Bankers Service Corp. v. Second National Bank

Headnote

Bankers Service Corpn. v. Second Nat. Bank of Allegheny, 181 App. Div. 655 , affirmed.

Appeal from an order of the Appellate Division of the Supreme Court in the first judicial department, entered February 1, 1918, reversing a judgment in favor of defendant entered upon a verdict directed by the court and granting a new trial. Plaintiff and the First National Bank of Allegheny, whose assets have been transferred to defendant which has assumed all of its obligations and liabilities, entered into a contract in writing whereby the plaintiff agreed to procure for the bank a certain number of new accounts and the bank agreed to pay plaintiff a certain amount for each account accepted. Plaintiff procured the accounts and the bank paid the agreed compensation for a part thereof. Thereafter it notified the plaintiff that certain of its accounts were undesirable and that it would refuse to pay therefor. This action was brought to recover the amount unpaid. Defendant counterclaimed for an amount which it claimed it had paid on undesirable accounts. The contract contained the following provision: “ It is understood and agreed that the bank has the right to refuse payment for depositors accepted from the corporation where such accounts in the judgment of the bank are undesirable.” The Appellate Division, construing the contract, held that it was necessary for the bank in order to take advantage of the clause of the contract entitling it to refuse payment for undesirable, accounts, to cause the depositor to sever his connection with the bank and withdraw his deposit, and on this ground reversed the judgment and directed a new trial.