| N.Y. App. Div. | Apr 15, 1904
This action was brought upon a bond given by John J. Bush, as principal, and the other defendants, as sureties, conditioned for the faithful performance by said Bush of his duties as cashier of the Elmira National Bank. The complaint, after making formal allegations of the incorporation of the Elmira National Bank, its insolvency and the appointment of the plaintiff as receiver, avers that ■ the defendant John J. Bush was elected cashier of said bank and that he gave a bond, conditioned for the faithful pérformanee' óf his duties, executed by said Bush as principal and the other defendants as sureties; that thereafter Bush had a deposit account with the bank until it suspended business and the bank had a deposit account with the Chase National' Bank of the city of New York, where it deposited large amounts and drew against them; that on or about the 14th day of February, 1891, Bush gave- to the Chase National Bank his promissory note for $25,000, and on the 5th day. of May, 1893, he was indebted thereon to the Chase National Bank in the sum of $15,000 principal, and $12.50 interest; that on said 5th day of May, 1893, at the office of the Chase National Bank in-the city of New York, Bush signed a check, of which the following is a copy, to wit.:
“New York, May 5, 1893.
“ Elmira National Bank,. Elmira, N. Y.
“ Pay to the order of the Chase National Bank, Fifteen Thousand twelve and 50/100 Dollars $15,012.50 to____
“(Signed). J. J. BUSH” ''
“ Certified and accepted May 5, 1893.
“ Payable at Chase National Bank, New York.
“ELMIRA NATIONAL BANK, by J. J. Bush, Cashier
That thereupon Bush delivered the check to the Chase National Bank in payment of his indebtedness as aforesaid, the check was accepted by the bank as such payment, the amount thereof charged to the Elmira National Bank and the charge against Bush upon the books of the Chase National Bank was canceled, and the sum of $15,012.50 was thereupon withdrawn from the deposit which the Elmira National Bank had with the Chase National Bank; that ■upon the 5th day of May, 1893, the account of Bush in the Elmira National Bank was overdrawn and he was without authority to certify the check as aforesaid, and that said certification was also illegal by reason of the statutes of the United States. (See U. S. R. S. ■§ 5208; 22 U. S. Stat. at Large, 166, § 13.) The complaint further averred that the books of the Elmira National Bank were kept under the direction of Bush and that no record was ever made ■on such books concerning the transaction of the said check of $15,012.50; that the said false certification was discovered by the receiver within six months after said May 5, 1893. The complaint further avers that no part of said sum of $15,012.50 has .been returned to the Elmira National Bank by the Chase National Bank, •except the sum of $7,012.50, which was returned to the plaintiff herein, and that by reason of the dishonest, unfaithful, fraudulent and criminal act of said Bush aforesaid, the Elmira National Bank is damaged in the- sum of $8,000, with interest thereon from ■said date. Then follows a demand for judgment. To this complaint the defendants demurred upon the ground that the complaint failed to state facts sufficient to constitute a cause of action, and from the order overruling the demurrer and ordering judgment upon the pleadings this appeal is taken.
We are of opinion that the demurrer was not frivolous. An ■order declaring a pleading frivolous can only be justified where the frivolousness appears from a mere inspection of the pleading and, therefore, justifies the inference that it was interposed in bad faith.
The last-mentioned bank had notice that the check 'drawn and certified by Bush was so drawn and certified for the purpose of discharging a debt held by the bank against Bush. The bank, therefore, was chargeable with, notice of all the facts and was bound to challenge the authority of Bush to make the check and certification in question before it could safely act thereon. It is a well-settled rule that the general power or authority given to an agent to act for his principal does not embrace .a case where it appears from the transaction that the agent is- a party acting upon the other side.
Under such circumstances authority to act will not be upheld unless it appears that the agent was-clothed with such power and the language conferring it must be so plainly expressed that no other rational interpretation can be placed upon it. (Bank of New York N. B. Assn. v. A. D. & T. Co., supra; Clarke National Bank v. Bank of Albion, 52 Barb. 592" court="N.Y. Sup. Ct." date_filed="1868-11-16" href="https://app.midpage.ai/document/clarke-national-bank-v-bank-of-albion-5461769?utm_source=webapp" opinion_id="5461769">52 Barb. 592; Jacoby & Co. v. Payson, 85 Hun, 367" court="N.Y. Sup. Ct." date_filed="1895-03-15" href="https://app.midpage.ai/document/m-jacoby--co-v-payson-5508273?utm_source=webapp" opinion_id="5508273">85 Hun, 367; Walsh v. Hartford Fire Ins. Co., 73 N.Y. 5" court="NY" date_filed="1878-03-19" href="https://app.midpage.ai/document/walsh-v--hartford-fire-insurance-co-3603494?utm_source=webapp" opinion_id="3603494">73 N. Y. 5.) The act of Bush was void and illegal, the Chase National Bank had notice of facts .which put it upon inquiry, and when it assumed to give force and effect to the transaction by the transfer of the money it did so at its peril. The Elmira National Bank was not divested of its funds by virtue of this transaction; nor was its title to the money defeated thereby! Its right to draw upon the fund was not impaired in the slightest degree. It lost nothing by the transaction and could
The argument in favor of the demurrer is to the effect that as the Elmira bank was not deprived of any right or title which it has in its deposit with the Chase National Bank, therefore it sustained no damage by reason of the act of Bush or of the Chase National Bank. There is great force in this suggestion, and we are unable to see how the Elmira bank could suffer loss through the void act of Bush, and so long as title to its moneys was not transferred or impaired it lost nothing on account of the transaction. It is said that the Chase National Bank withheld the moneys and refused to pay over the same upon demand by the Elmira bank and that by reason of such act the Elmira bank sustained damage. There is no averment in this pleading which shows any such element of damage. If the Elmira bank suffered any damage on account of the wrongful refusal to pay over the money on demand, it was in its nature special and would be required to be pleaded in order to be recovered. The wrongful refusal of the Chase National Bank to pay did not change' title to the moneys, nor did it in the slightest degree affect the title or impair existing remedies to enforce the rights held by the Elmira bank. It is evident, therefore, that the demurrer interposed has raised not only an arguable question, but also one which seriously challenges the sufficiency of this complaint.
There are other questions presented by this record, but we do not feel called upon to consider them. The rule in this department is settled by a long series of decisions that a pleading will not be regarded as frivolous unless its insufficiency is apparent upon a bare statement without argument, and when the trial courts disregard this rule and adjudge a pleading frivolous, this court has felt constrained to reverse the holding. (Manne v. Carlson, 49 A.D. 276" court="N.Y. App. Div." date_filed="1900-07-01" href="https://app.midpage.ai/document/manne-v-carlson-5187471?utm_source=webapp" opinion_id="5187471">49 App. Div. 276; Bedlow v. Stillwell, 45 id. 557; Dancel v. Goodyear Shoe Machinery Co., 67 id. 498; Vlasto v. Varelopoulos, 73 id. 145.) No doubt was thrown upon these decisions in Oakes v. Oakes (55 A.D. 576" court="N.Y. App. Div." date_filed="1900-12-15" href="https://app.midpage.ai/document/oakes-v-oakes-5188702?utm_source=webapp" opinion_id="5188702">55 App. Div. 576). There the question was waived and, in supporting the judgment entered upon the order in that case the' court expressly stated that the decision was not to be construed in any sense as a departure from the ordinary rule which obtains when the question is fairly presented.
Van Brunt, P. J., Patterson, Ingraham and Laughlin, JJ., concurred.
Order reversed, with ten dollars costs and disbursements.