Case ID: ny-st-rep_54/html/0803-01.html
Source: Caselaw Access Project
Author: {"author": "Earl, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Thomas M. McLoghlin et al., Ex’rs, Resp’ts, v. The National Mohawk Valley Bank, App’lt.
    
    
      (Court of Appeals,
    
    
      Filed October 24, 1893.)
    
    1. Banks—Modification of agreement as to interest.
    Where the president of the bank tells a depositor whose account has been drawing interest, that the bank can no longer pay him interest, and requests him to present his certificate and draw his money, the money being presently due, and that if he left Ijis money thereafter it would be without interest, and the depositor, making no objection, leaves his money there, he cannot recover interest upon it after the date of notice.
    
      2. Same—Evidence.
    The fact that such depositor had contracts with other banks for interest is inadmissible for the purpose of showing that he had such a contract, with this bank.
    Appeal from judgment of the supreme court, general term» fourth department, affirming judgment entered on report of referee-
    
      J. B. Rafter, for app’lt; Wm. P. Goodelle, for resp’ts.
    
      
       Reversing 47 St. Rep., 562.
    
   Earl, J.

This action was brought by the plaintiffs to recover money deposited by their testator with the defendant. The amount of the principal sum claimed is $2,511.31. The testator opened an account with the defendant in August, 1853, and from time to time made deposits in the bank, and drew checks against his account until May, 1865, when the amount now claimed was the balance due him. The testator died in November, 1888, and from. May, 1865, until that time, there was no entry of debit or credit in his account. Before the commencement of this action, the plaintiffs demanded of the defendant the balance of principal due them, with interest thereon from May 25, 1865, to the date of the demand. The defendant offered to pay the principal, but refused to pay interest, and the controversy between these parties is-whether upon the facts proved it was bound to pay interest upon the balance claimed.

The sole evidence given by the plaintiffs to prove any agreement to pay interest upon the money deposited by the testator was the entries in his account kept in the books of the bank and in the pass book held by him of credits from time to time of interest. It appears from the account, that interest was credited upon the balances for a portion of the time at the rate of five per cent, for another portion at the rate of three and three-fourths per cent, and for another portion at the rate of two and one-fourth per cent» The referee held that these credits were sufficient to show that the account was an interest-hearing account, and he reported in favor of the plaintiffs, giving them judgment for the principal sum, with interest thereon from the 25th of May, 1865, to the date of his report, at the rate of three per cent.

When the account was opened, and until, 1867, Mr. Pomeroy was cashier of the hank, and for many years before and after 1867 Dean Burgess was its president; and after the death of Pomeroy, in 1867, "Henry D. Alexander was its cashier. The referee found that in the latter part of the year 1867 the testator had an interview with Burgess, at which two of the directors of the bank were present, at its banking house during the usual business hours of the day ; that Burgess, speaking to the testator concerning his deposit, said in substance, “You must draw your money ; we can pay no interestto which the testator replied in substance, “ that the bank would bo crippled by "the defalcation, (having reference, probably, to the defalcation of the previous cashier), and they could afford to pay him interest; that it was not necessary for him to have the money;” that Burgess answered, “that it was contrary to the rules of the bank to pay interest; that the bank did not pay interest on deposits and he must withdraw his money ; that they could pay no interest;” that afterwards, in the year 1869, the testator had an interview with the cashier, Alexander, at the defendant’s banking house, during the usual hours of business; that the testator said to Alexander that “ he had called there sometime ago and had talked about his deposits with the old gentleman, meaning Burgess, in the back room, who said they could not pay him interest;” and Alexander replied, “ That is so, we don’t pay anybody interest now; if you desire to deposit your money where they pay interest you had better take it to a savings bank;” and the testator said that “ he would leave his money there until he could get some other place to put it;’’ that Alexander answered, “All right, you can have your money any time you want it.” That some years afterwards the testator met the cashier, Alexander, in the village of Mohawk, after business hours, and asked him if they had concluded to pay him any interest on his account, and Alexander replied, they had not; that they could not do it.” Notwithstanding these facts, proved to the satisfaction of the referee and found by him, he held that there was a continued obligation on the part of the bank to pay interest on the balance of this account

While it is true that the entries of interest in the bank’s account with the testator furnished prima facie evidence that the interest was allowed in pursuance of some arrangement or agreement, they furnished no evidence as to the precise character of that agreement. They did not show what the rate of interest was to be, nor for what length of time, nor under what circumstances interest was to be paid. They certainly furnished no evidence that interest was to be paid to the testator on the balance of his account so long as he chose to leave his money on deposit there. It is perfectly consistent with the entries of interest in the account that the arrangement for the deposit and for the payment of interest was terminable at the option of either party. In 1867, when the testator had the interview with the president of the bank, it is clear that there was no subsisting arrangement for the payment of interest. lie was then at the bank seeking for a promise from the bank to allow him interest, and it positively refused. Iu the subsequent conversation with the cashier it again clearly appears that there was no subsisting arrangement for the payment of interest, as the testator was seeking to make one. So that, upon the facts found by the referee, it seems to us that if some kind of arrangement for the payment of interest prior to May 25, 1865, could be found to have existed, that arrangement was not in force at the time of these conversations.

But, even if it was in force prior to these conversations, it is quite clear that it was then abrogated. We must assume that the president of the bank, with two directors engaged in the business of the bank, in the banking office, to whom the testator applied in reference to the allowance of interest, had authority to act for the bank. He was there informed that the bank would pay him no interest; that it was contrary to its rules to allow interest, and that he must draw his money. If the matter had rested there, and nothing more had been said, he could not after that have claimed interest on his account. He went away apparently acquiescing in what was said to him, and after that he had no arrangement for the continued allowance of interest to him, and there was no binding contract to compel the bank to pay interest The subsequent conversation with the cashier is still more explicit and significant. In that conversation the testator alluded to the conversation he had had with the president, and he was informed that the bank did not pay interest on deposits, and that if he desired to deposit his money where he would be paid interest he had better take it to a savings bank; and he replied that he would leave it there until he could get some other place to put it. The cashier assented to this, and told him he could have his money any time he wanted it. The testator went away apparently satisfied with that arrangement, and it is impossible to perceive how he could claim interest after that. Whatever the prior arrangement may have been, there wa's then a distinct agreement that he should leave his money without interest until he could get some other place to put it, and the prior arrangement, if one existed, was superseded. Under such circumstances we think there is no authority, and we know of no principle of law, which would authorize the allowance of interest on the testator’s account.

The case of Read v. City of Buffalo, 74 N. Y., 463, relied upon by the plaintiffs, bears no analogy to this. There the defendant issued interest-bearing obligations, payable when the money should be collected or realized from taxes for local improvements, with interest, three months from date. The necessary funds for paying the obligations were collected, and subsequently the defendant’s common council passed a resolution that after a certain date interest on the obligations should cease, and the treasurer published notices thereof in the official city papers; and it was held that that resolution and the published notices thereof did not stop the running of interest. There the defendant by its own acts, not communicated to the plaintiff, claimed to have absolved itself from the payment of interest, and it was held that the notices published of the resolution of the common council did not affect the rights of the plaintiff in the absence of proof that such notices ever came to his knowledge. Here the testator was distinctly notified that interest would no longer be paid, and the money was really left in the bank under a new arrangement, distinctly understood by both parties, that the account should not draw interest.

It may be true, as claimed by the plaintiffs, that if a bank should issue certificates of deposit bearing interest until paid, it could not stop the running of interest by a simple notice to the depositor that it would no longer pay it. But if it should say to him that it could no longer pay him interest, and request him to present his certificate and draw his money, the money being presently due, and say to him that if he left his money thereafter it would be without interest, and he, making no objection, should leave his money there, we know of no principle of law which would enable him to recover interest upon it.

We are, therefore, of opinion that upon the facts found by the referee the judgment should have been in favor of the defendant, dismissing the complaint.

But as there must be a new trial of the action, we ought further to notice some evidence given by the plaintiffs upon the trial, which the learned counsel for the defendant claims was erroneously received and considered by the referee. The plaintiffs were permitted to show that the testator had deposits in various other banks, upon which he was allowed interest, one bank being in New York, one in Little Falls, one in Syracuse, and another in ■Cortland. This evidence, as we understand it, was offered to show that the account with the defendant was an interest bearing account. The testator’s transactions with the other banks had no relation whatever with his transactions with the defendant, and it does not appear that the defendant had any knowledge whatever of them. His transactions with those banks were offered as independent evidence to show that while he was receiving interest upon all his money deposited with other banks, it was wholly improbable that he would make deposits with the defendant without .any interest, or that he would leave his money there without interest. While this evidence may be what is called moral evidence, more or less convincing, we are satisfied that it was illegal. The fact that he had contracts with other banks for interest has no legal tendency to show that he had such a contract with this bank; and we know of no well-adjudicated case which holds such evidence under such, circumstances to be competent. As a. general rule it is inadmissible, for the purpose of showing that A. did a particular thing at one time, to prove that he did a similar thing at another time. Evidence must legitimately tend to prove the issues between the parties. In 1st Gfreenleaf’s Evidence, § 52, it is said: “ This rule excludes all evidence of collateral facts, or those which are incapable of affording any reasonable presumption or inference as to the principal fact or matter in dispute; and the reason is that such evidence tends to draw away the minds of the jurors from the point in issue, and to excite prejudice, and mislead them; and, moreover, the adverse party having had no notice of such a course of evidence, is not prepared to rebut it.” If this evidence was competent then it would be •difficult to limit the evidence which the plaintiffs could give of the conduct of their testator, although unknown to the defendant, showing that it was improbable that he would leave his money with the defendant without interest; and the defendant might show that he did deposit money with other banks and loan money to individuals without interest, or even that he kept on hand large amounts of idle money, and it might show that other banks in the vicinity did not allow interest on open running accounts, and that it did not allow interest upon such accounts to -other depositors; and thus many unexpected issues would be brought into the trial of the action, and the real issues be obscured and the minds of the jurors diverted therefrom and confused. Such evidence is too remote, inconclusive and uncertain in its bearing; and evidence of a similar character was condemned in the following cases: Carter v. Pryke, 1 Peake’s Cases, 95; Wood v. Poughkeepsie Ins. Co., 32 N. Y., 619; Green v. Disbrow, 56 id., 334; Carroll v. Deimel, 95 id., 252. Where one is charged with carelessness it would be incompetent to prove that he was habitually careless; or if charged with assault and battery that he was in the habit of committing assaults upon other people, and so many illustrations might be put showing that facts which constitute moral evidence, quite convincing, may yet be irrelevant when tested by legal rules.

We are, therefore, of opinion that the judgment should be reversed and a new trial granted, costs to abide event.

All concur.