
    Walnut Hill Bank, Respondent, v. The National Reserve Bank of the City of New York, Appellant.
    First Department,
    December 30, 1910.
    Bills and notes — draft with order to credit amount to third party— when drawee not liable — estoppel.
    Although a bauk on receiving a draft drawn to its order with instructions to credit the amount to the plaintiff notified the plaintiff that the draft was received for its credit, it is not liable to the plaintiff if the amount was never credited to its account owing to the fact that the drawer lacked funds. Under the circumstances the notice was merely an erroneous statement and was not equivalent to an actual credit.
    Nor does the notice given by the drawee act as an estoppel, if the plaintiff did nothing nor refrained from doing anything to its damage in reliance thereon.
    Appeal by the defendant, The National Eeserve Bank of the City of New York, from an order of the Appellate Term of the Supreme Court, entered in the office of the clerk of the county of New York on the 26th day of May, 1910, affirming a judgment of the City Court of the city of New York in favor of the plaintiff rendered on the 21st day of December, 1909, and also (as stated in the notice of appeal) from the judgment entered in the office of the clerk of the City Court of the city of New York upon said order of affirmance.
    
      Royall Victor, for the appellant.
    
      Charles II. Payne, for the respondent.
   Scott, J.:

This is an appeal from a determination of the Appellate Term affirming-a judgment of the City Court in favor , of the plaintiff. • The action is for a sum claimed to have been On deposit with defendant to the credit of plaintiff. The facts are not disputed. In January, 1909, the plaintiff and the Merchants and Farmers Bank of Lewisville, were both banking institutions in the State of Arkansas, and were both correspondents of and depositors with the defendant, then known as the Consolidated. National Bank. On or about January 8, 1909, the. Merchants and" Farmers Bank - remitted to defendant its check or draft for $1,000, drawn upon defendant and to its order, with accompanying instructions or advice to credit the same to plaintiff’s account. This draft and instructions were received by defendant on January 13, 1909. On the same day defendant sent to plaintiff a postal card acknowledg-’iug the receipt of $1,000 from the Merchants and Farmers Bank, Lewisville, for the credit of plaintiff. On the same day a similar card was sent to the Merchants and Farmers Bank acknowledging . the receipt of its draft for $1,000 for credit of the plaintiff. In point of fact the- $1,000 never was placed to plaintiff’s credit on defendants’ books because the Merchants and Farmers Bank had not on deposit a sufficient amount • to cover the draft, and on the same day defendant notified the Merchants and Farmers Bank that the amount of the draft could not be placed to the credit of the Walnut Hill Bank until the account of the Merchants and Farmers Bank was made good. No notice to this effect seems to have been given to plaintiff. On January 22, 1909, defendant returned the’ draft to the Merchants and Farmers Bank, saying that the latter’s account had never been good for the amount of the draft and consequently it had not been credited} as requested, to the Walnut Hill Bank. The first information wdiich the Walnut Hill Bank received from defendant that it had not in fact been credited with the $1,000 was on or about February 2, 1909, when it received a statement of' its account with defendant upon which the item did not appear. The Merchants and Farmers Bank ceased doing business on January ’’20,1909. -

The plaintiff bases its right to recover upon Oddie v. Nat. City Bank (45 N. Y. 735) and other similar cases which support the rule that the acceptance by a bank of a check drawn upon itself and the crediting of it to the account of the depositor is equivalent to the payment of the check, and the transaction is thereafter closed between the bank and the depositor, provided the paper is genuine. In the Oddie case the bank had received on deposit a check of a third party drawn on itself, and at once passed it to Oddie’s credit, notwithstanding the fact that the account of the drawer of the-check was then overdrawn. The point upon which the court laid stress was the placing, of the check to Oddie’s credit, holding that this was equivalent in legal effect to first paying the money to Oddie and then receiving it back on deposit. In this respect the present case differs essentially from the Oddie case, because here it appears beyond contradiction that the defendant never did credit the amount of the Merchants and Farmers Bank’s draft to the credit of plaintiff, and; therefore, never evinced by that act an intention to assume responsibility for the draft. The notice to the plaintiff that the amount had been placed to its credit was merely an erroneous statement, and was not the equivalent of an actual credit. The judgment, therefore, cannot be sustained upon the first ground stated in the Oddie case. There was, however, a second reason assigned for affirming the judgment in that case. The court said : “ I think, also, that the defendants are estopped from claiming that they did .not receive the check upon deposit. They entered it and acted with' it as a deposit. The plaintiffs relied upon and acted upon the strength of the acts and admissions of. the defendants. The claim now set up is inconsistent with the acts and declarations of the party, and the plaintiffs have been injured by being deprived of the opportunity of retaining the check and reclaiming the con-sideration, or otherwise securing themselves, until the drawers had failed and run away.” The notice sent by defendant to plaintiff, that it had recovered "the draft for the latter’s credit, was undoubtedly enough to lay the foundation for an estoppel if it appeared that plaintiff, in reliance upon such notification, had done anything, or refrained from doing anything, to its damage. It does not, however, so appear upon the present record. All that appears is that the Merchants and Farmers Bank ceased doing business on January 20, 1909. This carries no implication of loss to the plaintiff, because it was misinformed as to the credit of the $1,000 draft.

It follows- that the determination of the Appellate Term and the judgment of the City Court must be reversed and a new trial granted, with costs to the appellant in all courts to abide the event.

Ingraham, P. J., Clarke, Miller and Dówling, JJ., concurred.

Determination reversed, new trial ordered, costs in all courts to appellant to abide eyent..  