Court Opinion

ID: 5328410
Source: CourtListenerOpinion
Date Created: 2022-01-08 05:03:27.459613+00
Date Added: 2024-06-11T08:29:24.896707
License: Public Domain

Bliss, J. (concurring in result).
The parties agree that the law applicable to this case is laid down in Bischoff v. Yorkville Bank (218 N. Y. 106). In that case it is stated that the defendant bank had no right to participate in a diversion of trust funds from their proper purposes and that “ Its participation in a diversion of them would result from either (a) acquiring an advantage or benefit directly through or from the diversion, or (b) joining in a diversion, in which it was not interested, with actual notice or knowledge that the diversion was intended or was being executed, and thereby becoming privy to it.” It is further stated in the same opinion: “ Although the depositor is drawing checks which the bank may surmise or suspect are for his personal benefit, it is bound to presume, in the absence of adequate notice to the contrary, that they are properly and lawfully drawn.”
Therefore, in the absence of benefit to the bank the question here is whether the bank knowingly assisted the county treasurer in diverting county funds to his own personal purposes.
Like my associate, Mr. Justice McNamee, I am entirely unwilling to accept the testimony of the defaulting county treasurer, Clyde H. *35De Witt. He is unworthy of belief. Were one to believe him, one would be compelled to reject the oral testimony of several other witnesses and actual written contemporary records, such as those of the telephone company showing messages participated in by De Witt himself.
Nor do I think it necessary, as did the trial court, to go back of the first item of defalcation for which the defendant surety company seeks to recover on its counterclaim. This is the item of $30,398.01, which on July 7, 1928, was transferred by check from the “ General Fund Account ” of the Columbia county treasurer in the plaintiff bank to De Witt’s personal account in the same bank. The deposit slip is in the handwriting of a bookkeeper of the bank. On the same day there was retransferred by check from De Witt’s personal account to the county’s “ General Fund Account ” an item of $10,075 to repay a prior embezzlement. This deposit slip is partly in the handwriting of the cashier of the bank and partly in the handwriting of the same bookkeeper. Also on the same day there was cleared through to the bank for collection and paid a check of $15,000 drawn by De Witt on his personal account payable to the order of the First Trust Company of Albany. Within a very few days there was presented for collection and paid another check dated July 7, 1928, on De Witt’s personal account, this one being for $5,323.01 payable or given to the Hudson River Trust Company of Hudson, N. Y. These three items of $10,075, $15,000 and $5,323.01 total $30,398.01 and completely exhausted the item of the same amount stolen by De Witt on July 7, 1928.
Before these transactions of July seventh De Witt’s personal account was $48.72 overdrawn. Temporarily it had a credit balance, but when his transactions of that date were completed and all cleared and paid, his account was unaltered by them. This temporary change is insufficient to charge the defendant bank with having benefited from the embezzlement by De Witt of the $30,398.01 item, and could not have possibly furnished any motive for participation by the bank. In this respect I think that the findings of the trial court should be reversed and the participation by the bank in the embezzlements of De Witt placed on firmer ground.
A careful scrutiny of this transaction of July 7, 1928, shows clearly that the bookkeeper and cashier both had knowledge of the illegal diversion and joined in its accomplishment. They knew that county funds were being transferred illegally to De Witt’s personal account and that he was making up a previous withdrawal by repaying to the county the item of $10,075 previously embezzled. These conclusions are irresistible.
*36Thus the case against the plaintiff is established by its own acts, for once chargeable with knowledge of De Witt’s embezzlement, it was its clear duty not only to closely scrutinize his further transfers to his own accounts but to reveal that which had already occurred. It may be readily conceded that the rule of responsibility set forth in the Bischoff case is not to be extended (Whiting v. Hudson Trust Co., 234 N. Y. 394), but its application must not be denied where the circumstances clearly warrant.
The items for which the defendant surety company has had judgment on its counterclaim begin with the one of $30,398.01 on July 7, 1928. They consist of items totaling $46,398.01 transferred by De Witt directly into his personal account in the plaintiff bank, $4,000 cashed at this bank, and $36,601.99 deposited to his personal credit in the Hudson River Trust Company, and total $87,000. Of the amount of $36,601.99 deposited in the Hudson River Trust Company, one item, $3,601.99, was by cashier’s check of the plaintiff bank. These were all transfers to De Witt personally and, in view of its knowledge of his machinations, the plaintiff may be held to have participated therein.
The judgment should be affirmed.