Opinion
June, 1899.
Charles F. Bridge (Peter A. Delaney, of counsel), for plaintiff.
John De Witt Peltz, for Albany Exchange Savings Bank.
The provisions which were included in the Revised Statutes (2 R.S., 406, part 3, chap. 7, tit. 3, §§ 75, 76) and the present provision of the Code of Civil Procedure (§ 1917) were designed to take the place of the ancient rule denying jurisdiction in law in actions on lost negotiable instruments and requiring all suits upon lost negotiable instruments to be brought in equity where the court would have power to require suitable indemnity to the defendant in the action. An action can now be brought upon such a lost instrument and a recovery had upon complying with the provisions of such section of the Code of Civil Procedure. The statute expressly relates to a negotiable promissory note or bill of exchange. It does not in any way relate to a non-negotiable instrument. In a suit on a lost instrument it is not necessary to give or tender a bond of indemnity unless the lost instrument sued upon is negotiable. Hinsdale v. Bank of Orange, 6 Wend. 379 (see note); Blade v. Noland, 12 Wend. 173; Pintard v. Tackington, 10 Johns. 103; Rowley v. Ball, 3 Cow. 303; Des Arts v. Leggett, 5 Duer, 156; S.C., 16 N.Y. 582; Wright v. Wright, 54 N.Y. 437; Terwilliger v. Terwilliger, 27 N.Y.S. 284.
The pass-book of a savings bank is not a negotiable instrument. Kummel v. Germania Savings Bank, 127 N.Y. 488; Smith v. Brooklyn Savings Bank, 101 N.Y. 58; Allen v. Williamsburgh Savings Bank, 69 N.Y. 314; Beaver v. Beaver, 53 Hun. 258; McCaskill v. Connecticut Savings Bank, 60 Conn. 300; 25 Am. St. Rep. 323.
The Banking Law provides: "The sums deposited with any savings bank, together with any dividends or interest credited thereto, shall be repaid to such depositors respectively, or to their legal representatives, after demand, in such manner and at such times, and after such previous notice, and under such regulations, as the board of trustees shall prescribe" (§ 113).
The Banking Law also provides: "No savings bank shall make or issue any certificate of deposit * * * or pay any interest or deposit, or portion of a deposit, or any check drawn upon itself by a depositor unless the pass-book of the depositor be produced, and the proper entry be made therein at the time of the transaction.
"The board of trustees may, by their by-laws, provide for making payments in cases of loss of pass-book, or other exceptional cases where the pass-book cannot be produced without loss or serious inconvenience to depositors" * * * (§ 122).
Under these provisions of the Banking Law such reasonable by-laws regulating the withdrawal of money may be made and enforced as the board of trustees of a savings bank may deem to the interest of the bank. Such provisions of the by-laws are evidence of the contract between the bank and its depositors. The pass-book is simply evidence of the deposit. Banking Law, § 113.
In the absence of any rules assented to by its customers a savings bank is to be governed by the same legal principles applicable to other moneyed institutions. Allen v. Williamsburgh Savings Bank, 69 N.Y. 314.
A provision in the by-laws of a savings bank to the effect that in case a pass-book is lost or destroyed the deposit shall not be repaid unless the bank shall first receive satisfactory indemnity, is a reasonable provision; and when it is so provided in the by-laws such provision becomes a part of the contract between the bank and its depositor and should be and is enforced as such by the courts. An examination of the authorities cited by the defendant bank, holding that a savings bank is not bound to pay a deposit to a depositor without production of the book, or satisfactory indemnity, will show that such decisions are based upon the contract between the depositor and the bank or by reason of some peculiar facts or circumstances applicable only to the case so decided. The by-laws of the defendant bank, in terms, provide that no money whatever shall be drawn out, without the depositor presenting the pass-book. The provision requiring the production of the pass-book at the time of the withdrawal of any part or all of the deposit is for the benefit of the bank. The simple fact that a pass-book is produced is not sufficient to justify a savings bank in paying a deposit. The bank must use reasonable care and diligence to ascertain that the person presenting the pass-book is in fact the depositor or a person legally entitled to receive the deposit. In this case it is impossible for the depositor or any other person to produce the pass-book. It is admitted that the pass-book has been lost, and cannot be found after diligent search. The by-laws of the defendant bank recognize that it may become impossible for the depositor to produce the pass-book. The provision relating to lost pass-books is a follows: "In the case of lost books the bank will decide as to the person to whom payment shall be made." This provision of the by-laws is a part of the contract in this case but it does not mean that the bank can decide not to pay the deposit to any person or that it will not pay the deposit without adequate indemnity. The bank has had knowledge since 1890 that the pass-book is lost and no claim has been made for the deposit, except by the depositor and the plaintiff as her executor, and its decision refusing to pay the deposit to the executor of the last will and testament of the depositor is unreasonable.
The plaintiff is entitled to judgment in the sum of $3,900 with interest thereon from September 10, 1897, besides costs, and a decision and judgment may be prepared accordingly.
Judgment accordingly.