Petrie v. Myers , 54 How. Pr. 513 ( 1877 )

Barrett, J.

The Eleventh Ward Bank has no status whatever. It had no right, upon declining a discount, to retain the note, and its action was clearly tortious. The paper was not left for collection, nor for the performance of any banking duty, nor even for safe custody. It is contended that the banker’s lien extends to all securities which may happen to be in its hands for any purpose, and Barnett agt. Brandas (6 Manning & Granger, 629) is cited in support of that proposition. The case holds directly opposite. There, the securities were delivered for “ the performance of a duty as bankersviz., to receive interest on the exchequer bills and to exchange them. It has been admitted, in argument, that if the bills had been delivered merely for the purpose of deposit in a bank there would have been no lien ; and lord Denman cited, with approval, the case of Lucas agt. Darrien (7 Taunt, 278), where it was held that á lease, which was accidentally left with a banker, after he had refused to advance money upon it, was not subject to any lien.

But even if the right to hold the note were established, the banker had no possible equity in the mortgage. Such an equity could attach, if at all, only in favor of one who had actually negotiated the note or parted with value upon the strength of the security.

As to the receiver there is, perhaps* a case of a latent equity arising out of an implied trust. No case has gone the length of preferring such an equity to that of a bona fide assignee for full value. On the contrary, equity will not aid a cestui gue trust against a bona fide purchaser (from a trustee) without notice of the trust. Nor is the bank which the receiver represents in the position of an earlier assignee. It cannot, therefore, invoke the rule gui prior est tempore potior est jure. It comes to this : The plaintiff, of course, took the mortgage subject to the equities between the original parties. But there were none such; nor in the entire chain of title.

It is unnecessary, therefore, to express an opinion on the much debated question (Bush agt. Lathrop, 22 N. Y., 535 ; Moore agt. The Metropolitan Nat. Bank 55 id., 46; Cutts agt. Guild, 57 id., 233) whether the rule extends to subsequent transferees.

What is claimed is an equity in favor of entire strangers to the record, and resting in the mere promise of the mortgagee with respect to a security not in existence at the time of the promise.

It must be added, too, that it will be impossible to find, as matter of fact, what is set up in the answer. The truth is, that the mortgage was ultimately given to Hubbell without reserve, and with a mere understanding as to the application of the proceeds, which raised no equity in the security — certainly not as against the plaintiff, who has paid full value and who could not, by any proper inquiry, have learned of the latent equity. For what inquiry, it may be asked, was he put upon ? Simply as to the .validity of the mortgage ; possibly as to the equities between the subsequent parties. But as the validity of the mortgage is conceded, and as there were no such equities, the plaintiff’s position is stronger than upon a mere estoppel.

There must-be judgment for the plaintiff.