Case ID: ny-super-ct_59/html/0059-01.html
Source: Caselaw Access Project
Author: {"author": "\n      “ Dugro, J. Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SAMUEL ADAMS and Another, Appellants v. PATRICK McCANN, et al., Respondents.
    
      Banking, rights of bankers—Trust, when not impressed—Personal judgment, when not given in an equity action—Jury trial, when not waived.
    
    There being two depositors in a bank (husband and wife) having accounts therein, the husband drew a check on the bank against his account to the order of the wife, the wife deposited the check to her account, the bank charged the check to the account of the husband and credited it as cash to the account of the wife; after this the plaintiffs gave notice to the bank that the husband before giving his check to his wife had transferred to them the balance in bank to his credit. Held, that the title to the check had passed to the bank before notice of the transfer to the plaintiff, and the bank had a right to charge it up against the husband’s account.
    The evidence not showing that the wife had been, guilty of any fraud in obtaining the check or had acted in any way other than in good faith, or that she was other than a bona fide holder of the check for an existing debt. Held, that no trust was impressed on the amount of the check carried to her credit.
    The cause of action alleged in the complaint being an equitable one, and the cause having been tried before the court without a jury as an equity action, and the cause of action alleged in the complaint not having been proved, and the complaint not having been amended to conform to the proof, Held, that a personal judgment could not be had; and further, that even if the evidence disclosed the existence of a cause of action for a personal judgment, the defendant against whom it was so disclosed had a right to a trial thereof by jury.
    
      The defendant, Patrick McCann, at special term, proceeded on the trial before the court without a jury without demanding a jury trial. This was all that appeared in the case on the point of a waiver of a right to trial by jury. Held, that the case contained no evidence of any waiver of a trial by jury.
    Before Sedgwick, Ch. J., and Freedman, J.
    
      Decided January 5, 1891.
    Appeal from judgment of the special term dismissing the complaint at the trial, with costs.
    The complaint was as follows:
    “The plaintiffs above named, complaining of the defendants, by Adams & Boothby, their attorneys, respectfully show to the court, and allege:—
    “I. That on the . 16th day of April, 1885, the plaintiffs and the defendant, Patrick McCann, were copartners in business, doing business as retailers of dry-goods, at No. 357 Sixth Avenue, in the city of New York, under the ' firm name and style of Adams & Co.
    “ II. That on the 16th day of April, 1885, there was on deposit with the defendant, Garfield National Bank, the sum of $660, in the name of and to the credit of the defendant Patrick McCann, which sum of money had been derived from sales of goods and from the business of said firm of Adams & Co.
    “ III. That on the 16th day of April, 1885, the defendant, Patrick McCann, executed and delivered to the plaintiffs a bill of sale in writing, wherein and whereby he sold and transferred to the plaintiffs all his assets of whatsoever kind and sort pertaining to the business of said Adams & Co., and all his interest in the assets of said firm, including the said sum of money so on deposit with the defendant, Garfield National Bank.
    “IV. That notwithstanding the execution and delivery of said bill of sale, as aforesaid, the said Patrick McCann, on the morning of the 17th day of April, 1885, wrongfully and fraudulently drew a check on said Garfield National Bank to the order of his wife, the defendant, Maria McCann, without any consideration, as the plaintiffs are informed and believe, directing the said bank to pay to her order the said sum of $660, so deposited in said bank as aforesaid, and delivered the said check to his said wife, who thereupon presented the said check to the said bank and deposited the said sum to her own credit in said bank.
    “V. That plaintiffs are informed and believe that the said sum of money so deposited in said bank has never been withdrawn from said bank, but that upon presentation of said check by the defendant, Maria McCann, the said sum of money so deposited was marked and passed to the credit of said Maria McCann upon the books of said bank, and that it still remains on deposit in said bank, credited to the said Maria McCann under the name of Mrs. P. McCann.
    “ Wherefore plaintiffs demand judgment against, the defendants:
    “ 1. That the money so on deposit with the defendant Garfield National Bank be declared to be the property of the plaintiffs, and that the same be delivered over to the plaintiffs by the defendant Garfield National Bank.
    
      “ 2. That the defendants, Patrick McCann and Maria McCann, their agents, attorneys, servants and employees, and each of them, be restrained and enjoined, pending this action, from withdrawing any part of said sum from the said bank, and that the defendant, Garfield National Bank, its officers, employees, attorneys and agents, and each of them, be enjoined and restrained pending this action, from paying out to any person, other than plaintiffs, any part of said sum so on deposit in said bank.
    
      
      “ 3. That the defendants, Patrick McCann and Maria McCann, their attorneys, agents, employees and servants, and each of them, be perpetually restrained and enjoined from withdrawing or attempting to withdraw, or in any manner interfering with any part of the said money so on deposit in said bank, and that the defendant, Garfield National Bank, its officers, employees, agents and servants, be perpetually enjoined and restrained from paying out any part of the said money so on deposit with it to any person except to plaintiffs or to their order.
    “ 4. For the costs of this action.”
    Issue was joined by the answer of defendants Mc-Cann and the answer of the bank. The cause was tried before the court without a jury at a special equity term. Defendant McCann proceeded with the trial without objection or demand for a jury trial. The judge found, among other things, the following facts :
    “ That defendants have kept separate banking accounts with the defendant bank.
    “ That on the 16th day of April, 1885, at the office of H. B. Claflin, in the city of New York, the defendant, Patrick McCann, in consideration of the sum of $2,500, then paid to him by the plaintiffs, executed and delivered to the" said plaintiffs two certain instruments in writing wherein and whereby he sold and transferred to the plaintiffs, all his right, title and interest in and. to all the assets of every nature and kind whatsoever, then in the said store or in any way appertaining to or belonging to the retail dry-goods business carried on by the firm of Adams & Co., composed of the plaintiffs and defendant, Patrick McCann. That at the time of the execution of such instruments there was on deposit with the defendant, the Garfield National Bank, a sum exceeding $660; being the proceeds of the sales of the said goods in said business, between the 2d day of April, 1885, and the said 16th day of April, 1885, which deposit was a general deposit, and was in the name of the said Patrick McCann. That said moneys had been so deposited in that name for convenience, by arrangement between the plaintiffs and the said Patrick Mc-Cann.
    “ That, notwithstanding, that the said deposit stood in the name of Patrick McCann, the said deposit and the account against the said bank therefore was the property of the said firm of Adams & Co., and the interest of the said McCann therein was by the said instrument executed by the said McCann as aforesaid, transferred to the plaintiffs.
    “ That after the execution and delivery of said instrument the said McCann was, in respect to the said deposit and account, the agent and trustee of the plaintiffs.
    “That on the 15th day of April, 1885, the defendant Patrick McCann' drew a check on the defendant the Garfield National Bank in favor of the defendant Maria McCann for the sum of $660, and delivered the same to her, and she thereupon deposited the said check to her own credit in said bank, and said bank credited her account with the amount of the said check as cash.
    “ That the said sum of money so deposited in said bank to the credit of the defendant Patrick McCann was collected by and paid to the defendant Maria Mc-Cann in due course of business and that she deposited the same in said bank to her own credit, and that there is now on deposit in said bank to the credit of said defendant Maria McCann, as her property, a sum of money exceeding $660.
    “ That the defendant bank credited the amount of the check for $660 to the account of Maria McCann as cash, and received from her as a deposit the said chedk, before notice of the plaintiffs’ claims to or ownership of the deposit and account of Patrick Mc-Cann.
    “ That as to the defendant Maria McCann and the defendant the Garfield National Bank, the defendant Patrick McCann was the owner of the deposit and balance to his credit in the said bank at the time the check for $660 was credited by the bank to Maria McCann.
    “ That Maria McCann was a holder of the said check for $660 in good faith, and deposited the same as cash in the said bank, before notice to her of the ownership or claim of ownership of the deposit or account of the defendant Patrick McCann by the plaintiffs.”
    And found as conclusion of law:
    “ That the amount of money on deposit in the Garfield National Bank, and the account against said bank therefor, the subject matter of this action, standing to the credit of Patrick McCann on the 16 th day of April, 1885, to wit, the sum of $660, was a deposit in the name of the said Patrick McCann, in trust for the benefit of the firm of Adams & Company, and that after the transfer to the plaintiffs, by the said Patrick McCann, of his interest in such deposit and account as a member of the said firm of Adams & Co., on the 16th day of April, 1885, the deposit and account against the said bank therefor was in the name of the said Patrick McCann in trust for the benefit of the plaintiffs.
    
      “ That the instruments referred to in the foregoing findings of fact, dated April 16th, 1885, and executed by and between the said Patrick McCann and the plaintiffs, and delivered on that day, operated to transfer to the plaintiffs in this action, and vest them with the title of the account in said bank of the said sum of money.
    “ That by the check transaction with the said bank, above referred to, the title of the account in said bank, aforesaid, was not transferred to the defendant, Maria McCann, and she was not the owner of the same at the commencement of this action.
    “ That the defendant Maria McCann was rightfully entitled to the check for $660, referred to, and that she is entitled to withdraw the said sum from the Garfield National Bank.
    “ That the defendants are entitled to judgment dismissing the complaint and dissolving the injunction, with costs, as -to defendants McCann, and costs after notice of trial and before trial to the defendant bank.”
    From the judgment entered on these findings the plaintiffs appealed.
    The trial judge, upon deciding the case, wrote as follows:
   Dugro, J.

—The evidence establishes that on April 16, 1885, there was on deposit in the Garfield National Bank, to the credit of Patrick McCann, a balance exceeding $660, which had been derived from and was an asset of, a partnership business, conducted by plaintiffs and Patrick McCann, prior to and until the mentioned date; that this balance was, on said date, transferred by Patrick McCann to the plaintiffs, notice of which was given to the bank subsequent to April 18th; that on the 15th of April, preceding the transfer, the defendant Maria McCann received from Patrick McCann his check, drawn on the defendant bank to her order for $660, in part payment of an existing debt; that on April 18th, this check was deposited in the defendant bank to the credit of Maria McCann, and credited to her account as cash; that the defendants McCann had and kept separate ordinary banking accounts with the bank, making deposits with and drawing checks upon the latter as occasion required.

“The plaintiffs ask that the defendant Maria Mc-Cann be perpetually restrained from withdrawing from the bank, and the bank from paying, $660, claimed to be the proceeds of the check, and that this sum to the credit of Maria McCann’s account be declared their property, etc.

“ As the ordinary relation of banker and depositor existed between the McCanns and the bank, their accounts were subject to the ordinary rules applicable to bankers’ accounts, one of which is that if a check is deposited in the ordinary way of business to the credit of a person’s bank account, and by the bank placed to the credit of the depositor as cash, the effect of the transaction is to make the bank debtor to the depositor for the amount of the check, and to pass the title to the check to the bank. Justh v. National Bank of the Commonwealth, 56 N. Y. 478.

“The bank, having received its title to the check prior to the receipt of notice of the transfer by Patrick McCann, has a right to charge it up against the latter’s account.

“ The defendant Maria McCann can be restrained, as plaintiffs ask, only if it appears that a trust is impressed upon $660 of the amount to her credit in the bank, of which trust she is the trustee for the plaintiffs as cestui que trust. The facts presented by the evidence do not warrant a finding that she has been guilty of any fraud in obtaining the check, or acted in any way other than in good faith, or is other than a bona fide holder of the check for an existing debt; and, with this so, no trust or agency can be held to have been created in plaintiffs’ favor.

“ In the absence of such a trust or agency, the rule seems to be that it is only cto the extent of the interest remaining in the party who committed the fraud, that money can be followed as against an innocent party, having a lawful title, founded upon consideration; and, if it has been paid, in the ordinary course of business, either upon a new consideration, or for an existing debt, the right of the party to follow the money is gone. Justh v. National Bank of the Commonwealth, supra.

Gildersleeve, Palmer & Boothby, attorneys, and John W. Boothby of counsel, for appellants, argued:—

I. The complaint alleged all the facts necessary for a recovery of a personal judgment for the amount of the deposit belonging to the plaintiffs, and wrongfully transferred by the defendant McCann to his wife, and the court found all the necessary facts for such a recovery. The mere fact that the prayer of the complaint was for equitable relief, does not preclude the plaintiffs from recovering any relief, legal or equitable, to which they may be entitled upon the facts stated in the complaint and proven on the trial. Fairchild v. Lynch, 42 N. Y. Supr. 265; Steinberger v. McGovern, 56 N. Y. 12; Hale v. Omaha National Bank, 49 Ib. 629; Stevens v. The Mayor, 84 Ib. 304.

This rule seems indispensable to the safe transaction of commercial business.

“ The plaintiffs, in their brief, ask that, if judgment cannot be given as prayed for in the complaint, a judgment for $660, the amount of the deposit, should be given against the defendant Patrick McCann, and refer me to section 1207 of the Code, and several authorities, as warranting such a disposition of the case as against him.

“A judgment against this defendant cannot be had in this action, as no cause of action, alleged in the complaint, has been proved, nor has the complaint been amended so as to conform to the proof.

“I might also add that if the existence of a cause of action against Patrick McCann has been disclosed by the evidence, it is, if one he has, a right to have passed upon by a jury.

“ There should be judgment for the defendants, dismissing the complaint, with costs to the defendant McCann, and costs after notice of trial and before trial to the bank.”

II. Patrick McCann was not entitled to a jury trial on that issue. The action was brought upon a state of facts upon which the plaintiffs claim they were entitled to equitable relief, a,nd such relief was sought. It was therefore within the jurisdiction of the court of equity, and the court, although denying equitable relief, may retain the action and give a personal judgment. Van Rensselaer v. Van Rensselaer, 113 N. Y. 207, 214 ; Fairchild v. Lynch, supra.

III. But, even if the defendant Patrick McCann was originally entitled to a jury trial in this action, he waived it by noticing the case for special term and trying it there without objection, or demand for a jury trial.

IV. The court erred also in not granting the plaintiffs the relief they demanded in the complaint. In support of his position, the learned judge who tried the case, cited the case of Justh v. National Bank of the Commonwealth, 56 N. Y. 478. That case is not a parallel one, and is not decisive' of the point. There was no question in that case of following the property in equity; and even if there had been, it was not a parallel case to the one at bar; nor is the case of Oddie v. The National City, 45 N. Y. 738. In the case at bar the deposit in the bank on the day of the transfer to the plaintiffs was simply a cause of action against the. bank nominally in favor of Mr. McCann, but in fact the property of the plaintiffs. That chose in action has never, been collected, and the bank, in a suit to collect it, brought by Mrs. McCann, the apparent owner of it, it would be a perfect defence, even under the rule laid down in the case cited, by showing that when McCann’s check was presented by Mrs. McCann, and the credit given her, McCann had no title to the account and transferred none to his wife. If this be so, then no money was ever paid Mrs. McCann, and it was exactly as if McCann had held a note or a Government bond as the agent or trustee of the plaintiffs, and had transferred the same wrongfully to his wife in payment of his individual debt, conceding, for the sake of the argument, that there was a debt. No one will contend that such a bond or note so transferred could not be reached by the plaintiffs in the hands of Mrs. McCann, either by replevin or by an action in equity to recover it. 2 Perry on Trusts, § 828 ; Wetmore v. Porter, 92 N. Y. 76. But the courts have even gone farther than that, and said that where a party receiving money or property belonging to another person, either in law or in equity, and wrongfully disposed of by that person in the payment of his individual debt, may be recovered from the person who receives it, and the fact that he received it without knowledge of such conversion would be no defence, unless he not only had no knowledge of the title of the property, but also paid a valuable consideration for it, and an antecedent debt is • not such a consideration. Brown v. Houck, 2 N. Y. St. Rep. 194, 196. And in Denton v. Merrill, where money was received in a fiduciary capacity by a member of a firm individually, and by him paid over to his firm and credited on the books of such firm to such partner, the court, holding that such trust fund could be followed into the hands of such firm, said: “ The mere fact of its deposit to the credit of the firm (i. e. in the firm bank) did not relieve it from its character of trust funds, so as to defeat the right to follow and recover it as such.” Denton v. Merrill, 5 St. Rep. 391. Here all the parties, as we have said, are before the court. The bank has never paid out the money and nobody has actually received the money. In other words, the bank owed a debt which they have never paid, an'd the question is brought up, all parties being in court, where perfect justice can be done, to whom shall it be paid ?

V. If the account against the bank for the deposit has never been collected, the court has the power to grant the equitable relief asked in the' complaint. Merritt v. Thompson, 3 E. D. Smith, 294.

Samuel Greenbaum, attorney for respondent McCann, and of counsel for respondents, argued:—

I. The plaintiff cannot maintain his cause of action. The learned trial judge, in his opinion has correctly stated the rule with respect to deposits with a bank. Justh v. National Bank of the Commonwealth, 56 N. Y. 478; Oddie v. National Bank of New York, 45 N. Y. 735. There being no fraud alleged, and none attempted to be proved in the case, upon what theory can the plaintiffs maintain the action against the defendants ?

II. Plaintiff should not succeed in this case, as he has not made out a case of equitable relief. It is a well settled rule that a court of equity will not grant an injunction in a case where the plaintiff has an ample remedy at laiv. This proposition is so well settled» that it is unnecessary to cite authorities in support thereof. There can be no doubt that if there was any fraud or collusion of any kind that plaintiffs would have their remedy against the defendants .in an action for damages. But the evidence amply shows that there was no fraud.

Per Curiam.

The judgment should be affirmed, with costs, upon the opinion of the trial judge at special term. As to the claim made upon this appeal that the plaintiffs should have had .at least a personal judgment against Patrick McCann for the reason that the latter waived a trial by jury, it should be said that the case contains no evidence of any such waiver.