Wareham v. Eagle Savings & Loan Co.

Putnam, J.: This record, accompanied by the original exhibits, amply supports the findings of fact. On the one side were the plaintiff’s positive statements, against which were denials by the defendant’s secretary which became materially qualified on cross-examination. Asked what Mr. Wareham said when he came into defendant’s office, Mr. Wood, the secretary, testified: “ That he wanted — well, substantially he wanted an account that he could deposit, make payments and draw money out when he chose. Q. Did he say he wanted to subscribe for shares? A. Well, he certainly did, because I — Q. Did he request you, did he ask you, did he say that he wanted to subscribe for shares when he first came in? A. I can’t just recollect what his wording was. * * * Q. When Mr. Wareham came to the window with his money, [28] did he say that he wished to subscribe for shares before you mentioned anything about shares to him? A. I don’t recollect that. Q. Don’t you know that he did not? A. I don’t recollect whether he did or not.” The secretary finally admitted that he then knew that plaintiff wanted to deposit money and not to borrow money, so that he could withdraw any or all of such deposit at any time. Also that he told plaintiff he could do so, and further that he did not say anything to plaintiff about any sixty-day notice before such withdrawal. Regarding the witness’ statement that he had told plaintiff he was subscribing for thirty shares, he testified on cross-examination: “ Q. You say you told Mr. Wareham that he was subscribing for 30 shares? A. Yes, sir. Q. What did Mr. Wareham say? A. I don’t recollect what Mr. Wareham said, but he subscribed for them. * * * Q. Did you tell him what was the face amount of the shares? A. No, I might not unless he asked me. Q. Do you recollect whether he did or did not? A. I don’t recollect it. Q. Did you tell him that he would be required to make payments on account of shares? A. I don’t recall just the conversation on those particular — on that particular thing. Q. Did you tell him that by subscribing for shares he would become a member of the defendant? A. Not necessarily. ' Q. Did you? Can you testify affirmatively that you told him that he would become a member? A. I only testified now to just that — answered to that question. Q. Did you tell Mr. Wareham that he might by subscribing to shares have to pay losses in case the company had losses? A. Why, no, I did not. Q. You knew that Mr. Wareham thought at the time he deposited that money that he was opening an account with you by which he could draw by check from time to time, didn’t you? A. No. Q. Didn’t you tell him that? A. No. Q. Did you tell him that he could deposit money with you and withdraw any or all of it as he pleased? A. Yes.” We find no ground to question the conclusions of the learned court, who had the advantage of seeing the witnesses. The point, however, remains, whether the facts found justify a decree for rescission. Defendant’s future ability to pay a certain rate of interest [29] was not the point represented. The representation went directly to the root of the mutual relations, leading plaintiff to part with his savings on the belief that he was and would be a depositor pure and simple, not a subscriber for $3,000 in defendant’s shares, and hence a participant in its risks. The peculiar forms of the “ signature card,” “ deposit slip,” and the “ pass book,” all simulated like incidents of accounts with a bank. Such close resemblances (save parts in finer print) would naturally mislead an unskilled customer. By them defendant was obviously held out as a bank, upon which checks passed current. The circumstance that the promise to pay was in futuro did not make these false appearances the less fraudulent. A depositor in a genuine bank can withdraw his money ' although such right may be a qualified one. A subscription contract for shares, if bona fide, raises an indebtedness to be gradually paid off, followed by delivery of share certificates. Here this was industriously put out of sight by the practice of the depositors’ free checking, so that checks on defendant, like those of a real bank, passed through the New York Clearing House. Such convenient check books brought in new customers and quieted any doubts of those already enrolled. How indeed should they surmise that back of this complete guise of a regular bank lay a subscription contract for enough “ shares ” to absorb all their accumulated savings? The judgment, therefore, rightly treated the plaintiff as deceived and defrauded, and afforded him the fitting remedy of rescission. Such disposition follows our prior rulings as to this same defendant. (Miller v. Eagle Savings & Loan Co., 174 App. Div. 581; Babeuf v. Eagle Savings & Loan Co., 180 id. 909; Wilcock v. Eagle Savings & Loan Co., Id. 911; Fox v. Eagle Savings & Loan Co., Id. 909; Payne v. Eagle Savings & Loan Co., Id. 910.) We are unable to follow Rosenkranz v. Eagle Savings & Loan Co. (180 App. Div. 388), which passed on testimony different .from that in the case here. The judgment should be affirmed, with costs. Blackmar and Kelly, JJ., concurred; Mills, J., read for reversal, with whom Thomas, J., concurred.