Wells v. National City Bank

Patterson, J.: This is an appeal from an order of interpleader. It was'made to-, appear to the court below that on November 28, 1898, the firm of Hoadley & Co.-had on deposit with the defendant a sum of about' $45,000 ; that on the day named, they filed their petition in bankruptcy ; that they were ad judged bankrupts in December, 1898, and the plaintiff was appointed trustee of their estate in February, 1899.. [499] Upon qualifying as such trustee, he made a demand upon the defendant for the moneys on deposit, and such demand being refused, he brought this action. Thereupon the defendant moved upon an affidavit of its cashier to interplead The Tropical Trading and Transport Company (Limited) and one Minor C. Keith, upon allegations that the first mentioned of such parties claimed $17,351 of the moneys so on deposit, and the latter claimed the whole amount of such moneys. The only other allegations of any materiality contained in the cashier’s affidavit are that the claims mentioned were made without collusion of the defendant, and that the defendant has no interest in the same except to pay the money to the person actually entitled; and there is a general statement that the defendant cannot safely determine to which of the claimants the money should be paid, and is ready and willing to pay the same into court or as the court may direct, upon the defendant being discharged from liability to either the plaintiff or the claimants. Annexed to the affidavit of the cashier are exhibits purporting to be copies of notices of claim served upon the defendant by The Tropical Trading and Transport Company (Limited) and by Mr. Keith, through his attorneys. In addition to the affidavit of the cashier and the exhibits annexed thereto, the defendant presented to the court an affidavit made by one of the attorneys bf the parties who served the notices of claim upon the defendant. That affidavit adds nothing whatever to the force of the .moving papers. It merely states that the affiant is a member of a firm of attorneys at law acting for the two parties named, and that such parties claim the whole of the fund on deposit with the National City Bank, and that such claim is based upon the ground that the fund is derived entirely from the proceeds of property belonging to such parties; and that those parties have fully and fairly stated to him, the affiant, the facts upon which they base their claim, from which statements he believes that property belonging to the Tropical Company of the value of $17,000 was disposed of by the bankrupts, and property consisting of negotiable drafts belonging to Mr. Keith was also disposed of by the bankrupts of the value of $44,000; and that the subject of the action "consists of the proceeds of the property so disposed of, and he believes the claims of his clients to be meritorious and made in good faith and without any collusion with any party to this action. [500] Such an affidavit, made under such circumstances, being 'based, ■upon nothing but statements and communications made by a client to an attorney, can have no force whatever as proof, notwithstanding the entire good faith with which it may be made. " ,It is insisted by the respondent that it is entitled to the order of interpleader under section 820 of the Code of Civil Procedure, , upon the mere showing that a person, not a parjy to the action, has . made a demand for the same debt or property without collusion, and in support of that view it relies upon certain cases,, such as Dreyfus v. Casey (52 Hun, 96), in the opinion, in which case it is said that it. is only necessary in moving for an interpleader tinder .section 820 of the Code for a defendant to show, in order to, avail' -himself of its provisions, that a person not a party to the action makes'a demand for the same debt or property without collusion with him. It is argued that the section, applying only to a proceed-• ing by motion, requires less to be shown than would be necessary to support an' action for an interpleader. The case cited has been criticised in other decisions; notably in Burritt v. Press Publishing Co. (19 App. Div. 610), in which it is said that both the old action , of interpleader and the Code provision contemplate the same result, . which is to relieve a party from contesting a claim in which he has . no interest; that the practice has been simplified by the Code pro- . vision; that that provision is a substitute for the' action, but that . fact furnishes no reason for dispensing with such proof as was heretofore required to entitle a party to relief by suit. In Schell v. Lowe (75 Hun, 43) it was held that the remedy authorized by sentian 820 of the Code of Civil Procedure is a substitute for the f, action -of interpleader, and is governed entirely by the same prin- , .cipl.es, and it is there proclaimed that in such a suit it must be shown . that there are adverse claims to the same thing; that the complainant has no. beneficial interest in that thing ; that he cannot determine,, without hazard, to which of the claimants the thing belongs; that . there is no collusion between the person seeking the relief and the claimants, and that he brings the money into court to await the deter- , mination as to its ownership. In Nassau Bank v. Yandes (44 Hun, 55) it was held that a reasonable doubt that the stockholder would be safe in paying must be shown. Section 820 of the Code makes it discretionary with the court to [501] grant the motion, which, of course, means a judicial discretion. The later cases in this court indicate under what circumstances that discretion will be exercised. Thus, in Stevenson v. The N. Y. Life Ins. Co. (10 App. Div. 233) it was held that the section • of the Code referred to introduces no new rule- respecting requirements necessary for an interpleader ; that to authorize an order, it is not sufficient that a claim has been presented against a fund already claimed by another, but that it is necessary for the' moving party to prove that the claim, has some reasonable foundation or that the stakeholder cannot, without hazard, determine to which of the claimants he should pay the fund. What is required upon the subject is proof of some kind and not naked assertions. In Roberts v. Vanhorne (21 App. Div. 369) the subject is again considered, and there it was held that an order of interpleader should not be granted where the moving affidavit failed to state facts or circumstances which placed in doubt the' right of the plaintiff to recover the moneys he sued. for .or which failed to show that the demand of an alleged claimant had some reasonable foundation from which the inference might be drawn that the moving party would be placed in danger were the order not granted. And the same view was again, taken in Wertheimer v. Independent Order Free Sons of Judah (28 App. Div. 64). From these cases if appears that the discretion resting in the court under section 820, will not be exercised in the direction of granting an interpleader and thus involving a plaintiff in serious controversies and litigations with third parties unless something more appears than that a demand has been made, or a notice of claim served upon a defendant seeking to interplead. That is the situation in this case. No facts are shown which indicate that the defendant is really placed in peril with reference to this fund by reason of anything contained in the notices served by the Tropical Company and Mr. Keith. . The basis of the Tropical Company’s claim does not appear in its notice ; that of Mr. Keith seems to he based on an allegation that the proceeds of negotiable paper belonging to him have gone into the bank accounts of the bankrupts. But the same notice in each case, which would locate the moneys claimed by those parties in the National City Bank, also locates the identical moneys in the Western Bank of the City of New York, for the -notices are directed to_both banks_for precisely. [502] the same moneys arising out of precisely the same transactions. As said before, the affidavit of the attorney as to information received from his client does not identify the fund in the City Bank as the proceeds of property belonging to either of the parties on whose behalf the notices were served. Without considering other questions that have been raised on this appeal, we think the order must be reversed, with costs, and the motion for the interpleader denied, with costs. Van Brunt, P. J., Barrett and Eumsey, JJ., concurred. Order reversed, with costs, and motion denied, with costs.