Meyers v. New York County National Bank , 36 A.D. 482 ( 1899 )

Cullen, J.:

John McLellan kept a deposit account with the defendant. He was appointed committee of the estate of Edward Crawford, an incompetent person. While such committee he received moneys belonging to the estate of his ward and deposited them in his personal. bank account. 'During this period the defendant made two loans to McLellan of §2,500 each, payable on demand. On April T9, 1892, there was to the credit of McLellan’s account in the bank the sum of $393.81,. of which $381.73 were the funds of the estate of his ward.. On this day' the défendant called the two loans of McLellan- and, on his failure to make payment, appropriated his Whole deposit account toward the satisfaction of the notes. There was nothing in the character of the funds of the estate which were deposited in McLellan’s account to give the bank any notice that they were other than McLellan’s personal moneys, and at the time of closing the bank account and of the appropriation of the balance, the defendant had no knowledge of the rights or equities of the estate of the incompetent. Subsequently this "present plaintiff was substituted as the committee of the' incompetent, and he brought this action to recover that portion of McLellan’s account which represented the flinds of the estate.

The learned counsel for the appellant concedes the doctrine that money has no earmarks, and that if McLellan had paid to the bank oh account of his debt to it the deposit balance remaining to his credit, that balance, though it consisted of the moneys of the estate misappropriated by McLellan, could not be recovered from the bank. (Justh v. Nat'l Bank of the Commonwealth, 56 N. Y. 478 ; Stephens v. Board of Education, 79 id. 183: Hatch v. National Bank, 147 id. 184.) He contends, however, that this rule does not control the disposition of the present, case, because McLellan did not pay over the moneys to the defendant, but the defendant appropriated them without any affirmative action on McLellan’s part. I think the difference of fact on which the learned counsel for the appellant relies, creates no difference in the principle applicable to-the case. It is unnecessary to consider whether moneys of a third, party, misappropriated by a depositor -and placed in his personal account, could be seized on an attachment or otherwise by an ordinary creditor of the depositor. The question here presented is different. True, McLellan gave the defendant at the time no authority to appropriate the deposit account to the payment of the jiotes, but he had previously given such authority.

The existence of what is called a banker’s lien is. well recognized: in commercial circles and by the-law. “ The rule may be broadly-stated, that the bank has-a geneial lien, on all moneys and funds, of a .depositor in its ^possession for the balance of the general account ” (Morse Banks, § 324), though the lien is only for accounts ’ that are at the time due and payable, (Jordan v. National Shoe & Leather Bank, 74 N. Y. 467.) “ Ordinai'ily that (the .lien) attaches in favor of the bank upon .the securities and moneys of the customei deposited in the usual coui-se of business, for advances which are supposed to be made upon their credit. It attaches- to such secui’ities and funds, not only against the depositor, but against the unknown equities of all others in interest, unless modified or waived by some agreement, express or implied, or by conduct inconsistent with its assertion.” (National Bank v. Insurance Co., 104 U. S. 54.) Such being the law and commei’cial usage, when a depositor opens an account ini a bank that vei'y act, in the absence of • an agreement to the contrai’y, authorizes the appropriation of his deposit balance to any matured claims the bank may hold against him, the same as if he then executed an agreement in writing tó that effect.

This being so, we do not see how the present case can be distinguished in principle from that of Hatch v. National Bank (supra). In the Hatch case the bank held the deposit under a contract which authoi-ized it to appropriate the deposit -to the payment of all obligar tions and liabilities held by it, whether the liabilities were due or otherwise.. It was held that, when the bank appropriated the depos: itor’s balance to its claims, “ it acted with the written consent and authority of the firm, as completely effectual and operative as if the debtors on that day had personally directed the application to be made.” While the agreement in the Hatch case gave the defendant •greater rights than an ordinary banker’s lien, that fact has no bearing on the doctrine just quoted; that a previous authority to the bank to appropriate funds to the payment of a debt is the same in effect as an express direction given at the time of the appropriation. We do not mean to say that if the defendant, before action taken by it, had known of the equities of the estate now represented by the plaintiff, 'it could have appropriated the moneys in McLellan’s account to the satisfaction of his personal debt. But we do hold that the appropriation by the bank of such balance, without knowledge of the equities of third parties, stands on the same footing as a payment to it of that 'balance by the check of the depositor, and cannot be recovered.

The judgment appealed from should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs.