited about six months without hearing further from the bank, and being thus strengthened in the»first impression, produced by the receipt of the attorneys’ letter, commenced this action.

The reply of the attorneys fully justifies the inference that, under claim of right, the bank intended to retain the moneys and apply them to the payment of the indebtedness due to it from the firm. If such was not the intention, the language was so evasive and so well calculated to produce that impression that fault cannot be found with the receiver if he was thus misled. While, therefore, it may not be that the receiver’s letter, taken by itself, was a sufficient demand, yet, when coupled with the bank’s action and the language of the attorneys’ letter, in which the bank’s position was defined, we think it was error for the trial justice to hold that any further or more formal demand was necessary before suit. The right suggested in the letter of the attorneys and alleged in the answer, to appropriate these moneys to the bank’s indebtedness, might or might not have been sustained upon the trial; but that question is not presented upon this appeal, the nonsuit being placed on the ground of the failure of the plaintiff to show a demand in any form, or a sufficient refusal on the part of the bank. We think that the ruling made was incorrect, and that the judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event..

Yan Brunt, P. J., Barrett and Patterson, JJ., concurred; Rumsey, J., dissented.

Barrett, J.

(concurring):

I agree to the reversal of this judgment. . No particular form of demand was necessary. As Judge Bronson said in Downes v. Phœnix Bank of Charlestown (6 Hill, 299), “ The understanding between the parties is, that the money shall remain with the banker until the customer, by his check, or in some other way, calls for its repayment.” Here the receiver called for payment. It was a demand, though not such a demand as the bank was bound to honor. The receiver said, “ Will you please send me that amount,” specifying it. That was certainly a request for the money. The bank need not have replied, or it might have replied, “We will not send you that amount, as you are bound to call for it.” But it made neither of these replies. It spoke through its lawyers. The reply of these gentlemen was, therefore, the reply of the bank. It was quite as though the bank had written directly to the receiver and had said what they said. The bank then, being asked to please remit the amount due, replies, “ You are probably not aware that the bank is itself a creditor of Campbell & Co. to an amount far exceeding these moneys mentioned in your letter to it.” This is its sole reply to the request for the money. What is that but a refusal to honor the plaintiff’s request, not because the bank objected to its form or substance, but because it deemed. itself entitled to keep the money ? The receiver was justified in thus regarding the letter in question, and in treating it as the bank’s counter statement to his request; a counter statement implying non-recognition of his rights, an assertion of the bank’s rights, and a refusal to pay him.

Yan Brunt, P. J., concurred.

Rumsey, J.

(dissenting):

For seven years before the 24th of February, 1897, the firm of William Campbell & Co. was engaged in business and was a depositor in the Central National Bank. On the 13th of December, 1895, there stood to the credit of the firm, on the books of the bank $1,138.08, being the balance due it as depositor in the bank. The^ plaintiff was appointed receiver of that firm on the 21th of "February, 1897. On the 12th of May, 1897, he wrote and sent to the defendant a letter, of which the following is a copy :

“New York, May 12th, 1897.
“ Central National Bank of New York :
“ Gentlemen.— I have been appointed receiver of the late firm of William Campbell & Company, which has on deposit with you the sum of $1,138.08. Will you please send me that amount, and let me know what papers you require for vouchers, showing my appointment, and I will prepare and send them to you.
“ Yours truly,
“ (Signed) JOHN DELAHUNTY,
Reo'r.”

No other demand was ever made for the amount of the deposit than the writing and sending of this letter by mail to the bank. The only notice taken of the letter was a reply sent the next day by the counsel of the bank, of which the following is a copy :

“ New York, May V&th, 1897.
“ John Delahunty, Esq.:
“Dear Sir.—The Central National Bank of New York has referred to us your letter of yesterday, requesting us to attend to it. Yon are pwobably not aware that the bank is, itself, a creditor of Campbell & Co. to an amount far exceeding these moneys mentioned in your letter to it.
“ Yours truly,
“ DUER, STRONG & JARVIS.”

After the receipt of that letter by the receiver, there seem to have been no further communications between the parties, but this action was brought against the bank for the recovery of the amount of the deposit. On the trial, upon proof of the foregoing facts, the court held that no sufficient demand had been made upon the bank, and that it had not waived a demand or refused to pay ; and, therefore, that the plaintiff had not proved a cause of action, and it directed a nonsuit. From the judgment entered upon that direction this appeal is taken.

While, in a general way, it may be said that a bank is the debtor of its depositor for the money deposited with it, yet there arises from the fact of the deposit no immediate duty to pay back the money without a demand ; and until a demand has been made the bank is not in default for any refusal to pay, and no action can be maintained against it. (Downes v. Phœniw Bank of Charlestown, 6 Hill, 297.) So firmly is this rule settled that it is now established that the Statute of Limitations does not run in favor of the bank and against the depositor to recover the amount of the deposit until a demand has been made. (Howell v. Adams, 68 N. Y. 314; Bank of British North America v. Mercantile Nat. Bank of N. Y., 91 id. 106.) When one is dealing with a bank, the known customs of the business of banking and the ordinary methods of transacting that business enter into the contract, and the parties must be understood as having governed themselves by such customs and methods, and this, whether there was any proof made that they had actual knowledge of them or not. (Fowler v. Brantly, 14 Pet. 318, 320.) The general customs of the banking business are well known and judicial notice must be taken of them. (Merchants’ Nat. Bank v. Hall, 83 N. Y. 338; The British & American Mort. Co. v. Tibballs, 63 Iowa, 468.) One of these customs, which is thoroughly settled, is that a demand for money deposited in the bank is to be made at the banking office and during banking hours, and the bank is not called upon to pay any attention to a demand made elsewhere or at any other time. It is not necessary to say that the demand must be accompanied with a check or any voucher; but that it must be made at that place and during those hours cannot be disputed. It is easy to understand that it would be impossible for a bank to do business in any other way. If depositors were to be permitted to send to the bank by mail or messenger a notification that they desired the bank to pay certain money to them at a certain time at their own places of business, so that the bank in paying the money would be required to send its messenger from house to house as a milkman serves his customers, it is quite clear that it would be impossible to transact banking business. This demand was not made in such a way as the customs of the banking business required. It was sent by mail, and it called upon the bank to transmit to the receiver at his office the amount of the deposit, and to receive its vouchers thereafter when the receiver was satisfied what papers were necessary to be delivered by him.

If the bank had paid no attention to this letter, no one would claim for an instant that it operated as a demand to put it in default and to permit an action against it for the recovery of this money. But it is said by the plaintiff that the answer of the bank showed that a demand would have been futile, and, therefore, that there was no necessity of making one. In the case of Southwick v. First National Bank of Memphis (84 N. Y. 420) it is said that when a demand is necessary it is not excused by showing that the defendant would not probably have complied if one had been made.” But without insisting upon the rule of law there laid down, and conceding that if it had been made to appear that the bank would not have complied with a proper demand under any circumstances, the plaintiff would have been excused fi-orn making one, it remains to be considered whether the letter which was in fact written was to be construed as a refusal to pay the money such as to relieve the plaintiff from the necessity of making the demand.

The relative situations of the parties as they appear from the evidence are that the firm of Campbell & Go. were depositors with the bank; that the deposit had been standing unclaimed from December, 1895, until May, 1897, and that the receiver was appointed very shortly before his letter was written. Whether he had any information as to the business relations between the bank and the firm does not appear. It is fairly to be assumed from the letter, and there is no other proof in the case upon the subject, that the bank was a creditor of Campbell & Go. to a considerable amount. If Campbell & Go. were solvent, and there is no proof that they were not, the bank owed them nothing, because it had the right to set off the amount of the deposit against the debt. (Commercial Bank of Albany v. Hughes, 17 Wend. 94; Sweeny v. Easter, 1 Wall. 166.) If for any reason that right did not exist, it is quite clear that the defendant was entitled to be informed as to the facts which took away the right before it could be called upon to pay over the full amount of the deposit to the receiver. No inference can be drawn from the letter of the defendant that, if it had been made to appear that the firm of Campbell & Co. was not solvent, so that the defendant, instead of being entitled to set off its claim, was entitled to none of it or only to such a percentage of it as the assets of Campbell & Co. would warrant, it would not have paid the full amount of the deposit. Before it would be called upon to do so, it was entitled to have the information given to it as to the condition of this firm, so. that it might know its rights and whether or not that deposit wa§ in fact due. It is a fair interpretation of the letter of the defendant to say that, so far from being an absolute refusal to pay the amount of the deposit, it was an invitation to the receiver to give to the writers of the letter the information which would enable them to know whether or not that deposit was due. Such an answer neither-tended to show that a demand would be futile, nor can it fairly be construed as a refusal; and, unless it operates as one or the other, it clearly did not make that demand good which before that time was-good for nothing.

But it is claimed by the plaintiff that the defendant is not in a. situation to insist that the demand was not sufficient because it ■alleged in its answer that the amount of the deposit had been applied upon the debt due from Campell & Co. to the bank. There ■ is no proof of that fact. If the defendant admits that fact — and unless it admits it no advantage can be taken of it here — then the bank, having a counterclaim to a very much larger amount than the-amount of the deposit, had the right to apply the deposit upon it and was not indebted to Campbell & Co. when the receiver was-appointed, and is not indebted to the receiver now. But I apprehend that the fact that the defendant sets up as an affirmative-defense something which, if proven, would do away with the necessity of proving a certain fact to establish a cause of action, does not permit the plaintiff to recover without proving his cause of action, at. least, until proof has been given to establish the defense. The rule is thoroughly settled that the defendant may put his defense upon distinct and even upon inconsistent grounds (Goodwin v. Wertheimer, 99 N. Y. 149), and if the defendant pleads a general denial,, the plaintiff is clearly bound to prove his cause of action, although the defendant may also set up a confession and avoidance by way of affirmative defense. When the plaintiff closes his case, the question for the court is whether, taking the facts proved and the admissions of the pleadings, the plaintiff has shown himself entitled to recover. If he has not, then it is the duty of the court to nonsuit* or to dismiss his complaint, without taking proof of the affirmative defenses set up in the answer. I am quite clear that when the proof closed upon this trial the plaintiff had shown neither a sufficient demand nor a refusal, and, therefore, that the ruling of the court was correct.

The judgment should be affirmed, with costs.

Judgment reversed, new trial ordered, costs to appellant to abide event.  