Knapp v. . Roche , 94 N.Y. 329 ( 1884 )

This action is brought by the receiver of an insolvent moneyed corporation against its vice-president to recover damages for losses occasioned by alleged illegal loans made by him of the funds of the corporation.

Such corporation was a savings bank, organized under a special act of the legislature (Chap. 831, Laws of 1868), by which it was authorized to invest its funds only in certain specified securities.

It was claimed that the defendant loaned the moneys of the bank to Avenue C railroad, and to one D.K. Colburn, upon securities not authorized by the act of incorporation.

The only damage occurring to such bank in consequence of the acts of the defendant, as stated in the complaint, was that such loans remained due and unpaid at the time of the commencement of the action.

To this part of the complaint the defendant interposed a general denial. The defendant also by a supplemental answer pleaded as a defense to the action that Henry Smith, president, and Reeves E. Selmes, secretary of said bank, were jointly liable with defendant for the causes of action alleged in the complaint, and that for a good consideration paid by the said Smith and Selmes to the plaintiff they had been released and discharged from liability on account of said several causes of action, and claimed that thereby the said defendant became also discharged therefrom.

In support of the action on the trial the plaintiff gave evidence tending to show that Henry Smith, the president, Reeves E. Selmes, secretary, and the defendant, as vice-president of the Bowling Green Savings Bank, co-operated in making the alleged illegal loans, and that portions of such loans remained unpaid when the case was tried.

The defendant in answer to the case made by the plaintiff offered to prove the payment by Henry Smith to the plaintiff of the sum of $45,000 on account of the alleged overdrafts which the evidence showed were the basis of the plaintiff's claim against the defendant.

This evidence was upon objection excluded by the court, and the defendant excepted to such exclusion.

In rejecting this evidence we think the court erred. The allegations in the complaint that the several unauthorized loans made by the defendant remained unpaid at the commencement of the action were necessary and material in order to constitute a good cause of action against the defendant. In the absence of these allegations there would have been shown by the complaint no cause of action, inasmuch, as it showed no damage resulting to the plaintiff from the injuries complained of.

It is essential to the maintenance of an action for a tort that damages should accompany the act complained of, otherwise it isdamnum absque injuria for which no action lies. (CommercialBank v. Ten Eyck, 48 N.Y. 305; People v. Stephens, 71 id. 541.)

The mere allegation that the officers of a bank have made illegal loans of the moneys of such bank, or committed other tortious acts, would not show a cause of action in favor of the bank against the officers.

It was, therefore, an essential part of the plaintiff's case to allege the non-payment of the loans in question, from which the damage to the plaintiff might be inferred.

This may not have been very correct pleading on the part of the plaintiff, but it constitutes the only theory upon which the complaint can be held to have stated a cause of action.

A general denial of the allegations of the complaint therefore put in issue the fact of non-payment, and rendered evidence controverting that fact admissible under the answer.

While it is generally true that a defense of payment is inadmissible under a general denial this is not so when the fact of non-payment is alleged in the complaint as a necessary and material fact to constitute a cause of action. (Van Giesen v.Van Giesen, 10 N.Y. 316; McKyring v. Bull, 16 id. 297;Quin v. Lloyd, 41 id. 349.) It is always competent to prove under a general denial any facts tending to controvert the material affirmative allegations of a complaint. (Quin v.Lloyd, supra; Beaty v. Swarthout, 32 Barb. 293; Howell v.Biddlecom, 62 id. 131.)

Under the general denial in this case it was competent for defendant to prove any facts tending to show that the plaintiff had not suffered damages to the extent claimed by him. For this purpose he could prove that the moneys illegally taken from the bank had been refunded, either by the alleged borrower or any one jointly liable with himself for the injury complained of. (Hun v. Van Dyck, 26 Hun, 567; affirmed, 92 92 N.Y. 660.) While a plea of payment by a stranger, between whom and the defendant there is no privity, has sometimes been held to be unavailable as a defense (Bleakley v. White, 4 Paige, 654;Atlantic Dock Co. v. Mayor of New York, 53 N.Y. 67), yet satisfaction by one joint tortfeasor has always been held to be available as a bar to an action against another. (Livingston v.Bishop, 1 Johns. 291; Thomas v. Rumsey, 6 id. 31; Barrett v. Third Ave. R.R. Co., 45 N.Y. 635; Woods v. Pangburn, 75 id. 498.) This rule applies with equal reason to a partial satisfaction by one of the wrong-doers for the damages occasioned by the joint wrongful act of both. Such evidence is proper in mitigation of damages, and under the former practice was admissible under the general issue. (Daniels v. Hallenbeck, 19 Wend. 409; Bush v. Prosser, 11 N.Y. 347; Wilmarth v.Babcock, 2 Hill, 194.)

Without considering the other questions raised on this appeal, we think that, for the reasons stated, the judgment should be reversed and a new trial ordered with costs to abide the event.

All concur.

Judgment reversed.