Brooklyn Trust Co. v. Toler — 47 N.Y. St. Rep. 420

Majority

p. 420

The Brooklyn Trust Co., Pl’ff, v. Henry P. Toler, Def't.

(Supreme Court, General Term, Second Department,

Filed July 22, 1892.)

Headnote

Bills and notes—Mistaken certification—Stock exchange.

Plaintiff by mistake certified the check of a customer which was delivered to the president of the stock exchange to secure one 0. on certain, stock. The following morning the mistake was discovered and the exchange notified thereof before 10 o’clock. Held, that payment of the check through the clearing house gave the exchange no better title than it had before; that it had no title to the check or its proceeds except as to the C.. claim, and could not hold them to meet the claims of other creditors of plaintiff’s customer, and that plaintiff was entitled to recover the balance-of the money.

Submission of controversy without action.

William N. Dykman, for pl’ff; Royal S. Crane, for def't.

—On the 21st of October, 1891, the Brooklyn Trust Company certified a check to be good which was drawn by 'William P. Whitehouse on the trust company to the order of Augustus W. Peters, chairman. Peters was chairman of the consolidated stock and petroleum exchange. The - check was given-as a margin to secure I. M. Comsh upon certain railroad stock. *The check was delivered by Whitehouse to Peters and Peters deposited the check with other moneys of the exchange. The certificate was made by mistake and on the 22nd of October, 1891, before 10 A. M., the exchange had notice of the mistake. The trust-company demanded the check and offered to pay the loss realized bv Comsh. This was $1,568.75. On the same day Whitehousesuffered other losses to members of the board of the stock and petroleum exchange. The defendant represents these claims other than Comsh, and as such owner demands the money, after Comsh is paid, of the exchange. The exchange cannot keep the money except to answer the Comsh loss. The trust company gave immediate notice of the mistake and except so far as there was a change of circumstances which had occurred by reason of the mistaken certification a revocation of the certificate that the check was good could be made. Irving Bank v. Wetherald, 36 N. Y., 335 .

The payment of the check by the trust company through the-clearance house, to comply with the rule that a certifying bank must pay the check and settle all questions of validity with the-parties to the paper, did not give the exchange any better title to-the money than it had before. The exchange had no title except-as to the Comsh claim and Toler by his judgment against White-

p. 421

house got no title to the money, which neither the exchange or Whitehouse owned. Only one of the claims merged if Toler knew of the existence of the certified check when the stock order was executed. He was neither a party or a privy to the paper and so far as the case shows had no better right than any of the general creditors of Whitehouse.

There should be judgment upon the submitted case for the plaintiff.

Dykman, J., concurs; Cullen, J., not sitting.