Case ID: nys_8/html/0901-01.html
Source: Caselaw Access Project
Author: {"author": "Barnard, P. J. Cullen, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Kelley v. Foster.
    
      (Supreme Court, General Term, Second Department.
    
    February 12, 1890.)
    Evidence—Book-Entries—Accounting.
    In an action by a stockholder oí a bank to compel an accounting oí money received by defendant’s intestate, as cashier and liquidator of the bank, the mere fact that a note discounted by the bank appears on its bills receivable book is wholly insufficient to create a personal liability upon intestate, especially after a lapse of 10 years from the last payment to the stockholders. Cullen, J., dissenting.
    Appeal from special term, Westchester county.
    An action by Roxanna Kelley against Ann Augusta Foster, as administratrix of Francis E. Foster, to'compel an accounting of the moneys received by defendant’s intestateas liquidatorof the Croton River National Bank. Judgment for defendant. Plaintiff appeals.
    Argued before Barnard, P. J., and Pratt and Cullen, JJ.
    
      Abbott Brothers, for appellant. T. S. Barnum, for respondent.
   Barnard, P. J.

In May, 1874, the Croton River National Bank went into voluntary liquidation. Francis E. Foster was the cashier of the bank. He collected the assets and paid the debts of the bank, and paid to the stockholders the full par value of the shares, and 25 per cent, beyond. The last payment was made December 11,1876. Foster died in November, 1886. There was no question made as to the failure of the cashier to pay over all he had received during his life, something over 12 years after the bank went into liquidation, and nearly 10 years after the last payment to the stockholders. Every intendment is in favor of the cashier after this lapse of time and long silence of the stockholders. The proof fails to show that the deceased cashier ever collected moneys which he has not accounted for. On December 23, 1873, a note was made by one Howes for $5,708.07, due in six months, with interest. There is no proof the note was ever paid to the bank, and there is no proof connecting the bank with it, except that it is entered as bills receivable in the bills receivable book of the bank. The note belonged to the plaintiff and the deceased cashier, unless the-bank discounted it, and this is not proven by the entry of the bills receivable book. This account does not show that the note was paid. It was the habit of the bank officers, whenever a bill receivable was paid, to enter the amount on a ticket, stating from whom it was received. This proof is equally inconclusive as to the note called the “Town Hall Note.” The claim is based upon memoranda found in the safe of the bank, in the cashier’s handwriting. There is nothing upon the memoranda to create a personal liability upon the cashier. They are wholly insufficient and inconclusive, and, in the absence of proof explaining them, mere nothing. The fact that a bank-book, which of necessity is more or less in the handwriting of the cashier, creates a liability personally upon him, as if he was responsible for all credits which appear upon the book to have been received, will be too severe a rule, as between the bank and its officers. The whole ’truth would need the other books of the bank. These are the chief items relied upon. The proof fails to establish them, as against the cashier. The judgment should therefore be affirmed, with costs.

Pratt, J., concurs.

Cullen, J.,

(dissenting.) This action is brought to compel an accounting of the moneys received by defendant’s intestate, as liquidator of the Croton River Rational Bank. The bank in May, 1874, by consent of two-thirds of its stockholders under the provision of the national banking act, went into voluntary dissolution, and the defendant’s intestate acted as liquidator up to the time of his decease. One dividend, of 25 per cent., was paid by him to the stockholders. The plaintiff claims by assignment from an owner of 1,640 shares of the total 2,000 of the bank at the time it went into liquidation, and the suit is brought on behalf of herself and all other stockholders. I think the action is properly brought by a stockholder, and not by the bank. After proceedings for voluntary liquidation, the corporate existence of the bank doubtless continues for the purpose of suing or being sued by others. Bank v. Insurance Co., 104 U. S. 54. But, as between the liquidator and the stockholders, that rule does not apply. The liquidator was not an ordinary agent of the bank, who was to collect and turn over moneys to his principal. His duty was to convert the assets into money, and, having satisfied the claims of creditors, distribute the surplus to the stockholders according to their holdings, not to pay such surplus to the bank as an existing corporation. The liquidator was therefore trustee, and the oestuis que trustent were not the corporation, but the stockholders. Assuming, therefore, that the action can be maintained, I think the judgment rendered by the trial court cannot be sustained. The plaintiff’s remote assignor, at the time of the liquidation, was indebted to the bank. This indebtedness was not a lien on the stock. But from the moment the bank went into liquidation he was not in the position of a stockholder in a continuing or “going” corporation. His only right was to share in the distribution of the assets, and to such share the amount of his debt was a proper offset. This proposition has properly been conceded by the plaintiff’s counsel. It is therefore to be determined whether there would be any sum due.to the plaintiff on account of the liquidator’s collections, over and above the debt due from her assignor. It is unnecessary, for the purposes of this appeal, to review all the items of the account. It is enough to' say that if the liquidator is charged with the note of one Howe, indorsed by himself and discounted by the bank, some amount will be due to the plaintiff. This note the trial court found was a part of the assets of the bank in the hands of the liquidator. It also found that it had never been paid, and that the liquidator was not guilty of negligence in not collecting it. This position cannot be sustained. Defendant’s testator was the indorser of the note. He was responsible for its payment, in case the maker failed to pay. If demand and notice were necessary to charge him, which we think not, then he was negligent in failing to have the note protested. His failure to protest the note must be considered as a waiver of notice, if notice was necessary. In any view, he was liable for the amount of the note, which has now become outlawed. As to the other items with which it is claimed the liquidator should have been charged, it is unnecessary to examine them, as the character of these charges, and the evidence concerning them, may be varied upon the next trial. . For the reason given, the judgment should be reversed and a new trial ordered, costs to abide event.