Corn Exchange Bank v. Manhattan Savings Institution

Guy, J. This case comes to this court on appeal from a decision of the Municipal Court in favor of the defendant Florence Blenderman, who had been impleaded by an order of the court, which also directed the dismissal of the action as to the defendant Manhattan Savings Institution, upon' that institution paying the sum of $500 into court. The action was brought to recover $500 loaned on the 11th day of January, 1915, by the Corn Exchange Bank to Mamie Blenderman upon the security of a savings bank book of the Manhattan Savings Institution, issued in her name as an individual, showing $595.73 on deposit. An assignment of $500 due under this book was made by said Mamie Blenderman to the Corn Exchange Bank at the time of this loan and the Manhattan Savings Bank was at once informed of the assignment (transcript 5) and acknowledged receipt of such notice on January 13,' 1915. After Mamie Blenderman had failed to pay the loan, the savings bank book, together with the assignment, were presented by the Corn Exchange Bank to the said Manhattan Savings Bank on January 16,1918, and payment [617] was refused with the statement that “ payment had been stopped.” Defendant proved that on or about November 23, 1914, an account had been opened in said savings institution in the name of Mamie Blenderman in trust for Florence Blenderman and that the moneys in said account were the property of said Florence Blenderman. That on or about January 5,1915, said Mamie Blender-man applied to plaintiff for a loan, informing plaintiff that she could furnish as collateral security a pass book, described as an account in the name of “ Mamie Blenderman in trust for Florence Blenderman ” in the Manhattan Savings Institution, and thereupon plaintiff informed said Mamie Blenderman that while it could not take that pass book as security, yet if the money should be withdrawn by the trustee and deposited in the name of the trustee, as an individual, and a new pass book issued, such new pass book would be taken as security; and that thereupon, without the knowledge of the defendant Florence Blenderman, said Mamie Blenderman drew out said trust fund and redeposited same in her name as an individual, and it is contended by defendant that plaintiff, knowing that the fund was a trust fund, was put upon inquiry as to whether the fund was being diverted from the purposes of the trust. There can be no question that the savings institution could rightfully, without inquiry as to the purpose for which the transfer was being made, permit the transfer of the moneys from the account of Mamie Blender-man in trust for Florence Blenderman to the individual account of Mamie Blenderman (Wickenheiser v. Colonial Bank, 168 App. Div. 329; affd., 224 N. Y. 651; Bischoff v. Yorkville Bank, 218 id. 106); and we are unable to see that plaintiff, in the light of all the facts proved by defendant, was put upon any further or [618] other inquiry than was required of the savings institution in transferring the account from a trust account to an individual account. The judgment must therefore be reversed and judgment directed in favor of plaintiff for the full amount named, with thirty dollars costs in this court and costs in the court below.