Hyperlawhypertext legal database La Montagne v. Bank of New York National Banking Ass'n 125 N.Y.S. 1104

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La Montagne v. Bank of New York National Banking Ass'n

125 N.Y.S. 1104 Court N.Y. App. Div. Decision date 1910-12-02 English

Delivered by SCOTT, J.

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p. 1104
LA MONTAGNE et al. v. BANK OF NEW YORK NAT. BANKING ASS’N.
(Supreme Court, Appellate Division, First Department.
December 2, 1910.)

Headnote

1. Appeal and Error (§ 1097[2] )—Law op the Case.
The decision of the Court of Appeals is the law of the case which the Appellate Division on a subsequent trial must follow unless such new facts have been established on the retrial as to make the decision inapplicable.
[Ed. Note.—For other cases, see Appeal and Error, Cent. Dig. § 4304; Dec. Dig. § 1097.*]
p. 1105
2. Banks and Banking (§ 129[2] )—Deposits—Title to Funds of. PabtnebSHIP.
Where a deposit in a bank was made with a view to the formation of a partnership by partners in an old firm and third persons, the partners of the new firm, the moment it became organized, could draw on the account in the name of the new firm, and the bank must honor their checks.
[Ed. Note.—For other cases, see Banks and Banking, Dec. Dig. § 129.*]
3. Banks and Banking (§ 129*)—Payment of Check—Liability of Bank.
A new firm took over the assets and continued the business of the old firm, and was required to pay the debts of the old firm up to the value at least of the assets received. A partner of the new firm drew a check on its deposit to pay a bona fide debt of the old firm to the bank on an overdraft. Held, that the bank paying the check was not liable for the amount of the check in a subsequent action by the new firm.
Appeal from Order Entered on Report of Referee.
Action by Edward Ra Montagne, Jr., and others against the Bank of New York National Banking Association. From a judgment of dismissal entered on the report of a referee, plaintiffs appeal. Affirmed.
See, also, 134 App. Div. 934 , 108 N. Y. Supp. 1138 .
Argued before INGRAHAM, P. J., and McLAUGHLIN, SCOTT, CLARKE, and DOWLING, JJ.
A. C. Brown, for appellants.
William B. Hornblower, for respondent.

This case has once been to the Court of Appeals, and its opinion ( 183 N. Y. 173 , 76 N. E. 33 ) contains the law of the case which we are bound to follow, unless such new facts have been established upon the retrial that the former opinion is no longer applicable. We have examined the record with care in the light of the former opinions, and have been able to find no new facts which would justify us in applying any different rule of law than that heretofore applied. It is now made clear that the articles of copartnership had not been signed when the deposit of $300,000 was made to the credit of the new firm, but they had been signed when the check for $60,000 was drawn and deposited to the credit of the old firm, although the requisite certificate to do business had not yet been filed. The court of Appeals held that the deposit of $300,000 check established the relation of debtor and creditor between the bank and the new firm, and that this relation would have continued if the certificate had never been filed. The deposit was made with a view to the formation of the new firm, and the moment that firm was organized the partners had a right to draw upon the account in the firm name, and the bank was bound to honor their checks. We find nothing in the circumstance that the deposit was made before the copartnership was formed, to render the opinion of the Court of Appeals inapplicable. It also now appears that the old firm was actually insolvent when the new firm was organized, but it does not appear that either of the Fultons knew this fact. It does clearly appear from the evidence that it was the intention of the parties (although not so expressed in the articles)

p. 1106
that the new firm should take over and continue the business of the old, and, in point of fact it did so, paying the debts of the old, and taking whatever there was of assets. As was said by the Court of Appeals the new firm was bound to pay the debts of the old up to the value of the assets at least. The fact that the assets ultimately fell short of the whole indebtedness cannot make the bank liable for a check, regular upon its face, given in payment of a bona fide debt. We find nothing in the new facts to justify any different result from that which was arrived at before.

The judgment is therefore affirmed, with costs. All concur.

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