Dexter Savings Bank v. Copeland

Danportk, J.

This case having been submitted to auditors comes before this court upon their report with the documents and evidence attached, with the provision that if in the " opinion of the court the plaintiff has made out a prima facie case for any balance, the action is to stand for trial upon such items as the court shall find the plaintiff has made a legal prima facie case to sustain, otherwise, judgment for the defendant shall be rendered in accordance with the law of the case.”

Under this report the first question that arises is whether the plaintiff has made out a prima facie case for " any balance ” in its favor. The report of the auditors shows a balance for the plaintiff and so far perhaps a prima, facie case for that balance. But from the terms of the report as well as from the course pursued by the counsel in the argument we do not understand that the balance so found is sufficient, or that the parties so understood it, but rather that the decision shall rest upon the facts reported.

The auditors have not made a full report of the evidence upon which their conclusions are based, but have reported what certainly appears to be a full, fair and clear report of the facts upon which their statement of the account was made up. Belying upon those facts there are several items allowed by the auditors to which the defendant objects and some credit dis *268 allowed which he claims should have been allowed. On the other hand it does not appear that any item of charge has been omitted which the plaintiff claims should have been allowed, or credit allowed which should have been rejected.

There is one item claimed by the defendant as credit, the money received by the bank upon the testator’s note for two thousand dollars, upon which the auditors have reported the facts but which they have neither allowed nor rejected; leaving it to the decision of the court. Assuming the account as stated by the auditors to be correct as far as it goes, if this item should be allowed, it changes the balance, and upon this question depends the result of this case in its present stage.

Ought the proceeds of this note to be allowed the defendant as a credit ? From the facts as they appear in the report we think they should be. The note was in fact never delivered to the bank. It remained under the maker’s control so long as he lived, was payable by its terms only from an insurance upon his life except at his.option, and it does not appear that during his life he elected to pay it in an}' other way, nor was it in his lifetime accepted by the bank for its officers had no knowledge of its existence until after his death.

But independent of these considerations by an indorsement upon the back of the note which became a part of it, it was given to make up in part for a loss for which the maker was neither legally nor morally responsible. The note was therefore without consideration and not valid or binding upon the maker even as a gift as is universally conceded, certainly since the case of Parish v. Stone, 14 Pick. 198 . It could not therefore have been collected by any legal process and the appropriation of the money received upon the insurance policy to its payment was without authority, or validity.

The note itself, as well as the indorsement upon the back, shows that it was secured upon a life insurance policy. The policy shows an absolute assignment to the bank, except so far as it was limited by a separate, but accompanying writing. This assignment, like the note, was not delivered or accepted, nor was it intended to operate during the assignor’s lifetime. *269 It being, therefore, in the nature of a testamentary disposition of his property, was a void instrument, either with or without the note. But under the accompanying memorandum, the trustees of the bank, though having no legal rights to the proceeds of the insurance, unlike the note, had a color of authority for collecting the money and appropriating it as directed. This memorandum explained more fully the reasons for, and purpose of, obtaining the insurance, and what was to be done with it in case of the death of the insured. At the beginning, after recognizing the liability to sudden death or incapacity to transact business, the insured declares his purpose to be, "that some way may bo provided to make good any possible loss to the bank, by reason of any neglect of mine, or occurring under my administration, during my term of office. ” He refers to the Leavitt loss, and of his intention, if he lives long enough, to make good to the bank that loss. He then says, "I desire strict and exact justice in the execution of this trust, ” and names certain persons he desires to have appointed by the trustees of the bank to examine the securities, calculate the probable losses, and pay the balance, if any, to his family. At the close, ho adds a request which amounts to a condition that if ho made good the loss, his family should be indemnified against all liability for dower under deeds of warranty he had given of the Leavitt property. Here then, was an instrument intended to impose a trust upon the officers of the bank to receive the money upon the policy, and after pursuing the course pointed out to ascertain the losses to the bank, both those for which the insured was liable, as well as those for which he was not, and after making such losses good, pay the balance to his family. Without following the directions, the trustees have appropriated sufficient of the money to pay the note and call it a gift to the bank. This money has gone into the funds of the bank: it has been entered upon its books. This suit is, in effect, to recover a deficit as shown by the books. This is as much a credit as any other sum credited upon the books, and in making up the deficit, should be taken into consideration precisely as the other sums were; and there is no more need of filing it in set-off than of the others. The appro *270 priation was an illegal one. Making the disposition of it they did, the trustees can not complain if it is treated as a credit, and if so treated, the defendant has the right to say it shall be first applied to losses for which his testator was liable, and by making that claim in this action, it follows that the amount necessary and used to make good such losses, he can not recover in this or another action. He can not recover for the excess in this action, for no account in set-off has been filed. Whether he can do so in any other, we have no occasion now to decide.

There is, therefore, from the facts reported, no prima facie balance in favor of the plaintiff, and under the provisions of the report, the court must render " such judgment for the defendant as shall be in accordance with the law of the ease. ”

That judgment can not be for any balance, for the reason already given, that no account has been -filed in set-off, nor can any specific balance be made, for at-most under this report, we can only decide whether any item is prima facie sustained by the facts, and can not decide its validity as upon a full hearing upon its merits. Therefore, no judgment should be entered which will preclude the plaintiff from a further healing upon these items in another action, so far as they may be available in defence of a suit to recover the money paid upon the note or otherwise. For these reasons the entry must be, Plaintiff nonsuit.

Peters, C. J., Virgin, Emery, Foster and Haskell, JJ., concurred.