Steiner v. Mutual Alliance Trust Co. — 139 A.D. 645

Majority

p. 645

Lawrence Steiner, Respondent, v. The Mutual Alliance Trust Company of New York, Appellant.

First Department,

July 7, 1910.

Headnote

Banks — discount of note — agreement of depositor that discount be charged to his account — rights of banlf as against assignee for creditors.

A bank which with the consent of a depositor charges his account with notes previously discounted owing to the fact that the indorser had become insolvent and no other indorser could be obtained, is entitled to retain the money as against an assignee for the benefit of the creditors of the depositor, and this although the notes were charged to him before maturity.

It is not necessary that there be a consideration for such agreement, as there is no law which prevents a debtor from paying his debt before it is due:

Appeal by the defendant, The Mutual Alliance Trust Company of New-York, 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 26th day of November, 1909, upon" the verdict of a jury, and also from an '"order entered in said clerk’s office on the 26th day of November, 1909, denying the defendant’s motion for a new trial.

Eugene G. Kremer [Charles T. Tittman of counsel], for the appellant.

Milton Dammann, for the respondent.

, This is á suit by the assignee of one Louis Berlin to recover from the defendant moneys which it is claimed said Berlin had on deposit with it. . In April, 1907, for the purpose of procuring credit with the defendant, said Berlin made a sworn statement of his financial condition, by which it appeared that his net worth was $2,150. He agreed in that statement that, in . case of his failure or insolvency, or of any change in his financial condition, materially reducing his ability to pay, any and all claims and demands against him, held by the defendant, should at the defendant’s option immediately become due and payable. In July, 1907, he procured the defendant to discount two $500 four months’ notes made by him and indorsed by “ Sol. Littenberg & Sonand on

p. 646

September 19, 1907, lie procured the defendant to discount another note for $500, similarly indorsed. On the'20th of September, 1907, the firm of Littenberg & Son failed. On the 4th of October, 1907, Berlin made an assignment for the’ benefit of his creditors, who realized the sum of $505. When informed of the failure of Littenberg & Son on the twentieth of September, the defendant’s cashier sent for Berlin and demanded of him that .lie procure another indorser, informing him that, unless he did, the defendant would charge to his account the said notes indorsed by Sol. Littenberg & Son. The said cashier, who is not now connected with the defendant, and another employee of the defendant b'oth testified that said Berlin consented to the notes being charged off if - he could not get another indorser. Their testimony is undisputed, and the said Berlin, who was called by -the, plaintiff, admitted that he undertook to get another indorser but failed. The defendant did charge the said notes to Berlin’s account with the result that, at the time of the assignment under which the plaintiff claims, Berlin had to his credit only the sum of $23.67. The defendant moved at the' close of the evidence that the court direct a verdict for that sum but that motion was denied, and two questions were submitted to the jury: (1) Whether Berlin made false representations to the defendant, respecting the solvency of the firm of Sol. Littenberg & Son; (2) whether his financial condition materially changed.

The undisputed evidence' required the direction of a verdict for the plaintiff for the sum of $23.67, irrespective of the questions submitted to the jury. If the maker of the notes consented that they be charged to his account before they were due that was a payment of them. While it is claimed that there was no' consideration for such agreement we know of no rule of law which prevents a debtor from paying his debt before it is due.

The judgment should be reversed and a new trial granted, with 30sts to appellant to abide' the event.

Ingraham, P. J., Laughlin, Clarke and Scott, JJ., concurred.

Judgment and order .reversed, new trial ordered, costs to appellant to abide event.