Stettheimer v. Stettheimer — 24 N.Y. St. Rep. 70

Majority

p. 70

Simon Stettheimer, Resp’t, v. Sigmund Stettheimer, et al., Appl’ts.^[1]

(Court of Appeals, Second Division,

Filed June 4, 1889.)

Headnote

1. Banks and banking—Co-partners—Right oe co-partner to individual deposit.

The defendants were co-partners doing business as bankers. Sigmund, one of the firm, had deposited in another bank, a certain sum, with intent to transmit the same to his brother in Germany,in payment of an indebtedness. At the solicitation of defendent Tone, one of the co-partners, he transferred the account to defendant’s bank, and it was credited to his private account. Subsequently the firm failed. On the day of the failure, Sigmund drew his individual check, payable to the plaintiff, and delivered it to him, with instructions to pay his brother the amount he owed him. All the partners had notice of this check and its purpose. A draft was drawn and delivered to plaintiff, but owing to defendants’ failure was not paid. This action was brought to recover the amount of such draft. The defendant, Tone, resisted recovery on the ground that plaintiff had no title, that he was merely an agent, and that Sigmund could not in his own name, or in that of another, maintain an action against himself and partners, as makers. Held, that inasmuch as the money was never contributed to the capital account, but was understood by the members of the firm to he Sigmund’s individually, he occupied the same relation towards the firm (as between themselves), as any other depositor; that so long as he was not in default, under the articles of copartnership, he had the same right to draw out the fund as had other depositors, and that the right could be enforced in an action brought directly against them.

3. Partnership—Estoppel.

Held, that having given the firm draft in payment of the check drawn

p. 71

by Sigmund, in an action brought against them, as drawers, the defendants cannot inquire into the consideration moving between Sigmund and plaintiff.

3. Same.

Held, that the fact that the firm has failed does not affect the legal liability of defendants.

4. Trusts—Of personalty—May be created, how.

A trust of personalty is not within the statute of uses and trusts, and may be created for any purpose not forbidden by law; it may be created without writing, and the delivery of the personalty is sufficient to pass the title.

Appeal from a judgment of the general term, fifth department, denying a new trial and directing judgment upon a verdict.

Theodore Bacon, for app’lts; James Breck Perkins, for resp’t.

The defendants for some time prior to February 13, 1879, were co-partners, doing business as bankers. The entire capital, $50,000, was furnished by Sigmund Stettheimer, while the other members of the firm contributed their energies and skill to the business. The adventure resulted in a general assignment for the benefit of creditors on the day mentioned.

In October, 1878, Sigmund Stettheimer deposited of his private funds $8,015.56 in the Importers’and Traders’ Bank of New York, with the intent to transmit such amount to his brother in Frankfort, Germany, in payment of his indebtedness to him, as soon as he should be advised by his brother of the manner in which he desired the transmission to be made. One of the defendants, Tone, who appears to have had charge of the general management of the business, solicited Stettheimer to deposit the money with the firm,- until he should receive the direction from his brother, for which he was waiting, and then he would send it to him. Stetheimer consented, and on November 11, 1878, the account was transferred from the Importers’1 and Traders’ Bank to that of the defendants, and the amount credited to Stettheimer on his pass-book and private account with the defendants. On the evening of February 12, 1879, he was informed by his partners that the firm was about to suspend.

At that time he had to his credit in his private account, which was entirely distinct from his capital account, a little over ten thousand dollars. It consisted of deposits made from time to time, and the amount transferred from the Importers and Traders’ Bank. During the evening, Sigmund Stettheimer drew his individual check, on his private account, payable to the order of the plaintiff, and delivered it to him with directions to pay his brother the

p. 72

amount which he owed him, and also his other individual creditors.

The evidence tended to show that all of the partners had knowledge of this check, and its purpose, and in view of the existence of such testimony, the manner of its submission to the jury by the trial court, and the finding of the jury, it must be assumed that such fact was found. After the check was drawn, it was agreed, in the presence of all the partners, that it should be paid out of the cash items then in hand, and the check charged up to the individual account of Sigmund Stettheimer. To accomplish the agreement of the parties, the plaintiff went to the bank where all of the defendants, except Sigmund, who was old and infirm, were engaged in arranging the affairs of the bank, preparatory to the making of a general assignment. He presented the check for payment, and one of the defendants, Tone, offered to pay the amount of the check in currency. Plaintiff for some reason stated that he preferred a draft on New York. The draft in suit was then drawn, and delivered to him, and the check was taken by one of the partners, and placed in a drawer where other checks of a like character were 'kept .by the officers of the bank. Plaintiff -at once endorsed and forwarded the draft to his correspondent for collection, but owing to the failure of the bank, the draft was not paid. Subsequently this action was commenced to recover on the draft. The defendants Stettheimer did not appear in the action and suffered a default. The defendants Tone appeared and answered, and upon the trial assigned as reasons for resisting a recovery that the plaintiff had not the title to the draft. That their co-defendant and late partner, Sigmund Stettheimer, was in fact the owner, and the plaintiff acted simply as his agent in bringing the suit; that Stettheimer cannot in"his own name or in that of another person, maintain an action against himself and partners as makers of the draft.

The defendants Tone do not appear to be in a position to question the title of the plaintiff. The money on deposit was never contributed to the capital account. It was Sigmund’s individually, and it was so understood by every member of the firm. By the understanding and agreement of the partners, so far as this deposit was concerned, he occupied the same relation towards the firm (as between themselves) as that of any other depositor. So long as he "was not in default, under the articles of the copartnership he had the same right to draw out this fund as had the other depositors—a right which could have been enforced in an action brought directly against his partners. Crater v. Bininger, 45 N. Y., 545 .

After the check had been drawn and delivered to the

p. 73

plaintiff, all of the parties being present, this right was fully recognized and acquiesced in, and it was agreed that the money should be paid. The check was handed in by the person to whom it was made payable, and payment thereof, in cash, actually tendered by one of the defendants Tone. Plaintiff preferred payment by draft, and one was drawn by the firm on New York, and delivered to him. If then the plaintiff had the right to draw out the money, he also had the right to transfer it. Whether the transfer was with or without consideration was no concern of his partners ; and having given the firm draft in payment of the check by which Sigmund sought to transfer the funds, these defendants Tone cannot now in an action against them and the other partners, as drawers thereof, be permitted to inquire into the consideration moving between Sigmund and the plaintiff, and the fact that the firm has since failed does not affect the legal liability of the defendants thereon. The rights of the creditors of the partnership are- not involved in this action. The assignee is not a party, and attacking the transaction as fraudulent. The question pre-. sented is simply one of liability of the defendants on their draft, as between themselves and the plaintiff, the payee therein.

But if it be assumed that the defendants could defeat a recovery in the event of a failure on the part of the plaintiff to prove that Sigmund Stettheimer had divested himself of title, then we agree with the conclusion of the general term in holding that Sigmund transferred this fund to the plaintiff in trust for his brother and other creditors, and that plaintiff’s title is that of trustee for the benefit of cestui que trusts mentioned. '

It is undisputed that Sigmund was indebted to his brother in the sum of about $8,000, and that he also had other individual creditors. It is also established beyond controversy that on the 12th day of February, he handed plaintiff a check, drawn against his private account in defendant’s bank, for §10,000, with instructions that plaintiff draw the money, and with.it pay Sigmund’s brother in Frankfort, and also his other individual creditors. The plaintiff accepted the trust. At the time of the delivery of the check, Sigmund’s title to the funds, as between himself and his co-partners, was unquestionable. The power to

p. 74

create the trust resided in him, and to effectuate such purpose he could divest himself of title, and transfer it to tho plaintiff. The delivery of the check, under the circumstances proven, was sufficient to constitute a transfer of the title. Gray v. Barton, 55 N. Y., 68 ; Westerlo v. De Witt, 36 id., 340. In Gray v. Barton (at page 72), the court says: “That a delivery of the evidence of the right of the donor to the donee, with the intent to transfer the title, is sufficient.” Upon the receipt of the check, therefore, the plaintiff became the owner of the account, subject to a trust to apply the proceeds in payment of the indebtedness due to his father’s brother and other individual creditors, and upon that check, had the firm refused payment, he could have maintained an action. The defendants did not decline to pay, but, with full knowledge of the trust, paid the check with their draft.

It is established, therefore, that Sigmund was divested of the title of the check, and there remains no basis for the insistence that the plaintiff is but the agent or representative of the defendant, Sigmund Stettheimer. The objections founded upon that proposition do not require consideration.

The excuse presented for the non-production of the letter written to Sigmund’s brother was not sufficient to justify the court in receiving secondary evidence of its contents. Under our view of the case, however, the evidence could not possibly have affected the result. It does not, therefore, constitute such an error as justifies a reversal.

The other rulings excepted to do not seem to require discussion.

The judgment appealed from should be affirmed.

All concur, except Bradley and Haight, JJ., not sitting.