Upton v. New York & Erie Bank

20 N.Y. Sup. Ct. 269

• Court: New York Supreme Court
• Decided: January 15, 1878
• Status: Published

Opinion

Mullin, P. J.:

In order to arrive at a satisfactory solution of tbe questions arising on this appeal, it is necessary to determine whether the delivery of the money by the savings banks to the New York and Erie Bank was by way of loan or deposit, as if it was the former, the banks are not entitled to a preference in payment by the receiver. (Rosenback v. The Manufacturers and Builders' Bank, 17 N. Y. S. C. [10 Hun], 148.)

It will be seen that the New York and Erie Bank and the savings banks entered into an agreément for deposits by the latter in the former. Loans are not mentioned, nor does it appear that they were contemplated. Pass books such as were given to all other depositors were delivered to, and used by, the savings banks. The parties obviously understood that the moneys of the savings banks were left with the New York and Erie Bank as deposits, and not otherwise. I had occasion in the case of Payne v. Gardiner (29 N. Y., 146) to attempt to draw the distinction between a loan and a deposit, and I came to the conclusion that such a distinction exists, and it is unnecessary to repeat the views there expressed; and within the principles decided in that case, the transactions between the New York and Erie Bank and the two savings banks were deposits and not loans.

It is urged by the appellant’s counsel that under the provisions of the act of 1875, the savings banks are not entitled to a preference for any deposits made prior to its passage. The act makes no such distinction. Preference is given for all sums deposited without regard to the time of making the deposit. It is urged, however, that in construing the statute it must be held to operate prospectively and not retrospectively, and hence all deposits made prior to its passage must be held not entitled to a preference under it. The act was intended to, and in terms does apply to all existing savings banks, and to all that should thereafter be created. It alters existing charters; it brings all savings banks under one uniform system, and requires all to conform to the new conditions and provisions. There is not a particle of evidence in the act, that all or any of the provisions of it should not operate tqjon all existing banks and upon all their operations. It was within the power of- the legislature to give the savings banks the preference ; it violated no contract; it disturbed no vested right. It had the power to alter and amend the charters of these institutions at pleasure, and as it was competent for the New York and Erie Bank to give to the savings banks this preference, the legislature could authorize and compel the insolvent bank or its receiver to give the preference.

The savings banks are entitled to have a preference for the interest upon the deposits. The interest is an incident of the debts, grows out of them, and, when due, is a part of them. No reason is perceived why a distinction should be made between them.

The judgment must be affirmed with costs.

Present — Mullin, P. J., Talcott and Smith, JJ.

Judgment affirmed with costs.