Case Name: HARTFORD v. GREENWICH BANK OF CITY OF NEW YORK
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1913-06-13
Citations: 142 N.Y.S. 387
Docket Number: 
Parties: HARTFORD v. GREENWICH BANK OF CITY OF NEW YORK.
Judges: 
Reporter: West's New York Supplement
Volume: 142
Pages: 387–393

Head Matter:
(157 App. 448.)
HARTFORD v. GREENWICH BANK OF CITY OF NEW YORK.
(Supreme Court, Appellate Division, First Department.
June 13, 1913.)
1. Banks and Banking (§ 138 )—Payment of Checks.
R., an employs, having charge of the checking up and verifying of bills for goods purchased had billheads printed under the name of W., rented a post office box in that name, and opened an account in his employer’s bank where he was introduced as W. He then prepared a number of fictitious bills in the name of W. against his employer, approved them, and on the faith of his approval checks payable to W. were mailed to the post office box where they were received by R., who indorsed them in the name of W., deposited them in the bank, and subsequently withdrew his deposit. Held, that the bank was entitled to charge such checks against the employer’s deposit, since it was intended by the depositor that they should be paid to the person from whom it believed that it had purchased goods, and they were paid to that person; it not being the case of a check drawn to a fictitious or nonexisting person, as there was an actual person calling himself W., although that was not his real name.
(Ed. Note.—For other cases, see Banks and Banking, Cent. Dig. §§-, 398-405; Dec. Dig. § 138.*]
2. Banks and Banking (§ 119*)—Depositors—Relation Between Bank:
and Depositor.
The relation between a bank and a depositor is in a strict sense that of debtor and creditor.
[Ed. Note.-—For other cases, see Banks and Banking, Cent. Dig. §§ 2891-292; Dec. Dig. § 119.*]
3. Banks and Banking (§ 138*)—Depositors—Payment of Checks—Duty
of Bank.
In disbursing a depositor’s funds, a bank can pay them only in the usual course of business and in conformity to the depositor’s directions, and can charge against the depositor’s account only payments made at the time when, to the person whom, and for the amount authorized by him.
[Ed. Note.—For other cases, see Banks and Banking, Cent. Dig. §§. 398-405; Dec. Dig. § 138.*]
4. Banks and Banking (§ 138*)—Deposits—Payment of Checks.
In determining whether a bank has paid out its customer’s funds without authority, the question is usually one of the depositor’s intention in. issuing a check, the bank being liable to refund the amount to the depositor if it pays to any one other than the payee intended, even though it pays to a person having the same name.
[Ed. Note.—For other cases, see Banks and Banking, Cent. Dig. §§ 398-405; Dec. Dig. § 138.*]
.5. Appeal and Error (§ 1139*)—Disposition of Cause—Attaching Conditions.
Where under the pleadings in an action a small balance was admittedly due plaintiff, but this not having been called to the trial court’s attention it was evidently overlooked and a verdict directed for defendant, the judgment would not be reversed for the error,, but defendant as a condition of the affirmance of the judgment would be required to stipulate that its judgment would not thereafter be interposed as a bar to the recovery of such sum.
[Ed. Note.—For other cases, see Appeal and Error, Cent. Dig. § 4448; Dec. Dig. § 1139.*]
Ingraham, P. J., and Laughlin, J., dissenting.
Appeal from Trial Term, New York County.
Action by John A. Hartford against the Greenwich Bank of the City of New York. From a judgment for defendant on a directed verdict and an order denying a new trial, plaintiff appeals. Affirmed conditionally.
Argued before INGRAHAM, P. J., and McEAUGHEIN, LAUGH-EIN, CEARKE, and SCOTT, JJ.
Herbert Barry, of New York City (Charles H. O’Connor, on the brief), for appellant.
Jesse S. Epstein, of New York City, for respondent.
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes,

Opinion:
SCOTT, J.
Plaintiff's assignor, the Great Atlantic & Pacific Tea Company, was a depositor in the defendant bank during the months of November and December, 1911, and for a considerable time prior thereto. The question in the case is whether or not the bank was justified in paying, and entitled to charge against the account of the Tea Company five checks, for the aggregate amount of $8,-060.50, drawn by said company to the order of James Wilson. That the checks bore the genuine signature of the Tea Company is undisputed, and it conclusively appears that the company was induced to draw them through the fraud of Edward Rypinski, one of its employés, in the belief that it was indebted to one James Wilson for the several amounts represented by the checks. The details of the fraudulent transactions appear without contradiction.
The Tea Company conducted a premium department through which it purchased quantities of goods to be given away to customers. Edward Rypinski was employed in the auditing department, and had .especial charge of receiving, checking up, and verifying bills for goods purchased for the premium department. He made very elaborate preparations for defrauding his employer. He procured to be printed billheads bearing the name of James Wilson, and the address, Room 1012 Fuller Building, New York. He rented a post office box in the name of James Wilson, giving to the postal authorities as reference one Swarz, whom he knew to be absent from the city, and himself under his real name óf Rypinski. He opened an account in the defendant bank under the name of James Wilson. He was introduced to the bank by his brother George Rypinski passing as George Friedman. This brother was married to a woman who carried on a business under the name of "Jeannette," and who had an account in the deT fendant bank in her maiden name of Jeannette Friedman. Having thus prepared the way, Rypinski proceeded to defraud the Tea Company into giving him a check for $1,543.50. He made out a bill upon ' one of his fictitious letter heads purporting to show that James Wilson had sold goods, to the value stated, to the Tea Company. This bill he certified in the usual manner, and such routine steps were taken that in due course a check for the amount indicated was made out to James Wilson, signed and mailed. It reached the post office box which Rypinslci had hired, whence it was taken by him, indorsed with the name James Wilson, and deposited to the credit of the account opened 'by 'Rypinslci, under the name of Janies Wilson, with the defendant bank, and the amount charged against the Tea Company's account. By a similar course of proceeding four other checks were fraudulently obtained by Rypinski, deposited with the defendant, and _ charged against the Tea Company. The aggregate amount thus obtained was over $8,000, all of which was subsequently drawn out and spent by Rypinski. The question involved in this appeal is whether the Tea Company represented by plaintiff or the defendant bank should bear the loss.
The relation between a bank and its depositor is well established, and is in a strict sense that of debtor and creditor. "In disbursing the customer's funds, it (the bank) can pay them only in the usual course of business and in conformity to his directions. In debiting his account, it is not entitled to charge any payments except those made at the time when, to the person whom, and for the amount authorized by him." Crawford v. West Side Bank, 100 N. Y. 50, 53, 2 N. E. 881, 53 Am. Rep. 152.
When a claim is made, as is made now, that the bank has paid out its customer's funds without authority, the question generally resolves itself into what was the intention of the drawer when issuing the check. If paid to one other than the payee intended by the drawer, the bank is commonly held liable to refund. Thus if there be two persons of the same name, and the drawer meant that the sum represented by the check should be paid to one of them, the bank cannot lawfully pay to the other one, and, if it does, must refund. Graves v. American Exchange Bank, 17 N. Y. 205. In many cases it has been held that if the name of the payee be forged, or if the amount for which the check was drawn be altered, or if the date of payment be changed, no matter how skillfully the forgery or alteration may be effected, the bank must refund if it wrongfully pays. In the present case none of these conditions have been shown. On the contrary, the checks were paid to the very person to whom the Tea Company intended they should be paid, viz., the person from whom it believed that it had purchased goods. It is true that it had never received any goods from the person in whose favor it drew the checks, and that it had been cheated into believing that it had so bought them, but it is very clear that no liability can attach to the bank for that fraud. Having, however, been cheated into the belief that it had purchased goods from and owed money to one James Wilson, it intended when it uttered the check that it should be paid to the person from whom, as it then believed, it had made the purchase. That person was the identical person to whom the checks were paid. This is not strictly speaking the case of a check drawn to a fictitious or nonexistent person. There was an actual person, calling himself James Wilson, although that was not his real name, and it was that person to whom the Tea Company intended its checks should be paid. It would serve no useful purpose to cite at length the many cases dealing with the liability of banks for wrongfully paying out their customers' funds. Some of them were reviewed by this court in Sherman v. Corn Exchange Bank, 91 App. Div. 84, 86 N. Y. Supp. 341, and the rule that the intention of the drawer must prevail was applied in Mercantile National Bank v. Sil werman, 148 App. Div. 1, 132 N. Y. Supp. 1017. In that case the defendant had drawn checks to the order of two officers in the army, .supposing that he was purchasing an assignment of their pay for certain months. He had had- negotiations with an impostor who personated one of the officers, and he had sent the checks to this impostor believing him to be what he represented himself to be and that he would collect the checks. It was held, however, that the form of the checks indicated the intention of the drawer that they should be paid to the payees named therein, and that payment to the impostor was unauthorized. That case was far different from this. What we have here is a successful fraud perpetrated upon the Tea Company by one of its own employés, by which it was induced to believe that it owed that employe certain sums of money. The checks in suit 'were intended to he paid in satisfaction of this supposed debt, and were in fact paid to the person for whom they were intended. No liability attaches to the bank under these circumstances.
Attention is now called to the fact that under the pleadings a small balance of $344.77 is admittedly due to plaintiff. This was evidently overlooked upon the trial, and no request made for a direction of a verdict for the amount. Under these circumstances, we do not feel justified in reversing the judgment and ordering a new trial merely for the purpose of correcting this oversight, but justice requires that defendant as a condition of the affirmance of the judgment should stipulate that said judgment shall not hereafter be interposed as a bar to the recovery by plaintiff of the sum admittedly due. Upon filing such a stipulation the judgment appealed from will be affirmed with costs.
McLaughlin and clarke, jj., concur.