Case Name: Edward Whitehouse, Respondent, v. The Bank of Cooperstown, impleaded, etc., Appellant
Court: New York Commission of Appeals
Jurisdiction: New York
Decision Date: 1872-01
Citations: 48 N.Y. 239
Docket Number: 
Parties: Edward Whitehouse, Respondent, v. The Bank of Cooperstown, impleaded, etc., Appellant.
Judges: 
Reporter: New York Reports
Volume: 48
Pages: 239–247

Head Matter:
Edward Whitehouse, Respondent, v. The Bank of Cooperstown, impleaded, etc., Appellant.
An entry was made upon the journal of a hank in the regular day’s business, charging certain mortgages held by the bank to the president and principal stockholder, who was the mortgagor, against a credit to him of a larger amount appearing upon the books of the bank. The bookkeeper, who made the entry, had no recollection of the transaction. The mortgages were subsequently transferred by the bank to a Iona fide purchaser for their face, the president and the bank representing them, to be wholly unsatisfied and valid liens.
In an action by a subsequent incumbrancer to remove the liens of the mortgages,—Held, that the entry alone, without some evidence of its adoption by the’ mortgagor and the bank, was not sufficient proof of the payment of the mortgages; and the subsequent action of both, in negotiating the mortgages rebutted any inference of acquiescence or adoption. (Lott, Oh. 0., dissenting.)
(Argued September 25, 1871;
decided January term, 1872.)
Appeal from a judgment of the General Term of the Superior Court of Buffalo, affirming a judgment of the court, on the trial at Special Term, in favor of plaintiff. It appeared that in January, 1849, five several mortgages were, for a valuable consideration, duly executed, acknowledged and delivered by Aaron D. Patchen and wife to Aaron D. Patchen as president of the Patchen Bank of Buffalo, upon certain lands in Erie county, to secure the payment of several sums of money amounting in the aggregate to something over $7,300, each of which was duly recorded in the office of the clerk of the county of Erie, and afterward in the same month (January, 1849) duly assigned and delivered by Patchen, as president of the Patchen Bank of Buffalo, to the comptroller of this State, his successor or successors in office, or assigns, for and as a security for the redemption of the bills or notes of that bank. While these several mortgages were the property of the State' and in the possession of the banking department thereof, and on the 2d day. of January, 1854, Patchen and wife executed and delivered to the plaintiff another mortgage covering the same premises described in the previous five mortgages to secure the payment to him of something over $18,000, the execution of which having been on the 9th day of February, 1854, duly acknowledged, was, in the same month, duly recorded in the office of the clerk of said county of Erie; after the execution and delivery of this mortgage to the plaintiff, and on the 20th day of February, in the same year, each of the several five mortgages by reassignment became again the property of the Patchen Bank. The plaintiff proved, under objection, by a party, that he had been a book-keeper in the Patchen Bank; that four days after these mortgages were reassigned to the Patchen Bank, he, as such book-keeper, made an entry on the journal of the bank, which appeared in that day’s business of the bank, charging these five mortgages to Patchen against a credit to Patchen for a larger amount then appearing on the books of the bank; at the time of testifying, he had no recollection of the transaction. This entry was the only evidence of the payment by a surrender to Patchen of these several mortgages.
On the fifth of the following April the defendant, the Bank of Cooperstown, relying upon the representations of Aaron D. Patchen and the Patchen Bank that each of the several five mortgages were wholly unsatisfied and valid liens upon the premises in them respectively described, and in ignorance of any pretended payment of either of them, purchased them of the Patchen Bank and paid for them therefor the full amount of principal secured thereby, and received from the Patchen Bank an assignment of them; and on the day following (April 5th, 1854) assigned the same to the superintendent of the banking department as security for the circulating notes or bills issued to it. Default having been made in the payments upon plaintiff’s mortgage, he commenced an action to foreclose it. In that action the defendants here were not made defendants. Plaintiff recovered judgment of foreclosure, under which, in September of the same year, he purchased the mortgaged premises. In August following (1863) the plaintiff brought this action making Van Dyck, as superintendent of the banking department, and the Bank of Cooperstown, the only parties defendants, alleging that the five mortgages held by them as herein stated were, on or about the 24th day of February, 1854, fully paid and satisfied by Aaron D. Patchen to the Patchen Bank, and, hence, demanded that they be, as against his mortgage, declared invalid or liens subordinate to it; and the court at Special Term, upon the evidence as herein stated, found, as a fact, that on the 24th day of February, 1854, the said five mortgages were, each of them, fully paid by Aaron D. Patchen to the Patchen Bank of Buffalo, and became thereby fully satisfied; to which finding the defendants duly excepted. The legal conclusion of the court was, that the defendants five mortgages were a lien subordinate to the plaintiff’s mortgage, and ordered judgment that unless the defendants redeem in six months they be forever barred; to which conclusion of law the defendants excepted. Judgment was entered as ordered.
J. L. Burditt for appellants. [Points not received by reporter.]
John Ganson for respondent.
The making of the entries per se produced the payment. (Jermain v. Denniston, 2 Seld., 276; Pratt v. Foote, 5 Seld., 463.) The mortgages were transferred after they were paid, and as against plaintiff defendants so took them, and they cannot claim they were resuscitated as to plaintiff by any act between them and the mortgagor. (Mickles v. Townsend, 18 N. Y. R. [4 Smith], 575; Purser v. Anderson, 4 Edwards’ R., 17; Rosevelt v. Bank of Niagara, 1 Hopkins, 579; affirmed, 9 Cowen, 409.) Defendant is entitled to redeem the premises from plaintiff. (Brainard v. Cooper, 6 Seld., 366; Bogert v. Coburn, 27 Barb., 230.)

Opinion:
Gray, C.
This case presents but a single question for our .consideration, and that is, whether the mere entry by the book-keeper of the Patehen Bank of a charge upon the journal of that bank, of which Patehen was president, and in which he was a principal stockholder of these five mortgages to Patehen against a credit to him of a larger amount appearing on its books, though the entry appeared as if it was made in the ordinary business of the bank on the day of its date, was unsupported by any evidence that Patehen desired thus to pay the mortgages, or that the bank desired to have them thus paid sufficient to justify a finding that the mortgages were paid. The fact that Patehen was president of the bank, and one of its principal stockholders, did not destroy its individuality. There yet remained two parties to be affected by the entry: one the Patehen Bank, and the other Aaron D. Patehen, neither of whom had the right without the consent of the other to authorize such an entry, and the book-keeper of the bank, unbidden by either, clearly had no right to make it. He, so far as his recollection served him, was without any knowledge as to whether the parties had agreed upon such a mode of payment; Ms only knowledge on the subject was that the entry appeared there in his handwriting, but he was destitute of any recollection why it so appeared. He had no right to negotiate or agree for the parties; Ms duty as book-keeper was limited to the entry of what others directed. (Potter, Receiver, v. The Merchants' Bank of Albany, 28 N. Y., 641.) Hnless, therefore, there was some evidence of the adoption of this entry as well by Patehen as by the bank, the inference that Patehen had in this way paid the mortgages was not justified. What occürred after the entry, instead of affording evidence of acquiescence or adoption, establishes the reverse. On the fifth of the following April, the bank and Patehen both asserting that the mortgages were wholly unpaid, the bank for a full price sold and assigned them to the defendants. The Bank of Cooperstown and Patehen continued to pay the interest upon them. There is a further fact, not without some significance, and that is that the plaintiff, after the lapse of seven years after the making this entry, foreclosed his mortgage, making a large number of persons whom he alleged to be subordinate incumbrancers, parties; omitting to include the defendents, thus affording an inference that these mortgages were, as all parties then understood, unpaid. It is quite unnecessary to pursue the discussion, inasmuch as we may place our disposition of the case upon authority. (Gibson T. Williams and others v. The same defendants, Court of Appeals not reported.) These cases are in all respects alike, except that in the case referred to the mortgage was over due; in this they were not due. This difference in fact fails to make one in principle. The rule of evidence is the same in each case. The judgment appealed from should be reversed and new trial granted, costs to abide event.