Case ID: nys_54/html/0696-01.html
Source: Caselaw Access Project
Author: {"author": "MERWIN, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

COOK v. SHULL et al.
    (Supreme Court, Appellate Division, Third Department.
    November 16, 1898.)
    Executors and Administrators—Right to Assets—Pledges by Committee op Lunatic.
    The committee of one insane, in order to draw a deposit which his non compos, while rational, had made in a bank (the certificate of deposit ' being negotiable, and having been lost), gave a bond to indemnify the bank, and drew the deposit, $5,400, and gave to each of the two sureties $2,000 thereof, to hold at a stated rate of interest until their liability to the bank on the bond was discharged. The non compos died, and her administrator demanded of the sureties the money held by them, as as- • sets of the estate. Held that, the certificate- not having been accounted for, the right of the committee, and hence of the estate, was in doubt, and the sureties were entitled to hold the money until the certificate was accounted for, as lost or destroyed.
    Appeal from trial term, Montgomery county.
    Action by Jacob C. Cook, administrator, against Alfred W. Shull and others. From a judgment on a decision of the court sitting as a jury, defendants appeal.
    Reversed.
    Argued before PARKER, P. J., and LARDON, HERRICK, PUTNAM, and MERWIN, JJ.
    Andrew J. Nellis, for appellants.
    . W. H. Van Steenbergh, for respondent.
   MERWIN, J.

On 10th October, 1885, Clarissa Cook deposited with the National Spraker Bank $5,400 in money, and received from said bank a certificate'of deposit reading as follows:

“$5,400. National Spraker Bank.
“Oanajoharie, Oct. 10, 1885.
“Mrs. Olarissa Cook has deposited in this bank five thousand four hundred dollars, payable in bank bills, to the order of herself, with interest at the rate of —:— per cent, per annum, if left six months. No interest allowed on fractions of a month. Wm. Wiles, Teller.”

Thereafter Mrs. Cook became of unsound mind, and in July, 1888, due proceedings were had, whereby she was declared to be of unsound mind, and Jacob C. Cook was appointed committee of her person and estate. In July, 1894, Mrs. Cook died intestate, and the plaintiff was appointed administrator of her estate. Jacob C. Cook, while acting as committee, demanded of the bank payment of the money so deposited,—without, however, returning the certificate. He was unable to find the certificate, and it was then claimed to have been lost or destroyed. The bank declined to pay, unless it was furnished with a bond of indemnity. Thereupon a bond, upon which the defendants Shull and Snell were sureties, was furnished, which was satisfactory to the bank, and on its presentation to the bank on the 10th April, 1890, the money, $5,400, was paid over to Cook; and on the same day, and in accordance with a previous arrangement with Shull and Snell, $4,000 of the money was turned over to them (being $2,000 to each), and they gave back to Cook, as committee, two instruments in writing, signed by them, and dated April 10, 1890, in each of which they promised to pay to Cook, as committee, or his successors in office, $2,000, with interest at 4 per •cent., whenever they should be relieved or discharged from the bond. Shull and Snell were induced to become sureties on the bond by reason of the promise of Cook to deliver to them the sum of $4,000, part of said moneys; and in pursuance of such promise the $4,000 was delivered to them, and the two instruments executed by them to the committee. On January 1, 1896, the plaintiff, as administrator of Mrs. Cook, demanded of the defendants Shull and Snell payment of the said $4,000, and interest at 4 per cent.; but they refused to pay, claiming they had a right to hold the same till they were discharged from the bond held by the bank. The certificate •of deposit has never been returned or presented to the bank, and has never been found. The defendants Shull and Snell have never been released from their obligation to the bank, and the bank claims that they are still liable to the bank thereon. The balance of the moneys received from the bank was used by the committee for the benefit of the estate of the lunatic. The court, on deciding the case, held that Cook, the committee, had no right to make the arrangement he did with Shull and Snell; that the latter were simply custodians of the fund, and liable to the plaintiff therefor.

The action was in equity, the bank being a party defendant, and the case was tried as an action in equity. In the decision the case is treated as an action at law. The $4,000 in the hands of Shull •and Snell is treated as part of the estate. The question whether the certificate of deposit was lost or destroyed was not considered •of importance. Evidently the court was of the opinion that the evidence did not warrant a finding that it was destroyed. It seems to have been conceded at the trial that the certificate may be an outstanding obligation against the bank, in the hands of others not parties to the action. At least, we cannot here assume that the certificate wTas ever destroyed. The respondent relied upon the cáse of Deobold v. Oppermann, 111 N. Y. 531, 19 N. E. 94. In that case it was, in substance, held that an administrator had no right t» pledge the assets of the estate to the sureties on his bond to secure them against liability thereon, and that assets so pledged could be reclaimed by action. In the present case the committee had been •duly appointed, and the question with him was whether the estate he represented owned the certificate at all. He could not find it, and could not show that it was destroyed. The bank did not recognize his right to have the money, and would only pay upon indemnity. So the appellants became sureties under the arrangement specified. The estate had $1,400 for its own use, and the balance was placed in the hands of the sureties, to remain, practically, until it was determined whether the estate owned the money. The estate has now a recovery for the balance of the money, and still it is not •shown that the estate in fact owns the fund. The Deobold Case is not applicable. The trial court, we think, erred in holding that the fund was a trust fund belonging to the estate represented by the plaintiff, without reference to the question of what had become of the certificate of deposit. The estate, in equity, had no greater rights against the appellants than it would have had against the bank, had the money still been in its hands. Upon the case as presented, the most that the plaintiffs would be entitled to would be a recovery upon giving indemnity as required by section 1917 of the Code. The-certificate was, in effect, a promissory note (Sheldon v. Heaton, 88 Hun, 535, 539, 34 N. Y. Supp. 856), and was negotiable. The appellants, having, at the request of the committee, assumed the risks upon the bank, were entitled to such protection as the law would have afforded the bank. In this view, the estate would have just as good a claim against the appellants as it had against the bank. The case-having been disposed of upon an erroneous theory, a new trial must follow.

Judgment reversed and new trial granted; costs to abide the event. All concur.