Grace v. Corn Exchange Bank Trust Co.

Appellate Division of the Supreme Court of New York

Grace v. Corn Exchange Bank Trust Co.

259 A.D. 896, 19 N.Y.S.2d 925

CourtAppellate Division of the Supreme Court of the State of New York

DecidedMay 14, 1940

StatusPublished

Cited by1 cases

This text of 259 A.D. 896 (Grace v. Corn Exchange Bank Trust Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Grace v. Corn Exchange Bank Trust Co., 259 A.D. 896, 19 N.Y.S.2d 925 (N.Y. Ct. App. 1940).

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The facts are amply and clearly presented in the dissenting opinion of Mr. Justice Adel.

The immense volume of daily transactions in the 86th Street branch of defendant compelled a division of labor among the subordinates who handled the details. Even mechanical devices were used for speed and accuracy. It is not claimed that defendant’s method of doing business was not in accord with that in general use among large banking institutions^ in the metropolitan area. Checks to the credit of an account were handled by one group of the staff of employees, cheeks drawn against an account by a different group, the attention of neither being directed to the details with which the other was concerned. When a check was drawn by the trustee herein and deposited in his personal account, the crediting group did not pay any attention to the name of the drawer, nor did the debiting division give any heed to the name of the payee. Thus, trust funds found their way into the personal account without the knowledge of any one in authority and, [897]*897therefore, the misuse of the trust account through the personal account could not be known. Though the entire transaction appeared in defendant’s books, the aggregate knowledge thereof was not possessed by any one in authority and could not be disclosed without an audit of the books. Under the system in use, the attention of no such person was so focused on the accounts as to enable htm to discover misappropriations of the trust funds through the individual account. These views do not conflict with Bischoff v. Yorkville Bank (218 N. Y. 106).

The factual showing is insufficient to charge defendant either with actual knowledge of, or reason to believe that there were, misappropriations of the funds of the trust account. There is, therefore, no warrant for so much of the judgment as is contained in the first decretal paragraph and the findings of fact and conclusions of law contained in the opinion of the Special Term upon which the same is based. Otherwise, there is concurrence with the conclusions of Mr. Justice Adel.

New findings of fact and conclusions of law in accordance herewith will be made.

Lazansky, P. J., Carswell and Johnston, JJ., concur; Adel and Close, JJ., dissent in separate opinions. Settle order on notice. [See 171 Mise. 522. Opinion rendered by Special Term on settlement of judgment is reported post, p. 904.] ,

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The facts are amply and clearly presented in the dissenting opinion of Mr. Justice Adel.

The immense volume of daily transactions in the 86th Street branch of defendant compelled a division of labor among the subordinates who handled the details. Even mechanical devices were used for speed and accuracy. It is not claimed that defendant’s method of doing business was not in accord with that in general use among large banking institutions^ in the metropolitan area. Checks to the credit of an account were handled by one group of the staff of employees, cheeks drawn against an account by a different group, the attention of neither being directed to the details with which the other was concerned. When a check was drawn by the trustee herein and deposited in his personal account, the crediting group did not pay any attention to the name of the drawer, nor did the debiting division give any heed to the name of the payee. Thus, trust funds found their way into the personal account without the knowledge of any one in authority and, [897]*897therefore, the misuse of the trust account through the personal account could not be known. Though the entire transaction appeared in defendant’s books, the aggregate knowledge thereof was not possessed by any one in authority and could not be disclosed without an audit of the books. Under the system in use, the attention of no such person was so focused on the accounts as to enable htm to discover misappropriations of the trust funds through the individual account. These views do not conflict with Bischoff v. Yorkville Bank (218 N. Y. 106).

The factual showing is insufficient to charge defendant either with actual knowledge of, or reason to believe that there were, misappropriations of the funds of the trust account. There is, therefore, no warrant for so much of the judgment as is contained in the first decretal paragraph and the findings of fact and conclusions of law contained in the opinion of the Special Term upon which the same is based. Otherwise, there is concurrence with the conclusions of Mr. Justice Adel.

New findings of fact and conclusions of law in accordance herewith will be made.

Lazansky, P. J., Carswell and Johnston, JJ., concur; Adel and Close, JJ., dissent in separate opinions. Settle order on notice. [See 171 Mise. 522. Opinion rendered by Special Term on settlement of judgment is reported post, p. 904.] ,

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259 A.D. 896, 19 N.Y.S.2d 925, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grace-v-corn-exchange-bank-trust-co-nyappdiv-1940.

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