Case Name: William B. Steiner, as President of Washington Council, No. 19, Order of Chosen Friends, Appellant, v. The East River Savings Institution, Respondent; William J. Martin and Benjamin H. Reeve, as Receivers of the Order of Chosen Friends, Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1901
Citations: 60 A.D. 232
Docket Number: 
Parties: William B. Steiner, as President of Washington Council, No. 19, Order of Chosen Friends, Appellant, v. The East River Savings Institution, Respondent. William J. Martin and Benjamin H. Reeve, as Receivers of the Order of Chosen Friends, Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 60
Pages: 232–237

Head Matter:
William B. Steiner, as President of Washington Council, No. 19, Order of Chosen Friends, Appellant, v. The East River Savings Institution, Respondent. William J. Martin and Benjamin H. Reeve, as Receivers of the Order of Chosen Friends, Respondents.
Interpleader — not granted on the application of a savings hank which shows simply ■ that another claimant has demanded, a deposit.
The discretionary power given to the court by section 620 of the Code of Civil Procedure, to grant an order of interpleader, will not be exercised upon a mere statement that a demand has been made or a notice served upon the moving party by the person sought to be interpleaded; it is necessary for the moving party to show that the claim made by the party sought to be interpleaded has some- reasonable foundation, and that the moving party cannot, without peril, determine to which of the claimants he should pay the fund.
A savings bank, which is sued by the .president of a subordinate council of Chosen Friends for moneys deposited in the name of such subordinate council, should not be permitted to interplead the receiver of the parent body, the Supreme Council of the Order of Chosen Friends, upon showing that' such receiver claims that the deposit is the property of the parent body and should be paid to him as receiver, where it appears that, under the by-laws of the organization, the moneys deposited did not belong to the parent body but: solely to the sub- . ordinate council, and that the order appointing the receiver only required the subordinate council to pay to the receiver the property of the parent body. Section 115 of the Banking Law (Laws of 1892, chap. 689), providing that, in an action brought against a savings bank to recover money on deposit with it,
■ the court may make parties defendant thereto or interplead persons, not parties ' to the action, who claim the same fund, does not make it mandatory upon the court to make the order of interpleader upon an application therefor, but commits the matter to its discretion.
Ingraham and Hatch, JJ., dissented.
Appeal by the plaintiff, William B. Steiner, as president of Washington Council, No. 19, Order of Chosen Friends, from an order of the Supreme 'Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 1st day of March, 1901, granting the defendant’s motion to inter-plead William J. Martin and Benjamin H. Reeve, as receivers of the Order of Chosen Friends, as defendants in the place and stead of the defendant, the East River Savings Institution.
Gilbert D. Steiner, for the appellant.
Michael C. Gross, for the defendant, respondent.
William L. Mathot, for the receivers, respondents.

Opinion:
Patterson, J.:
The defendant, a savings institution, held upon deposit a sum of money in the name of " Washington Council, No. 19, Order of Chosen Friends." The plaintiff, as president of that council, brought this action to recover the amount of such deposit. Thereupon the defendant presented to the court an affidavit made by its secretary, setting forth, among other things, that a demand for the same sum of money was made upon the defendant by William J. Martin, as receiver of the " Order of Chosen Friends," and that such receiver claimed and still claims that the fund on deposit was the property of the " Order of Chosen Friends," and belonged to and should be paid to him as such receiver; that there thus being conflicting claims of the plaintiff and of the receiver of the " Order of Chosen Friends " to the same sum, the defendant cannot safely determine to which of said claimants it" should be paid; that .it is ready and willing to deposit said sum in court, or as the court may direct, upon being discharged from further liability to either party; that the conflicting claims have been made without collusion of the defendant with either of the claimants, and that the defendant has no interest in said sum, except to pay the same to the person rightfully entitled thereto. The defendant, therefore, asked that an order be made permitting it to bring such sum. into court, and for an order interpleading the receiver, and that it be discharged from further liability for the moneys so held by it.
Upon this affidavit, an order to show cause issued, and upon the return thereof the motion was opposed by the plaintiff, and affidavits were presented on his behalf which showed that the plaintiff was the president of a subordinate lodge of the " Order of Chosen Friends; " that under the laws of that society, the Washington Council was the agent of its members to collect and then pay monthly to the " Supreme Council of the Order of Chosen Friends " a certain sum for each member to constitute a relief fund; that that fund is the only one to which the " Order of Chosen Friends " or the supreme council of the " Order of Chosen Friendswas entitled to receive from the Washington Council, and that it was entitled to no other moneys or funds of said Washington Council. There were other affidavits read and filed by the plaintiff, which showed that the fund on deposit in the East River Savings Institution, and which is the subject-matter of this action, is not a relief fund, and that neither the Order of Chosen Friends nor the supreme council of that order was entitled to the fund now on deposit with the defendant and that such fund was entirely at the disposition of the Washington Council and belonged to it in independent ownership.
Mr. Martin was. appointed one of two receivers of the parent organization, and appears to be the only one who qualified. By the order of his appointment it is provided as follows: " That all persons or corporations indebted to said defendant (that is, the parent organization) in any manner, shape or form, having or holding any funds, properties or monies of said defendant on deposit or otherwise, do refrain and they are hereby restrained and enjoined from in any manner delivering, paying or otherwise disposing of the same to any person or persons, corporation or corporations, save and excepting to said receivers, without further order or leave of the court, to be had and obtained only upon notice to the plaintiff and the said receivers herein duly appointed ; and it is further ordered that the defendant (that is, the parent organization), its officers, agents and all its subordinate branches and councils and officers, are hereby directed to assign, transfer-and deliver to the said receivers all the property and assets of the said defendant (the parent organization) in their or either of their possession or under their control," etc.
By the order cz-eating the z'eeeivez'sliip, the subordinate lodges or councils of the " Order of Chosen Friends " were only required to pay to the receiver such money as belonged to it. , The defendant in making its application failed to state any fact tending to show that the receiver was entitled to the money on deposit with the defendant in the name of the Washington Council. It only showed that a claim had been made by the receiver. The court below granted the motion and made the order applied for.
Considei'ing the application as made under section 820 of the Code- of Civil Procedure, the order was improperly granted. The discretion given to the court by the provisions of that section should not be exercised in favor of an applicant upon a mere statement that a demand has been made or a notice served upon a defendant seeking to interplead the demandant. It is necessary for the mow ing party to show that the claim made by the third party has some reasonable foundation and that the stakeholder cannot, without peril, determine to which of the claimants he should pay the fund. (Wells v. National City Bank, 40 App. Div. 498, and cases there cited.)
It is contended, however, that the defendant was entitled to the order appealed from under the provisions of the 2d subdivision of section 115 of the Banking Law (Laws of 1892, chap. 689), which provides that in all actions against savings banks to recover for money on deposit therewith, if there be any person or persons not parties to the action who claim the same fund, the court in which the action is pending may, on the petition of such savings bank and upon eight days' notice to the plaintiff and such claimants, make an order amending the proceedings in the action by making such claimants parties defendant thereto, and the court shall thereupon proceed to determine the rights and interests of the several parties to the action in and to such fund. By the 3d subdivision of the same section it is provided, among other things, " or the deposit in controversy may be paid into court to await the final determination of the action; and when so paid into coúrt, the corporation shall be stricken out as a party to any such action, and its liability for such deposit shall cease."
It is to be noticed that the terms of the provision of the Banking Law quoted do not make it mandatory upon the court to make the order upon application. It is left discretionary with the court to grant or refuse the application. The language of the statute is, that the court in which the action is pending may on petition of the savings bank make the order where some one not a party to the action claims the same fund. The same reason that requires the construction which the courts have given to section 820 of the Code of Civil Procedure applies with the same force to. the construction that should be given to the provisions of the section quoted of the Banking Law. It cannot be regarded that the legislative intent was to authorize a savings bank to retain from the depositor with whom it has entered into a contract the moneys belonging to him upon the simple demand or notice of a third party. The word " claim " as used in the statute must be interpreted and applied in its legal sense. " The ordinary signification of claim is that of a right dr title, actual or supposed, to a debt, privilege or other thing in the possession of another." (Gardiner, J., in Lawrence v. Miller, 2 N. Y. 254.) The court when called upon to exercise its discretion should be able to see that there is some foundation for the claim of a third party, and that it is not merely capricious Or arbitrary or fanciful; and in order that this may be done, it is the duty of a person asserting the claim to show that he has some ground upon which he may reasonably assert the claim, or base a supposition that he is entitled to what he demands. Here, not only has the defendant failed to furnish the necessary facts to support a real or supposed claim, but the plaintiff has shown in affidavits uncontrádieted and not replied to, that by the order of Ms appointment the receiver of the " Order of Chosen Friends " is entitled to a relief or mortuary fund only,, and it is made to appear affirmatively that the money on deposit with the- defendant is not part of a relief or mortuary fund. Under such circumstances the plaintiff should not be embarrassed in the enforcement of its demand arising under a direct contract with the defendant. There is no reason shown for obstructing the enforcement of his legal rights, since the order appointing the receiver only authorizes him to collect such moneys as belong to the " Order of Chosen Friends " receivership, and the subordinate councils are only required to pay over moneys coming within that category.
The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.
Van. Brunt, P. J., and McLaughlin, J., concurred; Ingraham and Hatch, J J., dissented.