Ehle v. Chittenango Bank — 24 N.Y. 548

Majority

p. 548

Ehle v. The Chittenango Bank.

Headnote

A dividend of the profits of a hanking association, declared hy the directors “payable in New York State currency,” is payable in cash. The directors have no authority to declare it payable otherwise.

Evidence of an understanding by the cashier that ■ “ State currency ” meant country bank notes current in New. York city at a discount of a quarter of one per cent, but not showing a general usage in that sense, is inadmissible. - - . •

Appeal from the Supreme Court. The plaintiff sued, as a stockholder of the bank, to recover fifty-six dollars due him for a dividend. Upon the trial it appeared that the defendant was a banking association organizéd under the genferal law of 1838. The directors declared a dividend of four pér cent,'.payable, by the terms of their resolution,'“in New. York State currency.” - The referee, under exception, allowed the'cashier ■ to testify that,- by the térms “New York State• currency," he understood .'bills that :are quoted at a quarter of one per cent below par in the city of New York. The plaintiff demanded

p. 549

his dividend in specie or in the bills of the bank, which was refused; the defendant tendering to him the bills of solvent country banks of this State (other than its own), which were' current in New York city at a discount of one-quarter of one per cent.. The referee reported in favor of the defendant, and the judgment entered upon his report having been affirmed at general term in the fifth district, the plaintiff appealed to this court.

Charles Stébbins, for the appeEant.

Sidney T. Fairchild, for the respondent.

I am for reversal, for the foEowing reasons:

1st. The dividend declared and demanded was, not of cur rent or úncurrent bills or' property possessed by the bank, (which might be specifically divided amongst the stockholders), but was a portion of the surplus or net earnings of the association. It was a dividend of $6,000 of cash profits realized, and set apart as due to the stockholders. So much of the cash earnings of the association were withdrawn from its business and divided pro rata amongst the stockholders as the earnings of their capital invested in the stock. The bank became the debtor of the stockholders when the dividend, by the terms of the resolution, was payable. I think that the stockholder was entitled to demand his dividend in money; and that an offer to pay in uncurrent biEs, of banks that might happen to be solvent when such dividend was payable, would not exonerate the association. If the terms “New York State currency,” employed in the resolution, mean anything other than money, or mean, as the cashier seems to have understood, bank bEIs, that are 'quoted at a quarter per cent below par in the city of New York, there was no authority in the board of directors .to declare that a dividend of the cash profits of the bank should be paid in depreciated bank notes.

2d. I think the question put to the cashier: “ What do you understand by New York State currency ?” was incompetent and inadmissible. His understanding of the phrase was imma

p. 550

ferial, and the evidence "did not tend, in any degree, to show in what sense the directors understood, or for what ptirpose they Used it in the resolution. The term “Hew York State currency ” must be held to mean what the ordinary signification of those words imply, unless, by some .general known usage, some 'other 'technical meaning can be attached to it. The testimony of the -cashier as.to whát he understood the phrase to mean, did not tend to prove any such known usage; or that the directors, when they used the term in their resolution making the dividend, understood it as he did.

The judgment should be reversed, and a new trial ordered, with costs to abide event.

Judgment reversed, and new-trial ordered.