Forschirm v. Mechanics & Traders' Bank

Miller, J.: The stipulation made at the suggestion of the court at the opening of the case is somewhat ambiguous, as oral stipulations made in the course of the trial are apt to be; but I think the fair inference from it is that the bank closed its doors and suspended payment ' because the Bank Superintendent, “ stepped in.” In any event, it is plain that the defendant did not intend, and was not understood, to stipulate that the action of the bank was voluntary. The answer distinctly alleged that the defendant’s inability to pay-was due to -no fault of -its own; but solely to the acts of the Superintendent of Banks, which it was powerless to prevent. By referring to and annexing a copy .of the order appointing temporary receivers the answer did not admit the truth of the recitals in said order, especially in view of the positive averment referred to. But the course of the trial frees this question from doubt. The court at the outset ruled “ that no demand is necessary where temporary receivers were appointed.” The defendant sought to show that it closed its doors because of an order of the Banking Department, but the evi [151] dence was ruled out by the court on the distinct ground that it was immaterial. So for the purposes of this appeal we must start with the assumption that the defendant was solvent, able to payits depositors in full, and that it was compelled to suspend payment by the Superintendent of Banks, who caused the Attorney-General to institute an action for the dissolution1 of the corporation, in which temporary receivers were appointed, but which was voluntarily discontinued by the Attorney-General on the 17th of August, 1908, when the temporary receivers were discharged and the entire amount of the plaintiff’s assignors’ deposit was returned to and accepted by them. “ Before interest can be allowed in any case it must be by virtue of some contract express or implied, or by virtue of some statute, or on account of the default of the party liable to pay, and then it is allowed as damages for the default.” (Per Earl, J., in Matter of Trustees, etc., 137 N. Y. 95, 98.) The case in 4 Metcalf, cited by Mr. Justice Clarke, arose between the creditors of a decedent and his widow and heirs on the final settlement of his estate. Mo doubt the equitable doctrine announced by Chief Justice Shaw in that case would be applicable upon the settlement of a decedent’s or insolvent’s estate as between different classes of claimants, who had unduly been kept out of their money. But it is certain that it would not be applied in this State as between the parties to a contract for the payment of money on demand without interest, for such in effect was the contract in this case. It may be said that it is inequitable for the depositor to be kept out of his money without interest, but the answer to that is that that was not due to any act of the defendant. To be sure, through no fault of its own, the defendant could not have paid, even if a demand had been made, but that is not a reason for penalizing it. If permitted to, it could and would have paid upon demand; and in my view it would be inequitable to subject it to damages for a wrong which it has not committed,-to compel it to pay interest on a non-interest bearing debt, due only on demand, in the absence of a demand or of some act of its own excusing a demand. Instead of undertaking to apply general principles of equity and natural justice, upon which we might differ in a case like this, the case should be reduced to the precise legal ground upon which interest is recoverable, if at all, e., by way of damages for a wrongful detention of the debt. [152] The case of People v. Merchants' Trust Co. (116 App. Div. 41; affd., 187 N. Y. 293) is not in point. There the question arose upon the final distribution by receivers, appointed in an action to dissolve a corporation, which went to final judgment, adjudging that the defendant was insolvent. Moreover, the action was prac- . tically the voluntary act of the defendant which admitted its insolvency. ■ In such a case, of course, it is unnecessary to make a futile demand, the demand being excused by the act o.f. the debtor. While'no case precisely like this is called to our attention, the case of Sickles v. Herold (149 N. Y. 332) seems to me exactly apposite. It was there decided, that insolvency was not to be inferred from the mere appointment of a temporary receiver; that in the absence of proof or an admission of insolvency, a deposit did not become due so as to draw interest until, a demand; but that the interposition of an answer, containing a counterclaim, demanding the amount of the deposit, in an action brought by the temporary receiver on a promissory note, was equivalent to a demand, and that, the depositor was, therefore^ entitled to interest, not, from the time of the appointment of temporary receivers, but frtitn the date of the interposition of the counterclaim. Thus, it will be perceived, that the precise question involved here was decided in that case. Moreover, even if interest was-recoverable, any claim for it was extinguished by the acceptance of the principal. It is settled law that interest recoverable only by way of damages for the wrongful detention of a debt is but an incident to the principal debt and cannot be the basis of an independent claim. (Cutter v. Mayor, etc., 92 N. Y. 166.) Acceptance of the principal sum under protest would not save the right to recover interest, but a special agreement,reserving the right to recover interest, would do so. (Grote v. City of New York, 190 N. Y. 235.) There is no evidence whatever iii this case of a special agreement. When the temporary receivers were discharged, the Metropolitan Bank of the City of New York succeeded to the business of the defendant’s branch at Broadway . and Prince street, where the plaintiff’s assignors had their deposit, and evidently took over the accounts of depositors. One of the plaintiff’s assignors made a demand at that place and was tendered a check for the amount of the deposit by a clerk of the Metropolitan Bank, who had theretofore been in the employ of the defendant [153] and of the temporary receivers. The former says that he demanded interest and that the clerk said to him, “ Ton will get the interest later.” Manifestly, the clerk did not have actual authority to bind the defendant by an agreement to pay interest, and plainly he did not have apparent authority to do so, for upon the witness’ own statement he did not rely upon that statement of the clerk, but upon the latter’s advice called up the cashier of the defendant arid had a telephone conversation with him. He did not testify what that conversation was, but a letter, written by the plaintiff’s assignors, plainly shows that no promise tó pay interest was made by the cashier. Said assignor finally accepted the check from the Metropolitan Bank clerk, upon being told that he did not have to sign a release, evidently thinking that he could recover interest if he did not give a release. To be sure, both sides moved for a direction of a verdict; but the facts being undisputed,, the question was one of law. The extinguishment of the right to claim interest by the' acceptance of the principal does not rest upon the doctrine of waiver, which involves the element of intent. The intent of the plaintiff’s assignors in accepting the principal is immaterial. The determination of the Appellate Term and the judgment and order of the City Court should be reversed and a new trial granted, with costs to the appellant to abide the event. McLaughlin and Scott, JJ., concurred; .Clarke and Dowling, JJ., dissented.