App. Div.]

FIRST DEPARTMENT, JUNE TERM, 1898.

deposited with a bank for collection remains the property of the depositor and the bank acquires no title to it. (3 Am. & Eng. Ency. of Law [2d ed.], 815; Dickerson v. Wason, 47 N. Y. 439; Nat. Park Bank v. Seaboard Bank, 114 id. 28.) At the time of the appointment of the receiver, therefore, this note deposited with the defendant for collection remained the property of the corporation and the defendant acquired no title to it. Unless the defendant had a banker's lien upon the note, under the facts stated in the submission, the plaintiff, as receiver, would have been entitled to the possession of this note so deposited for collection upon his appointment as receiver, and his qualification under the order appointing him, and was entitled to the proceeds of the note when collected by the defendant. The rule may be broadly stated that a bank has a general lien on all moneys and funds of a depositor in its possession, for the balance of the general account, provided that that account is due and payable. Where, however, a note is discounted by a bank the bank has no lien upon the funds or property of the depositor until the note becomes due. (Jordan v. Nat. Shoe & Leather Bank, 74 N. Y. 473.). It was held in that case that as there was no contract for a lien for the balance of a customer's account to secure the payment of a note of the customer's which had been discounted by the bank, and which was not due, the law did not operate to give one, the court saying: "It would be in complete hostility to the whole purport and contemplation of the contract of discount. The purpose, existing and understood by the parties in that act, is, that the customer of the bank may draw out at his pleasure the avails of the discount. After the paper discounted falls due and payable and remains unpaid, unless other rights have intervened, the bank may hold a balance of deposits and apply it towards the payment of the paper. Now a debtor in one sum has no lien upon it in his hands, for the payment of a debt owned by him, which has not yet matured; nor has a bank, more than any other debtor. Both hold, as debtors, the moneys of their creditors, and may set up no claim to them not given by the law of set-off, counterclaim, recoupment or kindred rules." The court discusses the principle of a set-off in equity, and says: "Insolvency of a party sometimes moves equity to grant a set-off, which would not be allowed at law;" but it was App. Div.— VOL. XXXI.

*

2

FIRST DEPARTMENT, JUNE TERM, 1898.

[Vol. 31. held that "none but mutual debts could be set off against one another, and that by mutual debts was meant those which, on each side, were, at the time, due and payable." In Fera v. Wickham (135 N. Y. 223) neither of the claims sought to be set off had matured at the time of the devolution of title, but both accrued afterwards and the right of set-off was denied. In The Matter of Hatch (155 N. Y. 405) it was held that when the debt owing to the party who asserts the right is due, although that owing by such party did not accrue until after such devolution, the right of set-off could be enforced. See, also, Scott v. Armstrong (146 U. S. 499), where upon the question as to the right to set off against the amount due to a national bank a sum of money deposited with the bank prior to its insolvency and the appointment of a receiver, it was held that the right existed as to an obligation due by the bank when the receiver was appointed and not as to debts which became due to the bank after the appointment.

If the obligation of the bank was not due, then the right of setoff did not exist. Thus, on the 25th day of June, 1897, the plaintiff corporation was indebted to the defendant in the sum of $250 for the note due on that day, which the defendant had discounted and which was unpaid. It had a banker's lien upon the property in its hands to secure the payment of this past-due note. It had received from the maker of the note for collection a note due on August 4, 1897, and it was entitled to hold that note under its lien as security for the payment of the past-due discounted note; and upon the payment of the note received for collection it was entitled to apply the proceeds on that note so far as necessary to satisfy the note which had become due on June twenty-fifth. On the 14th of July, 1895, when the receiver appointed in this State qualified, the property of the corporation vested in that receiver and the receiver was entitled to demand from the defendant the note received by the defendant for collection, upon the payment to the defendant of the lien that it had upon the note, or the payment of the discounted note then past due. Its banker's lien did not attach to the note received for collection, except as to the note then due, as its lien extended only to obligations that were due. When, therefore, the defendant received the amount of the note deposited for collection it received it as agent of the plaintiff as receiver, and

App. Div.]

FIRST DEPARTMENT, JUNE TERM, 1898.

as to the balance over and above the amount necessary to discharge its banker's lien, that money belonged to the plaintiff as receiver.

We think, therefore, that the defendant was entitled to retain the sum of $250 and interest from June 25, 1897, and that the plaintiff was entitled to recover the balance of the amount received by the defendant in payment of the note deposited for collection, with interest from August 4, 1897. Judgment is directed accordingly. PATTERSON, RUMSEY and O'BRIEN, JJ., concurred.

Judgment directed for plaintiff as stated in opinion.

HUGO HOHENSTEIN, Appellant, v. WESTMINSTER CANDLE COMPANY, Respondent.

Undertaking in replevin— new sureties cannot be required by the court.

The Supreme Court has no authority, where a surety upon a bond given by the plaintiff in an action to replevin certain chattels has become insolvent, to require the plaintiff to give a new undertaking.

APPEAL by the plaintiff, Hugo Hohenstein, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 16th day of April, 1898, requiring him to substitute a new surety and to file a new undertaking in an action of replevin.

Felix Jellenik, for the appellant.

Otto II. Wefing, for the respondent.

MCLAUGHLIN, J.:

The plaintiff replevined certain chattels and for that purpose executed and delivered the undertaking, with two sureties, required by section 1699 of the Code of Civil Procedure. Thereafter one of the sureties became insolvent, and the defendant, on that ground, applied for and obtained the order appealed from, which requires the plaintiff to give a new undertaking.

We think the order must be reversed. There is no provision in the Code of Civil Procedure which entitles a defendant to an under

FIRST DEPARTMENT, JUNE TERM, 1898.

[Vol. 31. taking in an action of replevin other than that specified in the section above referred to. The plaintiff to obtain possession stated in an affidavit then made by him the actual value of the chattels claimed (§ 1695), and gave the undertaking required (§ 1699). If the defendant was not satisfied with the sureties named in the undertaking it could then have excepted to them (§ 1703), or it could have itself retained possession by giving the undertaking required by section 1704. Not having, however, seen fit to exercise either of these options, it became the duty of the sheriff to deliver the chattels to the plaintiff (§ 1706), and he, having performed that duty, the power of the court to regulate and control the possession of the chattels, pending the final determination of the action, was exhausted. The statute confers no authority upon the court to thereafter interfere with their possession or control, and no authority exists independent of it. In Manley v. Patterson (3 Code Rep. 89) where a similar provision of the Code was under consideration, EDMONDS, J., observed that after the property had been delivered to the plaintiff he could "discover no power in the court to order it redelivered to the defendant, except on final judgment; nor any mode in which an order for its redelivery prior to judgment can be enforced, so that it would seem that when the property has been delivered to the plaintiff, even when his sureties are utterly worthless, the statute has provided no remedy except the sheriff's responsibility for the plaintiff's omission to justify his sureties." Substantially the same view was taken with regard to another branch of the statute in United States Land Co. v. Bussey (53 Hun, 516) in which Mr. Justice BARRETT said, "the exercise of such a power would practically destroy the entire system so elaborately constructed by the Code, and would substitute discretion and equity for the strict legal rights contemplated by the scheme."

It follows that the order must be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

BARRETT, RUMSEY and O'BRIEN, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.

App. Div.]

FIRST DEPARTMENT, JUNE TERM, 1898.

MARY A. LODGE, Appellant, v. GEORGE W. MARTIN, Respondent.

Landlord and tenant — title divested by condemnation proceedings — rent subsequently accruing not recoverable by the landlord.

An owner of property in the city of New York whose title thereto has been divested in condemnation proceedings taken under an act of the Legislature, and who has received an award made to her therefor, by virtue of which proceedings the title to the premises vested in the city of New York, cannot recover rent for the premises which has accrued subsequent to such proceedings.

This is particularly the case in the city of New York where the statute, section 982 of the Consolidation Act (Chap. 410, Laws of 1882), relating to condemnation proceedings, provides that when land is thus taken, the obligation of the tenant to pay rent is discharged.

APPEAL by the plaintiff, Mary A. Lodge, from so much of an interlocutory judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of New York on the 28th day of March, 1898, upon the decision of the court rendered after a trial at the New York Special Term, as overrules her demurrer to a portion of the defendant's answer, and also from an order entered in said clerk's office on the 28th day of March, 1898, directing the entry of said judgment.

Theodore H. Friend, for the appellant.

Douglas Mathewson, for the respondent.

MCLAUGHLIN, J.:

This action was brought to recover rent for the use and occupation of certain real estate situate in the city of New York. The answer admits the hiring, use and occupation by the defendant of the premises, but alleges as a defense that, by virtue of an act of the Legislature, and proceedings taken thereunder, the plaintiff was, prior to the time the rent accrued, divested by an order of the Supreme Court" of all her right, title and interest of, in and to the premises in the complaint described, and of and from all right and title to the rent thereof, and that an award for such right, title and interest so taken and divested from the plaintiff was, by said order and proceedings, made to her, and that the plaintiff had duly accepted