
    Povall v. Dansville Cigar Manuf’g Co.
    
      (Supreme Court, General Term, Fifth'Department.
    
    January 23,1891.)
    Set-Off—When Allowed.
    In an action for money loaned to defendant by plaintiff’s assignor, it appeared that defendant’s treasurer, who was authorized to pay its obligations, had given his check to plaintiff’s assignor In payment of the note given for the borrowed money, and that the note was canceled and surrendered. The account kept by defendant’s treasurer at the bank on which the check was drawn was composed of both his own and defendant’s money, and was kept for the purpose of meeting defendant’s commercial paper. By the negligence of plaintiff’s assignor, the check was not presented, though there was money in the bank to pay it, until the bank’s failure, 10 days after it was given. Meld, that defendant could recoup its actual damages caused by the negligence in presenting the check, and that in computing such damages the account at the bank could not be separated between defendant and its treasurer, but the entire fund must be considered defendant’s.
    Action by Joseph Povall against the Dansville Cigar Manufacturing Company, to recover moneys loaned. From a judgment entered on the report of a referee, defendant appeals.
    Argued before Dwight, P. J., and Macomber and Corlett, JJ.
    
      Charles J. Bissell, for appellant. F. C. Peak, for respondent.
   Macomber, J.

This action is in form brought for moneys loaned and'advanced to the defendant by one Mina Prusia, the indebtedness for which was assigned by the latter to the plaintiff. The answer admits the Joan, and alleges that the defendant’s promissory note, at three months, was given for it, and that after the note became due, and on the 13th day of August, 1387, one Nicholas Johantgen, who was the treasurer of the defendant, and authorized to pay-its obligations, gave to the plaintiff’s assignor his check upon the First National Bank of Dansville, N. Y., for the amount of the note and interest, which the latter accepted, and canceled and delivered up the note. This allegation in the answer was proved at the trial and found by the referee. At the time the check was given, namely, on the 13th day of August, 1887, and continuously until the 25th day of that month, Johantgen’s check, held by Prusia, was good at the bank upon which it was drawn, but the plaintiff’s assignor, through negligence, failed to present the same for payment. The learned referee has found, in accordance with the evidence, that Mina Prusia, on the 16th day of October, 1886, through her husband, acting as her agent, loaned to the defendant the sum of $570, and received the note above mentioned. During all this time Johantgen was not only the treasurer of the defendant, but he had full charge of all its financial affairs, and undertook to, and did, provide means for paying its commercial obligations. The account which was kept by him in the bank was composed in part of the moneys belonging to the corporation, as between that body and himself, and in part to himself individually. The arrangement for doing the banking business in this manner was such that the corporation had no account in its own name, but all of its funds stood in the name of Johantgen. .Johantgen, in turn, was charged and had agreed to keep the account of the defendant good against all liabilities. On the 13th day of August, 1887, Johantgen, for the purpose of raising sufficient money with which to pay the promissory note above mentioned, made his individual promissory note, to the order of one John J. Kennedy, in the sum of $500, at 10 days from the date thereof, which, being indorsed by Kennedy, was on that day discounted by the bank, and the proceeds thereof placed to the credit of Johantgen in the account kept for him and the defendant at the bank. This obligation was, in reality, that of the defendant, and the avails thereof became the money of the defendant. Applying this note to' Johantgen’s credit, the amount thereof, and the balance due on the account kept in his nauie, was $667.07. The referee has undertaken to separate, for the purposes of this action, the interest in this sum of $667.07 owned, respectively, by Johantgen and the defendant. On the 15th day of August, 1887, Johantgen gave his check upon the bank for $597.65, payable to the order of James 0. Prusia, the husband and agent of Mrs. Prusia, and by the agent indorsed and delivered to ¡the principal. On the receipt of this check, which is shown to have been good up to the time of the failure of the bank, the note above mentioned was surrendered and canceled. After the making and delivery of the check, .Johantgen continued to make deposits in this bank, and to draw checks thereon, up to the 24th day of August, 1887. The bank closed its doors August 25, 1887, and suspended payment, being insolvent, and subsequently thereto a receiver of its assets was appointed; and the affairs of the bank are now in his hands, with no prospect of any appreciable dividends. At the time of the bank’s failure, the amount to the credit of Johantgen was $914.84. Here again the referee has undertaken to separate and divide the respective interests of Johantgen and the defendant to this sum of $914.84, finding that ,$563.47 thereof belonged to the defendant, and $351.37 to Johantgen. The referee has found, as a fact, that the omission, on the part of Mina Prusia, to present the check for payment on or before the-22d day of August, 1887, was negligence on her part. In ascertaining the amount of damages to the defendant by reason of such negligence, he has very properly decided that the actual loss only which the defendant sustained can be recouped against the claim of the plaintiff. First Nat. Bank v. Fourth Nat. Bank, 77 N. Y. 320, and cases there cited.

At the time of the failure of the bank there was in its possession the note of Johantgen, for $500, whicli was subsequently by him presented to the receiver witli a verified claim against the bank, together with a demand that the note, then amounting to $501.08, should be deemed paid by deducting that amount from the credit standing on the books in his favor of $914.84, and the balance only be regarded as the amount due him by the bank. This claim was allowed by the receiver, and the $500 note was by him delivered up to Johantgen, the amount thereof being set off by the receiver against such balance of $914.84, and the sum of $413.76 credited by the receiver as the balance due Johantgen by the bank. The act of Johantgen in thus procuring a set-off was done in pursuance of the general authority and power which he possessed of acting for the defendant, and not through any special instructions given him at this particular time. The only question, under the facts appearing in the case, which are substantially undisputed, relates to the amount the defendant lost by the failure of Mrs. Prtisia to present the check for payment. After the application of Johantgen’s credit to the payment of the note by the receiver, there remained of his credit $413.76, which was, by the sum of $183.89, less than the amount of the check. If the defendant can recoup in this action the amount of Johantgen’s loss, the last-mentioned sum would have been the amount of plaintiff’s recovery, as the learned referee concedes, but he has been unable to see any reason why the defendant can claim any more of Mrs. Prusia than defendant’s own liability was to Johantgen. It is here where the fallacy of the learned referee appears. Upon the findings, which are supported by substantially undisputed evidence, it is impossible to separate the account at the bank, and apportion one part of it to Johantgen, and the other part to the defendant. The whole course of the dealings between the defendant and Johantgen shows that, for the purpose of meeting the commercial paper used in the business of the defendant, there had been provided a fund at the bank, partly that of Johantgen and partly that of the defendant; and that bank-account, which had always stood in the name of Johantgen, was intended to meet any commercial paper which might be issued in behalf of the defendant. The rights between the defendant and Johantgen could not be settled in this action; Johantgen is not a party. The entire fund at the bank must be treated as though it was procured for the express purpose of meeting the checks drawn upon that bank for the payment of the indebtedness of the defendant. The plaintiff cannot escape the consequences of negligence of his assignor by showing that this fund, so provided at the bank, did not belong exclusively to the defendant; it is sufficient for the determination of her rights, and those of her transferee, to say that it was amenable to the checks drawn by Johantgen. For the purpose of determining the amount of defendant’s damages, the account at the bank is not separable between the defendant and Johantgen. Johantgen had a right to rely upon the fact that the check, which he had given the plaintiff’s assignor, had been collected, and the account at the bank, provided by him for this and other purposes of the defendant, had been, by so much, lessened. By the failure of the plaintiff’s assignor to present the check, there was lost to the fund at the bank, provided by the defendant through its authorized agent, Johantgen, the sum of $413.76, instead of the sum of $96.57, as found by the referee. This amount should be deducted from the sum claimed by the plaintiff. A simple computation shows the balance to be $183.89, with interest from the 25th day of August, 1887, instead of the sum of $501.08, and interest from that date, for which judgment was directed by the referee. It follows, therefore, that the judgment should be reversed, with costs to the appellant, and a new trial granted, unless the plaintiff stipulates to reduce the judgment as above indicated, in which event the judgment, so reduced, is affirmed, without costs of this appeal to either party. All concur.  