
    Ellen Clark, Resp’t, v. The Saugerties Savings Bank, App’lt.
    
      (Supreme Court, General Term, Third Department,
    
    
      Filed December 28, 1891.)
    
    .Savings banks—Deposit—Invalid payment. °
    The husband of a depositor in a savings bank went to the bank with her book to draw a deposit. The bank officer said the deposit belonged to the wife, and that he must have her order. The husband said the money was his. He then said she had sent him for the money and that she could not give an order as she could not write. The officer gave him a check upon a national bank, payable to the wife’s order. That bank refused to pay it without her endorsement. The husband returned to the savings bank. He there stated that he was authorized to do business for his wife. He then endorsed the check in her name as authorized by her. Thereupon the national bank paid it. Held, that it had no authority to do so ; that hence the savings bank had never paid the depositor and was liable to her.
    Appeal from judgment in favor of plaintiff, entered on verdict and from order denying motion for a new trial on the minutes.
    Action to recover a sum of money deposited by plaintiff in the •defendant bank.
    
      Egbert Whittaker, for app’lt; Brinnier & Newcomb, for resp’t.
   Putnam, J.

The defendant claims that the judgment should be reversed because the court below erred in excluding evidence ■offered to show that the $500 for which plaintiff recovered was .the property of her husband, William Clark.

The offer on the trial was not to show that William Clark had acquired an interest in said deposit for which the action was brought, subsequent to the delivery of the money to defendant, by assignment or otherwise; but that when deposited it was the property of William Clark in whole or in part, as alleged in the answer.

It may be doubted whether a bank which has received money on deposit and is sued for the money can set up as a defense that the depositor was not the owner, at least, unless it proposes also to show that the person claimed to be the true owner has in some legal way asserted his claim to such money or prosecuted the bank "therefor or taken some proceeding or action to enforce his claim to said deposit. Lund v. Seamen's Bank, 37 Barb., 129; First Nat. Bank v. Mason, 95 Pa. St., 113; Sinclair v. Murphy, 14 Mich., 392.

In this case, under the answer and the facts appearing on the trial, it is difficult to perceive how the testimony offered by defendant could be competent or material. It does not appear that William Clark ever legally asserted any claim against the bank for the money on his own behalf. It is true he made a statement to the officers of the bank that he owned it. But he went there as the agent of his wife, carrying her bank book, and claimed only, to draw the money as her agent. The bank officers declined to pay him, as it belonged to his wife. The officer of the bank, Mr. Bus-sell, testified in this regard as follows, viz.: •

“ Q. What next? What occurred on the 26th day of March, 1888 ? A. On that day her husband,William Clark, brought the book to the bank and asked- for $500; I told him I could not pay that money, it belonged to his wife, it was deposited in her name,, and he said that it was money he had earned, it belonged to him, she had taken it to the bank and put it in her name, although it. belonged to him; then I told him it was necessary for him to get-an order from her to draw the money; he said tome, ‘you know she can’t write an order; ’ I asked him if she sent him for the money, and he said ‘ yes; ’ they had bought a little place and wanted to pay for it in the morning.
“Q. Wanted to pay $500 in the morning? A. Yes, sir; I did not have the money, so I drew a check on the Saugerties National Bank for $500, payable to the order of Ellen Clark; the Savings-Bank had deposits there; he went out with the check; afterward he came back and said they would not pay the check at that bank-unless Mrs. Clark’s name was on it; I tolci him that it was payable to her order, and of course it was necéssary for her to endorse-it; he asked why he could not do that; I asked him if he was authorized to do business for Mrs. Clark and ought to endorse for her; he said he was, but that he could not write; so he requested that her name be written on the check, endorsed on the check by him; her name was written on the check, as authorized by William Clark, to which he made his mark before witness.”

The money was deposited in plaintiff’s name. William Clark took her book to the bank as her agent and received a check payable to her order. The defendant insisted that she was the owner and that he could only draw the money as her agent; to which Clark assented.

The defendant, therefore, not having paid the money to William Clark, or acknowledged his title, but having paid it by delivering-a check to the party it assumed was plaintiff’s agent, payable to-her order, it cannot be competent or material to show that William. Clark was the owner of the deposit in the bank. Both the defendant and William Clark in the transaction of giving the check agreed and acted upon the assumption that plaintiff was the-owner of the funds in question. The bank, the defendant, decided that plaintiff was the owner of the deposit and acted upon such decision.

This view of the case rendered the evidence so, as aforesaid,, offered by the defendant and excluded by the court immaterial;. and makes it unnecessary also to consider the claim of the learned counsel for the appellant that the ruling of the judge below was-erroneous in excluding said evidence as based upon constitutional grounds.

The defendant also insists that there was no sufficient evidence-of a want of care and diligence of defendant, as required under by-law 24 of the bank, to justify the submission of the case to the-jury. Said by-law is as follows, viz.: Article 24. “ Although the bank will endeavor to prevent frauds and imposition, yet all-payments to persons producing the pass books issued by it shall be valid payments and discharge the bank.”

It has been held by the court of appeals in Kummel v. Germania Savings Bank of Kings Countg, 40 St. Rep., 252, in which case the= by-law of the defendant contained a provision that “ the bank will not be responsible to any depositor for any fraud committed upon the officers in producing the pass book and drawing the money without the knowledge or consent of the owner,” that, assuming that the by-laws printed in the book are binding upon the depositor, and constitute a contract between the parties, the duty still devolves upon the officers to exercise care and diligence in order that their ‘depositors may be protected from fraud and larceny. That case also holds that such clause in the contract between the parties does not permit the officers to carelessly close their eyes and pay any person presenting the pass book, but, on ■the contrary, they owe the depositors active diligence in order to detect fraud and forgery.

We think that on the evidence given in the case the question •of defendant’s negligence in delivering the check to William Clark, on which he obtained $500, was- properly submitted to the jury, and that the verdict in favor of plaintiff is supported by the evidence. On the evidence given the case could not have been taken from the jury upon this question of negligence. The plaintiff was called as a witness, and testified as follows, viz.:

“ On the 13th of February, 1888, I deposited in the Saugerties .Savings Bank $1,030; I gave the money to Mr. Jeremiah P. Bus-.■sell, the secretary and treasurer of the bank; I told him not to give that money to any one but me ; he did not make me no answer ; I says: 1 Mr. Bussell give this money to no one but me; he said all right; my husband drawed out $500 on March 26th, 1888; I did not; I did not consent to any person drawing any portion of this money; of the $1,030 I myself drew out $515 and one $15 before that, making $530; the other $500 I never had.”

The deposit was headed: “Saugerties Savings Bank in account with Ellen Clark, Special.” The jury, who saw and heard the plaintiff as a witness, might have believed her statement and not the testimony of the officer of the bank who contradicted her. Assuming that the jury believed plaintiff’s statement, there was :an express direction assented to by the defendant not to give the money in question to any one but the plaintiff. And yet, notwithstanding this agreement, defendant gave a check to William Clark on which he received the money. There was evidence in the case justifying the jury in believing that William Clark had never before drawn money of plaintiff’s, and never had any authority whatever to act as her agent.

On such evidence the question of defendant’s negligence in delivering the check to William Clark was properly submitted to the jury. Kummel v. The Germania Savings Bank, 40 St. Rep., 252; Allen v. Williamsburgh Bank, 69 N. Y., 314; Boone v. Citizens Savings Bank of N. Y., 84 id., 83; Appleby v. Erie County Savings Bank, 62 id., 12; Smith v. Brooklyn Savings Bank, 101 id., 58.

In the Kummel and Allen cases, above cited, there were rules ■of the.respective banks similar to the article on which defendant relies in this case. But the courts hold, as above stated, that the ■defendants owed the duty to the depositors of active diligence.

In a case like the present, where the deposit was marked special,” where the plaintiff testifies that notice was given to the bank to pay no one but herself, which direction was assented to-by the officers of the bank, where it does not appear that William Clark had ever drawn money before, and the evidence leads to-the conclusion that he was not in fact authorized to draw any, a court or jury could properly reach the conclusion that defendant had not exercised the care it should to protect the depositor’s interests. The giving by the' defendant to William Clark of the check on another bank, payable to the order of plaintiff, and the endorsing of said check in defendant’s bank, with the aid of an officer of defendant, is the same as if the bank had paid the $500--in money to Clark in defiance of the notice that plaintiff had given the bank when making the deposit.

The judge submitted the matter to the jury by a fair and impartial charge. His remark as to the plaintiff’s being “ a poor old. lady ” can hardly be deemed an error on which a valid exception can be taken, and if so the error was cured by the statement made-by the judge when his attention was called to such remark.

The plaintiff having made the deposit with the defendant and duly demanded payment thereof, the defendant having declined, to pay the same, and the jury having found the facts in favor of the plaintiff, she was entitled to recover. It was no defence to-the action that the bank had given the check to William Clark payable to plaintiff’s order, unless it appeared that William Clark was authorized to obtain and receive the said check. The evidence in the case was such that the jury could' find that William Clark had no authority whatever to act for plaintiff and was not in fact authorized to do so ; hence the obtaining and receiving the check by William Clark is no defence in the action. Plaintiff deposits $500 with defendant and demands it. Defendant cannot successfully defend because it gave a check payable to plaintiff’s order to-a person who was not authorized to receive it and which check never comes- to plaintiff’s hands.

On the whole we think the case was properly disposed of in the-court below and that the judgment should be affirmed, with costs.

Learned, P. J.

In concurring with the foregoing opinion ot my brother Putnam I wish to add a few words.

I do not feel confident that when William Clark presented plaintiff’s book to the bank, defendant, and the defendant gave a check payable to plaintiff’s order, there was any negligence. The-check could not be drawn without plaintiff’s endorsement. The * defendant did not make the check payable to William Clark, but. to plaintiff. The defendant authorized and requested the Saugerties National Bank to pay the money to the plaintiff. Thus defendant protected the plaintiff against a payment to any other person. And I should be inclined to hold that when a bank book with such a by-law therein was presented by a person other than the depositor, the bank had endeavored to prevent fraud a-nd imposition, when it gave a check on a bank of deposit, payable to-the depositor’s order.

If a check given under such circumstances were shown to be outstanding, and not accounted for, I am not willing to say that the savings bank would be liable for the amount. For the depositor might have endorsed the check and it might be remaining in the hand of some third party. In which case the savings bank would be liable thereon as drawer, if the bank of deposit should refuse to pay. And the payment by the bank of deposit would be a charge against the account of the savings bank thereon.

But in the present case the check is shown to have reached the-bank on which it was drawn, to have been presented and not to have been refused or protested. Hence no liability of defendant, thereon can arise. .

The Saugerties National Bank paid the check without the endorsement of the payee. Hence such payment did not authorize-that bank to charge the amount paid against the defendant. And the defendant has lost nothing.

The check was endorsed as follows: his

“ Ellen Clark, as authorized by William X Clark. Witness,. Frank Bussell.” mark

Bussell then was simply a witness to the fact that William Clark had affixed his mark to the endorsement. He was not a. witness to any authority possessed by William Clark. One who-witnesses an instrument executed by an agent does not in any way, by such witnessing, assert or guaranty that the agent is authorized by the principal. He only asserts that the agent signed the instrument. Frank Bussell, who witnessed the signature, does not appear to have been an officer of the defendant. But even if' he were, the act of witnessing signatures could hardly be within the scope of his duty. So that his act would not bind the defendant. And I have already stated that it bound the witness to-nothing but the genuineness of William Clark’s mark. The Saugerties National Bank were not misled. It saw that a check to the plaintiff’s order had an endorsement purporting to be made by William Clark as her agent. It was for that bank to determine at its own peril whether he was such agent. It failed to do-this.

The defendant therefore has not paid the sum in question to plaintiff or to any one. The money still remains, so far as appears in this action, to the credit of the defendant in the Saugerties National Bank.

The plaintiff is entitled to recover. For, as the case appears, the National Bank has no right to charge against defendant’s account the money paid on this check.

Judgment affirmed, with costs.  