
    William E. Hanna, Appellant, v. Manufacturers’ Trust Company, Respondent.
    Interpleader— action on a certificate of deposit indorsed over to-, secure the performance of- an obligation — claim by a receiver of thé indorser that it is moi'e than sufficient to meet such obligation—the bank issuing it is not entitled to interplead the receiver.
    
    Where the holder and indorsee of a transferable certificate of deposit brings an action to recover the amount thereof from the trust company issuing the same, the fact that'the certificate of deposit was delivered to thei plaintiff’s indorser by a corporation, in whose favor it had been originally issued, as collateral security , for the performance of certain undertakings by the corporation, and that the receiver of the corporation, claiming that the amount of the certificate is more . than sufficient to extinguish all the obligations to which it is collateral, has notified the trust company of his alleged interest in the certificate of deposit and has protested against payment thereof to the plaintiff in. the action, does not, whe^e the plaintiff denies the correctness of the receiver’s contention, entitle the thrust company to have such receiver inteiipleaded in the action.
    Appeal by the plaintiff, William E. Hanna, from an order,of the Supreme Ooiirt, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 31st day of January, 1905, granting the defendant’s: motion for an interpleader.
    
      Norman B. Beecher [Henry Galbraith Ward with him on the brief], for the appellant.
    
      Louis F. Doyle, for the respondent.
   I think that the defendant cannot sustain its order of interpleader. The action is brought upon two certificates of deposit for $5,000 / each issued by the defendant; The certificates represent deposits . made by the Nautical Preparatory School, as charterer, pursuant to the 16th article of a charter party between it and the International Mercantile Marine Company, owner of the steamship Pennsylvania. That article permitted the charterer to give a bond of a surety company or to make a deposit in cash with the owner, “ the terms of the bond or of the deposit being the same ” as the bond agreed upon in the 11th article. Such bond was to hold and to save the owner and its steamship harmless from all claims or demands arising, asserted or pretended by reason of any act, contract or omission of the charterer, and was also conditioned that the charterer should at the expiration or other termination of the charter at its own expense and charges restore the steamship to the same condition she was in at the time of the execution of the charter party.

The two certificates of deposit were transferrable. They were indorsed by the charterer to the owner, and without question represent a partial compliance with the requirement that there should either be a bond, or the bond of a surety company, or a deposit in cash with that owner. The plaintiff is the indorsee of that owner. The certificates were intended to represent moneys actually left with the bank for safekeeping, which are to be retained until the depositor actually demands them.” (Daniel Neg. Inst. [5th ed.] § 1698a.) They have the attributes of negotiable promissory notes. (Pardee v. Fish, 60 N. Y. 265; Frank v. Wessels, 64 id. 155; Matter of Baldwin, 170 id. 156.) The depositary became liable to deliver the deposit to any holder of the certificate to whom it was properly indorsed. (National Bank of Fort Edward v. Washington County Nat. Bank, 5 Hun, 605; appeal dismissed, 72 N. Y. 606; First National Bank v. Clark, 42 Hun, 16 ; Morse Banks & Banking [4th ed.], § 300.)

Section 820 of the Code of Civil Procedure is governed by the principles which applied to the old action of interpleader. ( Windecker v. Mutual Life Ins. Co., 12 App. Div. 73, 80, and authorities cited.) The basis of the defendant’s motion was an alleged claim of Newhall, as receiver of the depositor (the charterer of the steamship), and hence I must inquire whether as between the plaintiff and such receiver the defendant is a mere stakeholder for one or the other who claim the stake, and whether under the circumstances the defendant may acquit itself by a payment into court. (Bassett v. Leslie, 123 N. Y. 396.) . The defendant shows’ that it has been notified by Newhall as receiver that he claims the fight to demand, col lect and receive ’the funds against which the certificate wás issued, and that he is the owner theréof, “ or to have some special property, therein or right to receive the same, the particulars of which are set forth in the affidavit of- said George II. Newhall which is hereto annexed and which lias been filed with deponent on behalf of the said George H. Newhall,” and that said Newhall has protested against payment, and notified it that in event of such payment he will hold the defendant responsible. .Blit the affidavit of Newhall, which avowedly is the ground for this statement of the defendant,' and hence is the criterion thereof, does not justify the statement. For Newhall deposes that the certificates are simply held by this owner as collateral security against liens, that no liens have been filed, and “ on information and belief that, the amount required to restore said steamship'to.the condition she was in at the time of the execution of said charter party would be much less than said sum of $10,000, and that he is entitled as receiver as, aforesaid ito. the, difference between the amount required so- to restore said steamship and said sum of $10,000 and the accrued .interest.” Thus Newhall'does not assert any present fight to the deposits or the certificates thereof. He does not deny the right of the owner of the ship to hold the deposits as security foj liens and to meet the expense of restoration in accord with the terms of the charter party, but he bases his claim upon the assertion that there are no liens, and that there will be a surplus , over the amount required fof such purpose to which he will be entitled. Opposed' to the bare assertion that there are no liens is the -deposition of the manager of the owner that certain specified libels based upon. the breaches of contract by the charterer^ have been filed to the amount of $10,240, which the owner has been compelled to meet with an undertaking in order to save its ship from seizure. The interpleader represents ah attempt of the receiver to impound the deposits which'under the terms of the charter-party were made in part fulfillment of the 16th article! that the cash should be deposited with the owner, in lieu of which the certificates thereof were indorsed over without his assertion of any right thefeto save that there/afe no-liens; and unless there be a surplus after the expense, of restoration. But the charter party did not make the trust company a depositary to hold the money until there was no peril from liens, or to disburse it as required to meet the expense of restoration. I see no reason why the defendant has any right to hold tlie deposit for either of. these purposes merely upon a request from the receiver. The defendant is not bound to pay the deposits except upon production and surrender, of the certificate properly indorsed. (Read v. Marine Bank, 136 N. Y. 454; Cottle v. Marine Bank, 166 id. 53.) And it cannot avoid its obligation by interpleader sought upon such a claim as is presented by this record. (United States Trust Co. v. Wiley, 41 Barb. 477; Third National Bank v. Skillings Lumber Co., 132 Mass. 410; Bassett v. Leslie, supra.) 'It is not a stakeholder between the proper indorsee of the certificate and such a claimant. In United States Trust Co. v. Wiley (supra) the court at Special Term said : “No case can be found in the books where a debtor has ever sustained a bill to interplead his creditor and an outsider — a mere stranger — who had no other claim to assert than a mere equity against the creditor to reach the fund loaned; and this really is all there is in this case. The case seems to me too plain for discussion or the citation of authorities.” The General Term in its affirmance said: “ The trust company have agreed to pay the deposit to certain persons, with interest. They cannot invoke the intervention of this court to disregard that contract, and inquire into the equities existing between the depositors and a class of persons who have no immediate, but only remote and contingent rights (if any) in respect to the fund.”

Under all circumstances it is not enough that a claim has been made, but it must appear that the claim has some reasonable foundation so that the court can see the necessity of the shield sought for. ( Wells v. National City Bank, 40 App. Div. 498 ; Post v. Emmett, Id. 477; Lateer v. Prudential Insurance Co., 64 id. 423.) So.far as the restoration of the ship is concerned the receiver but deposes on information and belief, without further reference, that the amount required would be much less than $10,000, while he is opposed by an affidavit of the owner’s naval architect, who had a share in the designs for the ocean steamships St. Louis and St. Paul, and who supervised the building of the ocean steamships Si. Louis, St. Paul, Kroonland and Finland, who was familiar with the former and the present condition. of the Pennsylvaniaand who deposes' that the cost would be at least $10,000. ...

I think that the order must be reversed.

Hirschberg, P. J., Bartlett, Rich and Milléb, JJ., concurred.

Order reversed, with ten dollars costs and disbursements.  