Case Name: Martin Cassidy, Respondent, v. Frederick Uhlmann, Appellant, Impleaded with Joseph F. Blaut and Ronald T. McDonald
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900
Citations: 54 A.D. 205
Docket Number: 
Parties: Martin Cassidy, Respondent, v. Frederick Uhlmann, Appellant, Impleaded with Joseph F. Blaut and Ronald T. McDonald.
Judges: 
Reporter: Appellate Division Reports
Volume: 54
Pages: 205–214

Head Matter:
Martin Cassidy, Respondent, v. Frederick Uhlmann, Appellant, Impleaded with Joseph F. Blaut and Ronald T. McDonald.
Bank director—liability of, where deposits are received, after his knowledge of the banlds insolvency — res gestee characterizing; the intent.
In an action against a director of a bank, for fraudulently receiving deposits at a time when he knew that the bank was hopelessly insolvent, it appeared that the deposits in question were made on Monday, August 7, and Tuesday, August 8, 1893. There was evidence that the defendant became aware of the insolvency of the bank during the preceding week, and that he took part in a discussion between the directors as to the propriety of continuing to receive ■deposits, after which the cashier was directed to receive deposits made on Monday in a certain manner designed to protect the depositors; that for a time •on Monday the deposits were disposed of according to these directions and were not turned into the general assets of the bank, but that during the day a message was sent to the cashier to receive deposits in the usual manner; that thereupon the deposits previously made were turned into the general assets of the bank, and that this course was pursued from that time until the bank finally closed its doors on Tuesday. It did not appear whether the defendant directed the deposits made on Monday to be turned into the general assets of the bank or whether he knew that such directions were, given.
JSeld, that the evidence warranted a finding that the defendant not only knew that the bank was insolvent at the time these deposits were made, but that he actually took part in directing the receipt of such deposits;
That if, after acquiring knowledge of the insolvency of the bank, the defendant for any reason directed that deposits should be accepted in a qualified way so that the depositors should be protected, he was bound to see that such directions were obeyed;
That evidence that on the evening of August 8, 1893, after the bank had finally closed its doors, several of the depositors of the bank, including the defendant, held a meeting, after which corporations, of which the defendant and his. brother were officers, and the State Treasurer drew checks for the amount of their respective deposits in the bank, which checks were presented and paid through the clearing house on the next day, although in the usual course of business such presentation could not have been made before August tenth, is admissible as part of the res gestee to characterize the intent with which the deposits were received on Monday and Tuesday.
Ingraham, J., dissented.
Appeal by the defendant, Frederick Uhlmann, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of New York on the 23d day of November, 1899, upon the verdict of a jury, and also from an order entered in said clerk’s office on the 5th day o'f December, 1899, denying the said defendant’s motion for a new trial made upon the minutes.
William A. Jenner, for the appellant.
Harold Nathan, for the respondent.

Opinion:
Rumsey, J.:
The jilaintiff, as assignee of several persons who made deposits in the Madison .Square Bank on the 1th and 8th of August, 1893, sued the defendants, who were directors of the bank, for fraudulently receiving deposits at a time when they knew that the bank was hopelessly insolvent. The appellant Uhlmann alone defended. ITe gave no evidence upon the trial and the case stood upon the evidence offered by the plaintiff. There was no dispute that the deposits were made by the plaintiff's assignors as alleged in the complaint. Neither was there any dispute that at that time the bank was insolvent. The court submitted to the jury two questions: First, " did the defendant know at the time the several' deposits in question were taken by the bank that the bank was insolvent ? secondly, " did the defendant take part in directing the receipt of the deposits by the bank, knowing that it was insolvent ? " Each of these questions the jury answered in the affirmative. The amount of the deposits was not disputed, and the jury rendered a general verdict for that amount, which was $6,491.86. A motion for anew trial was denied; judgment was entered upon the verdict, and from the order and the judgment thus entered this appeal is taken.
The learned counsel for the appellant insists that the defendant Uhlmann, being a director only of the bank and not an officer-engaged in its active management, stood in no such relation to a. depositor as Would enable that depositor to- charge him with fraud because the dejDosits were received by the bank at a time when it. was insolvent. It is not necessary in deciding this case to consider at any length the duties and responsibilities of a director of a bank who takes no part in. its active management and is not acquainted with its condition. Whatever may be the extent of the responsibility of such a director in respect of the business of a bank, Mr. Uhlmann did not stand in that position. The evidence showed •without any dispute that at a very early day of the month of August, Mr. Uhlmann took steps to actually acquaint himself with the situation and condition of the bank; and the jury have found not only that he had become aware at the time these deposits were made that the bank was insolvent, but that he actually took part in directing the receipt of these deposits. These findings were warranted by the evidence. The testimony was that these deposits were taken to the bank on Monday and Tuesday, the 7th and 8th of August, 1893. The evidence is undisputed that during the week preceding Mr. Uhlmann was at the bank not only during business hours but during the evenings with other directors; that he caused a statement of its affairs to be prepared, and that after an examination of this statement several days before the deposits were taken by the; bank he became aware of its insolvency. It was also shown that the question of receiving deposits was discussed between the directors, one of whom was the defendant Uhlmann. It appeared that directions were given to the cashier as to the custody of deposits taken on Monday ; that for a time deposits were disposed of according to those directions, but that during the day a message-was sent to the cashier to receive deposits m the usual manner, and that the deposits which had been previously taken were turned into-the general assets of the bank, which had not been done until the-message was delivered, and from that time until the bank finally closed its doors on Tuesday deposits were received in the usual way in which solvent banks receive the deposits of their customers. That all this was done, and express directions were given to receive the deposits on Monday was known to the defendant, and this course was agreed upon by him after a discussion of the propriety of receiving deposits in view of the insolvency of the bank. Whether he directed that the deposits made on Monday should be turned into the general assets of the bank or whether he knew that such directions were given, does not appear nor is it in our judgment important. He did know that the bank was insolvent. He must necessarily have known that all deposits made after that condition was discovered were received in fraud of the persons making them, and if for any reason he directed that deposits should be accepted in a qualified way so that the depositors should be protected, he was bound to see that the deposits thus received were kept in the manner in which the employees of the bank had been directed, to keep them. It does not lie in his mouth after .the receipt of these deposits to say that he did not pay sufficient atten-' tion to the business after that time to continue to the depositors the protection which it is said the qualified receipt would have given to them.
It is said that this mode of receiving the deposits was justified by a decision of the Court of Appeals. Whether this was so is of no importance because that course of business was not continued and the deposits were received in the usual manner on .Monday afternoon and on Tuesday, and those received before that time- were-turned into the general assets of the bank. As has been found by the jury, the defendant took part in the receiving of the deposits after the insolvency of the bank was known. Therefore, he is to be judged in the same way that any officer of a bank is, who, knowing its condition and knowing it to be insolvent, causes its business to be continued. This is not the case of a director who, after deposits have been received, by an insolvent bank without his knowledge either of the. receipt of the deposits or the insolvency of the bank, seeks to shelter himself from responsibility on the ground that he is unaware of its condition, but that of a person in authority who, knowing of the condition of the bank and knowing of its insolvency, takes upon himself after that time to give express directions that the deposits shall be received. Such an act is by statute made a misdemeanor (Penal Code, § 601), and the Court of Appeals has held that a banker with knowledge that his bank is insolvent cannot honestly continue in business and accept the money of his customers, and though he. does so without any actual intent to defraud he will be held to have that intent if he continues to receive deposits under those circumstances. (Anonymous, 67 N. Y. 598; Cragie v. Hadley, 99 id. 131.) If it were necessary to determine here as an original question whether the appellant was, responsible .for the receipt of these deposits under the circumstances, the cases just cited would be sufficient to establish that responsibility,. but the question is not. an original one in this court. It has . been, determined in an action brought by this plaintiff against this defendant upon the same cause of action, where it was held that the receipt of the deposits under the circumstances disclosed-in this case was fraudulent as against the depositors and they were entitled to recover the amount of their deposits against him. (Cassidy v. Uhlmann, 27 App. Div. 80.) It is quite true that that case was reversed in the Court of Appeals, but the reversal was solely upon a question of .evidence which is not. presented here, and nothing was said in the opinion of the Court of Appeals to disapprove the rule of law there laid down upon the general proposition.
There remain simply the. questions of evidence which are presented upon this appeal. All were presented upon the trial of the case of Cassidy v. Uhlmann (27 App. Div. 80), and were there disposed of against the contention of the appellant. The determination of these questions there made was correct. The bank closed its doors on the afternoon of the 8th of August, 1893, and was not again opened for business. On the evening of that day a meeting of several of the directors, among whom was the defendant, was held at the office of the bank. The State Treasurer, who had deposited a large amount of money in the bank, was also present. The East River Bridge Company, of which the appellant was president, was also a depositor to the amount of $50,000. Another corporation, in which a brother of the appellant was an officer, had a deposit of $5,000 in the bank., The plaintiff proved that on Tuesday evening after that meeting checks were drawn by the State Treasurer for the amount of the State moneys in the bank, by the East River Bridge Company and by the Glenn Ridge Mining and Quarry Company, the company of which the appellant's brother wras an officer, for the amount of their respective deposits, and that these checks were presented and paid through the clearing house the next day, although in the usual course of business such presentation could not have been made before August tenth. This evidence was received under the objection and exception of the defendant's counsel, and it is now insisted that the court erred in admitting the testimony of these withdrawals. It appeared that the State Treasurer was called into the meeting of the directors on Tuesday night and it also appeared that after that meeting, and the jury might have assumed as a result of it, these several cheeks were drawn. The question is whether the appellant, in receiving deposits on the seventh or eighth of August, was guilty of a fraudulent act-towards the depositors whose money had been paid in during those days. Any act from which it might be inferred that the appellant had an intent to defraud those depositors was clearly competent.
The appellant knew on Saturday that the bank was insolvent, yet with that knowledge he permitted deposits to be received on Monday and Tuesday.' In the evening after it had been determined to-close the doors of the bank, he was present at a meeting with other-directors, and as a result of that consultation favored depositors, one of them the company of which he was president and another a. corporation in which his brother was interested, were permitted to withdraw large amounts of money not in the ordinary course of business.- The effect of this was largely to • diminish . the amount upon which the depositors could rely for the repayment of the: moneys they had put into the bank during the two days before, and to that extent it operated to injure them. This act of the appellant might properly be shown to characterize the intent with which the deposits were received on Monday and Tuesday. Certainly if he had taken that money to pay his own debt from the bank every one would assent that it was cogent evidence tending to show the intent with which the deposits had been received during the previous two days. That the debt was. not his own, but belonged to corporations in which he or members of his family were interested,, while it may diminish the weight of the evidence, does not takeaway its competency. It was clearly, we think, a part of the res-, gestae, and the jury might be permitted to refer to it as giving some light upon the intent with which the deposits were received. So, even if the question had not been determined by this court in Cassidy v. Uhlmann (27 App. Div. 80), we would hold that the evidence was competent. We have examined the other points raised by the appellant and find no error in the rulings.
The judgment and order must, therefore, be affirmed, with costs-to the respondent.
Van Brunt, P. J., McLaughlin and Hatch, JJ., concurred Ingraham, J., dissented.