Adams v. McCann

Headnote

Banks—Injunction to restrain payment op check.

Defendant McCann was a partner with plaintiffs and transferred to them all his interest in the firm assets, which included, as is claimed, a fund in hank standing to his credit. Thereafter he drew a check for such fund to his wife, in payment of an existing debt, and the bank transferred the fund to her account before receiving notice of the transfer to plaintiffs. It did not appear that the wife was guilty of any fraud or bad faith in receiving the check. Held, that, under these circumstances, plaintiffs were not entitled to have the bank restrained from paying the proceeds of the check or the wife from withdrawing such proceeds, and that the cause of action against McCann, if any, was one which he had a right to have tried by jury.

Appeal from judgment in favor of defendants, dismissing the complaint, with costs.

The following is the opinion at special term :

Dugro, J.—The evidence establishes that on April 16, 1885, there was on deposit in the Garfield National Bank, to the credit of Patrick McCann, a balance exceeding $660, which had been derived from, and was an asset of, a partnership business conducted by plaintiffs and Patrick McCann prior to and until the mentioned date; that this balance was, on said date, transferred by Patrick McCann to the plaintiffs, notice of which was given to the bank subsequent to April 18th ; that on the 15th of April, preceding the transfer, the defendant Maria McCann received from Patrick McCann his check, drawn on the defendant bank to her order for $660, in part payment of an existing debt; that on April 18th, this check was deposited in the defendant bank to the credit of Maria McCann, and credited to her account as cash; that the defendants McCann had and kept separate ordinary banking accounts with the bank, making deposits with and drawing checks upon the latter as occasion required.

The plaintiffs ask that the defendant Maria McCann be perpetually restrained from withdrawing from the bank, and the bank from paying $660, claimed to be the proceeds of the check, and that this sum to the credit of Maria McCann’s account be declared their property, etc.

As the ordinary relation of banker and depositor existed between the McCanns and the bank, their accounts were subject to the ordinary rules applicable to bankers’ accounts, one of which is that if a check is deposited in the ordinary way of business to the credit of a person’s bank account, and by the bank placed to the credit of the depositor as cash, the effect of the transaction is to make the bank debtor to the depositor for the amount of the • check, and to pass the title to the check to the bank. Jusih ei al. v. National Bank of the Commonwealth, 56 N. Y., 478 .

The bank having received its title to the check prior to the receipt of notice of the transfer by Patrick McCann, has a right to charge it up against the latter’s account.

The defendant, Maria McCann, can be restrained, as plaintiffs ask, only if it appears that a trust is impressed upon $660 of the amount to her credit in the bank, of which trust she is the trustee for the plaintiffs as cestui que trust. The facts presented by the evidence do not warrant a finding that she has been guilty of any fraud in obtaining the check, or acted in any way other than in good faith, or is other than a bona fide holder of the check for an existing debt; and, with this so, no trust or agency can be held to have been created in plaintiffs’ favor.

In the. absence .of such a trust or agency, the rule seems to be that it is only to the extent of the interest remaining in the party who committed the fraud that money can be followed as against an innocent party, having a lawful title, founded upon consideration ; and, r£ it has been paid, in the ordinary course of business, either upon a new consideration, or for an existing debt, the right of the party to follow the money is gone. Jusih et al. v. National Bank of the Commonwealth, supra.

This rule seems indispensable to the safe transaction of commercial business.

The plaintiffs, in their brief, ask that if judgment cannot be given as prayed for in the complaint, a judgment for $660, the amount of the deposit, should be given against the defendant Patrick McCann, and refer me to § 1207 of the Code, and several authorities, as warranting such a disposition of the case as against him.

A judgment against this defendant;' cannot be had in this action, as no cause of action, alleged in the complaint, has been proved, nor has the complaint been amended so as to conform to the proof.

I might also add that if the existence of a cause of action against Patrick McCann has been disclosed by the evidence, it is, if one he has, a right to have passed upon by a jury.

There should be judgment for the defendants, dismissing the complaint, with costs to the defendants McCann, and costs after notice of trial and before trial to the bank.