Case Name: Scrantom, Executor, v. The Farmers' and Mechanics' Bank of Rochester
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1862-06
Citations: 24 N.Y. 424
Docket Number: 
Parties: Scrantom, Executor, v. The Farmers’ and Mechanics’ Bank of Rochester.
Judges: 
Reporter: New York Reports
Volume: 24
Pages: 424–430

Head Matter:
Scrantom, Executor, v. The Farmers’ and Mechanics’ Bank of Rochester.
An executor who was insolvent and indebted to the estate, having sustained a loss by fire, indorsed on his policy of insurance an assignment of it to himself as executor, and, upon receiving payment, deposited the money in a bank to his credit as executor: Held, an appropriation of it in payment of his debt.
It is no defence to the bank, against the claim of the estate, that it paid over the money upon the demand of a receiver of the executor’s property, appointed in the suit of another creditor
Appeal from, the Supreme Court. The plaintiff was one of the executors of T. M. Watson, deceased, and on the 4th. day of May, 1858, he deposited in the defendant’s bank a sum of about $350, of which $72.37, a balance-undrawn, is claimed to be recovered in the action. The account in the books of the bank was opened with “ Henry Scrantom, Executor,” and it was entered in this manner by the direction of the plaintiff. At the time of the deposit, the plaintiff was indebted to the estate which he represented in a larger sum than the amount of the deposit. The money deposited was the proceeds of a claim which the plaintiff had in his individual right against an insurance company on account of a loss by lire, of property which the company had insured. The plaintiff had procured, a draft from the company’s agent for the amount, to be drawn in his favor as executor. He left the draft with the bank for collection, and the deposit was of its proceeds. Shortly be* fore making the deposit the plaintiff, being insolvent, wrote and signed an instrument purporting to assign to himself and his co-executor, Robbins, who did not act, and had never acted, as executor, all his right and title to the -above-mentioned policy of insurance, but the paper was not delivered to any one, and it did not appear that it ever came to the knowledge of his, co-executor. In June succeeding the time of the deposit, a creditor of the plaintiff obtained judgment against him for a sum exceeding the above balance. After the return of an execution unsatisfied, proceedings supplementary to the execution were instituted, which resulted in the appointment of a receiver of the plaintiff in that action who claimed the balance of the deposit from the bank, and it was paid to him on the 4th day of August following. The plaintiff, before this suit was brought, had demanded of the defendant the money to be paid to him as executor of the estate of Watson.
The referee, before whom the case was tried, decided that the depositing of the money to a special account, in the manner mentioned, was an appropriation of it to the payment of his defalcation as executor, and that was in the nature of a preference which a person indebted, though insolvent, has a right to malee. Judgment was accordingly rendered in favor of the plaintiff for the above balance and interest. The judgment was affirmed at a general term on appeal, and the defendants appealed here.
William F. Cogswell, for the appellant.
Martin S. Newton, for the respondent.

Opinion:
Sutherland, J.
This action was certainly brought by the plaintiff as executor. The plaintiff complains as executor, and I do not see how the defendant can deny that he meant to bring the action as executor.
Mo objection was taken, either by-demurrer or answer, that Bobbins was not a party plaintiff, and the defendant could not make the objection at the trial. (Code, '§§ 144, 147, 148 Bidwell v. The Astor Mutual Insurance Company, 16 N. Y., 266; Zabriskie v. Smith, 3 Kern., 336.)
The referee did not decide that the assignment of the policy of insurance by the plaintiff to himself as executor, transferred the money secured thereby to the estate of T. M. Watson; nor do I think it was necessary for him so to decide. The draft was made payable to the plaintiff as executor; was deposited by him with the defendant for collection, and the 'avails of the draft received by the defendant and placed to the credit of Henry Scrantom, executor. I think these facts show an intention to apply this money on his indebtedness to the estate, and an appropriation of it in part payment of such indebtedness, irrespective of the question whether he could assign the policy to himself as executor. The plaintiff's indebtedness to the estate of Watson is not disputed. He had a right to pay that debt before any other debt; his co-executor Bobbins did not act, and had never acted as executor. How could he very well apply the money on his debt to the estate otherwise than as he did ? The bank certainly was a very proper place for him to keep the money of the estate in. There was no evidence of a fraudulent intent, unless an intent to prefer his debt to the estate can be called fraudulent
But assuming that his purpose was not to apply the money on his debt to the estate, but to cover it up and keep it from his creditors; what right had the defendant to adjudicate the question of fraud, and volunteer to do justice to these creditors ? What right had the defendant to pay the money to the receiver ? The defendant received the money on deposit in a fiduciary capacity of the plaintiff as executor; and I think it was a breach of the trust upon which it was received to pay it to the receiver as the defendant did. It was not a special deposit, and therefore the relation of bailor and bailee did not exist between the plaintiff and the defendant; but the money was received by the defendant upon a trust like that implied on a bailment. How it is well settled, as a general rule, that a bailee cannot set up against his bailor a better title in a third party.
But it is said if the goods are taken from the bailee by the authority of law exercised through regular and valid proceedings, it will be a defence to an action by the bailor. (Bliven v. Hudson River Railroad Company, 35 Barb., 191; Burton v. Wilkinson, 18 Vt., 186.) It is doubtful whether the bailee has a right to yield to regular legal proceedings without defending, or at least notifying the bailor of such proceedings. But however this may be, this principle will not help the defendant. The order appointing the receiver did not authorize "him to demand find receive this particular deposit or sum of money, but the property of the plaintiff generally. The defendant undertook to adjudicate, that the money was not the money of the estate of Watson, but of the plaintiff, and paid it to the receiver as the money of the plaintiff, not as the money of the plaintiff as executor, although the defendant had collected it and held it for the plaintiff as executor.
It is plain to me that the judgment of the Supreme Court should be affirmed, with costs.
Davies, Weight, Gould and Smith, Js., concurred.