20 Barb. 119 | N.Y. Sup. Ct. | 1855
The Knickerbocker Savings Institution, chartered by the act passed April 8, 1851, chapter 100, amended by chapter 257 of laws of 1853, while in existence, and in the course of its business, on the 7th of January, 1854, out of the moneys deposited with it, loaned to the defendant $700, taking from him as security for its repayment when required, an hypothecation of thirty-two shares of the capital stock of the Knickerbocker Bank, which stock was owned by the defendant, and was of the nominal value of $800, and also taking his note, promising to pay the $700 on demand with interest. The savings institution afterwards became insolvent, and its assets and affairs passed by an order of a justice of the court, to the plaintiff as receiver, This action is brought to enforce payment of the note. The complaint counts only upon the note. The above facts are in substance averred in the complaint and answer, and were admitted by both parties at the trial; and no proofs were given on either side.
The defendant claims that the transaction was in violation of both of said acts, and particularly of the 6th section of the latter act; and that the plaintiff is not the lawful holder of the note. Judgment was rendered, at the circuit, in favor of the plaintiff, for the amount claimed, with interest and costs, which judgment is now the subject of review by the court at general term.
The note in question was not a violation of the charter of the savings institution, nor of the act of 1853. The 6th section of the latter act was intended to be, and is, only a prohibition against" the loaning of the funds of savings institutions on mere personal securities. It was intended for the protection of the depositors, who, being generally in moderate circumstances, and not well able to take care of their funds, would wish to deposit them where they would be safe. The legislature meant to make certain the securities to be taken for them by prohibiting
A mortgagor, when sued upon his bond, could not set up that the latter is void under the section in question. In that case the loan would be, not upon the bond, but upon both the bond and mortgage; principally the latter. In the • present case, the loan may be said to have been made upon the hypothecated stock, with the note as evidence of the debt.
If the note were void, and the point made by the defendant’s counsel, that the action should have been for money lent, were technically sound, (See Utica Ins. Co. v. Kip, 8 Cowen, 20,) such a count might be added to the complaint, in any stage of the action, or the complaint would be considered as amended accordingly; or, as these facts are stated in the answer, they could be treated as proved at the trial, and the defendant could not object to them on the ground of variance, as he could not pretend that he had been misled. (Code, §§ 169, 170, 275.)
The charter of the United States Trust Company of Hew York is not unconstitutional. It is not a corporation created for banking purposes, within the meaning of section 4, of article 8, of the constitution. Banking is there used in its then and still familiar and popular sense, that business which might be carried on by banking associations under the law to authorize the business of banking, passed April 18,1888. That law had been amended and reference made, each time, to its title
The judgment must be affirmed, with costs. The receiver, on the defendant’s giving security for the costs of the action, and of an appeal to the Court of Appeals, may waive any further security on said appeal, as there is a large number of cases in which the same questions are intended to be raised, and it is important to have the decision of the court of last resort as promptly as possible in the case.
Mitchell, Clerke and Cowles, Justices.]
