Castle v. . Corn Exchange Bank

148 N.Y. 122 | NY | 1895

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] I think that the determination by the General Term was correct. It proceeded upon the theory that the facts established by the evidence were insufficient to justify an inference that the defendant was placed in the wrong, because of its failure to show that there had been any demand on the part of Cameron. The defendant had come lawfully into possession of the draft in question and a demand by Cameron, if he was entitled to the draft, or to its proceeds, and a refusal after such demand by the defendant, were essential in order to make out a case of conversion. In Addison on Torts, page 312, the rule is stated as follows: "When the chattels of the plaintiff have not been wrongfully taken possession of by the defendant, but have come into his hands in a lawful manner, he cannot be made responsible for a conversion of them until they have been demanded of him by the owner, or the person entitled to the possession of them, and he has refused to deliver them up." In Goodwin v. Wertheimer (99 N.Y. 149), where the defendant had come into possession of the goods in question, as assignee under a general assignment for the benefit of creditors, and had refused to deliver them up upon the request of the attorney for the vendors of the goods, claiming that they had been obtained by the defendant's assignors by fraud, this court held there was no sufficient proof of a demand and that, "the original possession of Wertheimer being lawful, and not tortious, it was necessary to change the character of his possession by a demand and refusal, before the plaintiffs could maintain an action against him for conversion, or to recover the goods."

It is evident from the proof that the defendant had not assumed dominion over the property in hostility to the right of any one entitled to be regarded as the true owner, and the demands which had been made upon it by Mrs. Melson and the Farmers' Bank were not of a nature to put it in the wrong. Mrs. Melson was not entitled to the draft and the defendant, having received it in payment of her check, was not bound to regard her as authorized to make any demand for it on the part of Cameron, or to treat her otherwise than as a stranger. The Farmers' Bank made no demand for the draft and, if we could assume that it was in a position to make such a demand and had done so in fact, its legal relation was that of an agent for the defendant in the transaction and not for Cameron. The position of the defendant was, in legal contemplation, that of a lawful holder of the draft, which had been sent to it by the Farmers' Bank in payment of the check which had been forwarded for collection. The transaction of the check had been closed. The check had been paid and was cancelled. Thenceforward the duty of the defendant, with respect to the draft received in payment, was owing to its correspondent, the Harrisons' bank in Indianapolis; although, under the circumstances, Cameron might have been entitled to show his right to, and to intercept, any moneys received upon its collection. When the defendant received the check from the Harrisons for collection, it was not informed of any fact in connection with its ownership and, in undertaking its collection, assumed merely the relation of agent for the forwarders.

It is not disputed that, as between Cameron and the Harrisons, the check was received by the latter merely for collection and, had nothing occurred to prevent the receipt by the defendant of the moneys due upon the draft received in payment of the check, Cameron would, doubtless, have been entitled, in a proper action, to assert and to maintain his right to have them paid over to him. The difficulty in this case is that the plaintiff has utterly failed to make out a case of any conversion of property. He has not shown that any property belonging to him had been wrongfully withheld from him. It should be observed that Mrs. Melson's demand, as was that of the Farmers' Bank, was to hold the moneys. If we might assume authority in her, her demand was to do something violative of defendant's obligations to its principal. I suppose that Cameron did not misconceive his legal rights in the matter; but the moneys due upon the draft not having been actually received by the defendant, because of their misappropriation by the sheriff, Cameron probably believed that he could be made whole in the matter, through a recovery of damages upon the theory of a wrongful conversion by the defendant.

In the action brought by this defendant against the Farmers' National Bank upon the draft remitted by the latter in payment of the check, and which it had directed its correspondent, the First National Bank in New York, as the drawee, not to pay, this court in its Second Division, (118 N.Y. 445), held distinctly that the defendant, the Farmers' Bank, was in no position to defend the non-payment of the draft upon the ground of Cameron's rights in the proceeds of the check. It was held in that case that neither the Farmers' Bank, nor the Corn Exchange Bank were agents for Cameron and that the Farmers' Bank in the transaction was the agent for the Corn Exchange Bank. While the decision of that case may not be deemed to be conclusive upon Cameron, nevertheless, it laid down a rule of law for application in the present case, which would be binding upon us; even if it were not, as we consider it to be, correct. The defendant, as a collecting bank, was the agent of the Harrisons as to the check received from them. The Farmers' Bank, in undertaking the duty of collecting the check, at the request of this defendant, was its agent. From those relations certain duties flowed and, in either case, a responsibility for the performance of the resulting duty rested upon the agent.

Had the Farmers' Bank, in the performance of its duty towards its principal, this defendant, suffered its draft to be paid in New York, the present condition of things might not have arisen and it would have been, possibly, within the power of Cameron, by appropriate action, to have intercepted the moneys on their way to the hands of the Harrisons. Mrs. Melson not only did not apprise the defendant of her possessing any authority from Cameron to demand the draft, or its proceeds, but her attitude in the transaction was not such as to carry with her demand any weight. She was the drawer of the Cameron check, and the obligation resting upon her to see to its payment was discharged by the forwarding of the draft in question for payment. Thereafter, as to the defendant, with respect to the draft, she was either a stranger or, for aught that appeared, as one asserting a claim in hostility to the draft.

The argument of the appellant rests, in the main, upon the theory that Cameron never parted with the ownership of the check to the Harrisons and that the defendant acquired no title to it as against Cameron, nor to the draft received in payment of the check. While it is true that, as between Cameron and the Harrisons, Cameron remained the owner of the check and was entitled to its proceeds, to all intents and purposes, still the defendant only knew the Harrisons in the transaction and when it collected the check and received the draft for it, it held it, in legal contemplation, for the Harrisons only and was the lawful holder of the draft for the purpose for which the collection of the check was undertaken, viz.: for the credit of Harrisons' account with it.

For these reasons, which are in agreement with the views of the General Term, I think the judgment appealed from should be affirmed, with costs.

All concur.

Judgment affirmed.