Friday, September 20

Otago Witness, Issue 2170, 26 September 1895, Page 13

Friday, September 20

DOWXES AND ANOTHER V. TUB BANK OF NEW zi; u.i.vn. In the above previously heard case bis Honor gave judgment as follows : — That Elmer obt lined his overdraft from the bank by fraudulent misrepresentation is plain. It does not, however, follow, bt cause part of the proceeds of that overdraft wero placed in the bank on fixed deposit iv tho names of Klmer and Bootten, that the bank can retain thi-j amount towaids recouping itself the money of which it may have been thus defrauded. The money was placed on deposit at the request of Bootten, to replace money of which Elmer and Bootten ■were truntees which had come to Elmer's hands, and for which Elmer and Bootteu wcro responsible. Bootten was wholly unnwaic of Elmer's fraud, and, indeed, undir.stiod that Elmer's account, from which the money was drown, was in credit. Bootten, by ace pting tha deposit in the names of Klmer aud Boottcin, gave up the right of action ho previously had sgainst JSliner to innke him restore the trust fund. He is, therefore, according to the dcciBion in the case of Taylor v. BUkelock (32 CD., 5*50), in the position of a pui chaser for value. The sum of j£2lß 17s 21 was deposited in the joint names on the 15th January 1895, and the sum of £100 on the 4th of February, each for the fixed period of 12 months from date. The bank had no notice of any trust at the time of the deposit, and as between the bank and tho depositors it must have been contemplated that the right to the deposit should accrue to the survivor. As to the deposit for £100, this was expressed in the application, but wbcie a liability of two persona is created, and nothing more is said when the liability is cteated, then as between the creditors and the debtor the liability is to the two jointly, and the right to sue enures to the surviving creditor only. At various dates, between the ?sth of October 1894 aud the 18th of February 1595, the bank discounted for Elmer oifeht promissory notes of Rootten's for different suniH. Three of theEe were dibcounted before the date of the first deposit, four after the date of the first deposit and before the date of the second, and one after the date of the second deposit, dn the 3rd of March Klmer died. On that day one of the above promissory notes for £19 6* was overdue, but all t lie others were current. The one of longtst currency fell due on the 19th of May They therefore were payable before the duo dates of either of the deposit receipts. On the 4th of March the bank had notice that the moneys included iv the deposit receipts were truht moneys. It seems to me that the bank cau at any rate assert as against the original depositors no rights arising out of any transaction subsequent to this date, an<l that the effect of th« no 1 ice, so far as the bank is concerned, may be first considered apart from the question of trust, and as if there hid been on that day an asiignment at law by the surviving depositor of the debts due on the deposit receipts, and notice of such assignment had been then given to the bink. Before and at the time of the notice the position, therefore, was that Booi ten had, by survivorship, become solely entitle! to payment of ihe money comprised iv the deposit receipts, that he was indebted to the bank in respect of £IP 6's (the aniouut of one promissory note), and that he was liable to the bank on the other promistoiy notes which were then current but would mature before the deposits matured. The question then is, as the bank would when the deposit receipts matured be entitled to set off against them all sums then due by Boolten in respect to the promissory notes it Bootton hnd tetained his interest;, whether B< otten an by parting with his interest deprive it of tbat light. So far as tbe £19 6s is concerned, tho casi- of Wilson v Gabriel (4 B and S., 24:0 is conclusive to show th.it he cannot, and that his at signet's woubl take subjtct to the right of the batik to set oIF tint amount. As to the current pmiiiis-ovy notes, the case is somewhat diffeient. Before <iml nt the time of the notice of the 4th of March ftootlen was indebted to the bank in the amounts <>f thorn, which though due were not pie* -u'ly payable. In re-pect to th' se piomissoiy note-, th* c-tst! of Clnitie v. 'faun ton, 1) lrnard, aud ( 'o (Ift)-'J, 2G, 175) serins to apply, and to decide that the bank would be entitled to set them off against tho assignee of the deposits as being debts due by the assignor at the time of the assignment though not then payable. So albo, if tbo analogy tbe rule laid down in tbe case of George v Clagett (7 T.ll , 35!)>, referred to in the last mentioned case, be followtd, would the bank be eutitled to .set them off Tlim bank is entitled, when it has notica tbat some person other than the person it has con ti acted with has btcome entitled to the b -Befit of the contract, to be placed in as favourable a situation with respect to such Utter pert on as it then was with regard to the actual contractor. As pointed out in the judgment in Christie v. Taunton, Delmard, and Co., the defendants in the c*«o of George v. Clagett were allowed to set ofF a bill given by the agent before, but not payable till after the d ite whi n the plaintiff, tha undisclosed principal, cave notice of his title to the defendants. If then the assignee of Bootten would have taken the deposits subject to the right of the bank to set off ibe promissory notes, how is the case affected by the circumstance that tin deposits were of trust moneys? Now, the bank at tho time the deposits were made had no notice of any trust. The b»nk receiveeHhe deposits from Elmer and Bootten as bi-ing their own moneys, and constituted itself their debtor. The contract of the bank with Elmer and Bootten is on the footing tbat they are tbe joint owners and benelicwl«y entitled to the Hums reported, aßd that llio bank becomes a debtor to them or the survivors of them in respect to these turns. If the bank has or acquires any rights as a creditor against them or either or them, these rifchts the bank in the ordinary counse of business is to be allowed to s-;t off against the cl.iim of them or cither of them in r< spect to the sums deposited in the same way und to the Fame extent a< it could against any other like rkima of p. r-ons beneficially entitled. Any poison claiming beneficiiilly under Elmer and Bootten mint tike f-uliject to any rights tbat the bank nja> have acquired under tbe contract up to the lime tint the bank has notice of the existence of thu hencfic'nl interest. It seems to me tint the persons beneficially inteie*tel Etand in no b •tter pn-ition than if there had been originally no truht at all, and Bootten bad on the 4th of March as-signed the debt due by tbe bank on the deposit to them as purchasers for value, and had giveu tbe bank notice of the assignment. As I have already s»id, I think such a pun-has- r would take, subject to tbe right of the bank in an action against it for the den isitc, to set off as well the amounts of the promissory notes curicnt as of the promissory notes due (at the time of their assignment) by the assignor. Ido not think, however, that the bank is entitled to set off tbe £300 duo by Bootten to * liner under the moitg.ige», which Elmer by memorandum of January 17 charged in favour of tbe bauk, with the suras due by him (Elmer) to the bank, and which he agreed to submort.age to the bank to secure these sums. Tho rights of the parties must be determined as on March 4, when the bank icceiyed notice of the existence of the trust. At that lime the principal money secured by the moitgigc was not due, nor, if the interest were punctually paid, would the principal become due until October 18'.)5, after tbe deposits had m itured The bank bad merely the agreement as übove-mentioncd, and no submortgage had been executed. I do not think it even appears whether notice of the agreement by Klmer to *ub mortgage tad been then given to Bootten. In respect to this latter claim to set off, the case of Wats"n v. the Mid-Walea Railway Company (L.R . 2 C.P., 593) applies, and the claim cannot, in my opinion, be sustained.