credit of this account were paid out by the defendant on five separate drafts or written orders drawn in the name of Ellen Neville, as follows: December 28, 1878, $41.43; June 2, 1880, $50; July 30, 1881, $70.45; August 14, 1883, $56.62; September 1, 1883, $937. No part of these moneys was paid to the legal representative or representatives of Ellen Neville, but the payments referred to were made to her mother or to one of her sisters, and the signatures on these five drafts or orders, purporting to be the signatures of Ellen Neville, were not her signatures, but were made by her mother or one of her said sisters. The findings relating to the conduct of the bank officials in the payments of these drafts are as follows: "That by a critical examination and comparison of the said signatures on each of the aforesaid drafts or orders with the true signature of said Ellen Neville, entered and signed as aforesaid in the book of signatures, it would have been apparent to a competent bank officer that neither of the signatures to said drafts or orders was the genuine signature of said Ellen Neville. That, at the respecby the person who might present the book, or according to the charter and by-laws, as set forth in a book of deposit delivered to the depositor, and these by-laws provided that, "as it will be impossible for the officers of the corporation to identify every depositor, the production of the book of deposit will be held to show that the person producing the same is legally authorized to receive the deposit; and the corporation will not be responsible for loss," etc. It was held that this stipulation between the bank and the depositor did not relieve the bank from the duty of acting in good faith and with reasonable care, when the agent fraudulently presented the book and obtained payment. Such a stipulation between the parties "does not mean that the bank is absolved from all obligation of caution. A depositor is a beneficiary of a fund held by the bank as trustee. The trustee is incorporated for the purpose of exercising care in the management and preservation of deposits. This object would not be accomplished by care in the investment of the fund, and recklessness in paying a deposit to a wrongful possessor of a book. The by-law and agreement are to be construed according to the authorized business and organic object of the institution. The terms of deposit cannot be understood to make the books payable to bearer, like bank bills, without imputing to the trustee a deliberate and studied attempt to expose beneficiaries to a great and unnecessary peril of loss, and to deprive them of important security which the trustee was chartered to furnish." The fact of the by-law, as in this case, beginning with the statement that the bank officials will be unable to identify every depositor, so that the presentation of the book alone will be deemed sufficient authority for payment, puts cases involving such stipulations in a class by themselves, according to some decisions. tive times at which such drafts or orders were presented to the defendant for pay. ment, the defendant made no critical examination or physical comparison of the signatures thereon with that of the said Ellen Neville entered and signed in the book of signatures of depositors kept by the defendant aforesaid. That said drafts or orders were paid by defendant on presentation of the same with the pass book, and the defendant made no effort, by a critical examination or physical comparison, to ascertain the genuineness of the signatures of any of said drafts or orders, or to ascertain the identity of the person presenting the same. That there does not exist such a disparity or difference between the signature of said Ellen Neville upon the signature book of the defendant and the several signatures upon said five checks, or any or either of them, as to create doubt or misgiving concerning the genuineness of said five signatures, or any or either of them, in the mind of a competent and reasonably careful bank officer, when presented by a person unknown to him with a bank book, and therefore the defendant character, stating also the reason for it, namely that "the officers may be unable to identify every depositor," contains a limitation upon its effect and meaning, and shows that the rule is only applicable to cases where the officers are unable, by the exercise of reasonable care and diligence, to identify; and that, if they can perceive the want of identity by reasonable care, they must use that which is reasonable care under all the circumstances, or be responsible to the depositor. Ladd v. Augusta Sav. Bank, 96 Me. 516, 58 L. R. A. 288, 52 Atl. 1012. Where, however, a by-law practically identical with those last considered ended in a statement that "in all cases a payment upon presentment of a deposit book shall be a discharge to the corporation for the amount so paid," and the fraudulent claimant presented not only the deposit book, but also a forged order purporting to be signed by the depositor, it was held that the argument that the by-law was intended to protect the bank against the risk of mistake as to the personal identity of its depositors, and that therefore (as in the last case, Ladd v. Augusta Sav. Bank, 96 Me. 516, 58 L. R. A. 288, 52 Atl. 1012) it did not apply to a case where there was no mistake as to identity, but the payment was made upon a forged order purporting to be signed by the depositor, would be perhaps conclusive in favor of the depositor if it were not for the clause providing that the presentment of the book should be a discharge of the bank "in all cases;" in both cases the purpose of the by-law was to authorize the bank to rely upon the presentation of the book as its security against fraud; and if the bank, using reasonable care, and in good faith, paid the account upon the presentation of the book, the bank was discharged. Levy v. Franklin Sav. Bank, 117 Mass. 448. And in a later Massachusetts case, going So it is laid down that a by-law of this further, it was held that since the by-laws of exercised due care and caution, and was not guilty of negligence, in paying the five checks in question, nor in paying any or either of them." These findings of fact were followed by the legal conclusion that the complaint should be dismissed, and the judgment entered thereor has been unanimously affirmed by the appellate division. Mr. Harry D. Williams, for appellant: The defendant should be held liable for the breach of its express agreement that, "on the decease of any depositor, the amount standing to the credit of the deceased shall be paid to his or her legal representatives when legally demanded." Mahon v. South Brooklyn Sav. Inst. 175 N. Y. 69, 96 Am. St. Rep. 603, 67 N. E. 118; Podmore v. South Brooklyn Sav. Inst. 48 App. Div. 218, 62 N. Y. Supp. 961. 113 N. Y. 600, 21 N. E. 985; Farmers' Loan & T. Co. v. Wilson, 139 N. Y. 284, 36 Am. St. Rep. 696, 34 N. E. 784. The fact of unauthorized payment having been established, the burden was on the defendant of showing affirmatively some valid reason for such payment. Abramowitz v. Citizens' Sav. Bank, 17 Misc. 298, 40 N. Y. Supp. 385; Allen v. Williamsburgh Sav. Bank, 69 N. Y. 317; Farmer v. Manhattan Sav. Inst. 60 Hun, 462, 15 N. Y. Supp. 235. Messrs. Marshall & Rebadow, for respondent: Before the by-law relating to payments to personal representatives can have any application, the bank must have actual notice of the depositor's death; or at least circumstances must have come to its knowledge sufficient to put it upon inquiry, The bank was bound to take notice of and require further investigation in the the depositor's death. Hoffman v. Union Dime Sav. Inst. 41 Misc. 517, 85 N. Y. Supp. 16, 95 App. Div. exercise of reasonable diligence. If the bank pays without knowledge of the drawer's death the money cannot be 329, 88 N. Y. Supp. 686; Marlett v. Jack-recovered back. man, 3 Allen, 287; Christie v. Royal Bank, Edwards, Bills & Notes, 2d ed. p. 546; 1 Dunlop, B. & M. 745; Weber v. Bridgman, Tate v. Hilbert, 2 Ves. Jr. 118; Donlan v. the bank, subscribed by the depositor, provided that, "as the officers of the institution may be unable to identify every depositor, the institution will not be responsible for any loss sustained when a depositor has not given notice of his book being stolen or lost;" and the plain object of the by-law was to exonerate the bank from loss occasioned by the inability of its of ficers to identify the depositor, and to throw upon the depositor the risk of keeping his book safely, when the account was paid in good faith and without negligence, upon presentation of the book, this was exactly the case which the by-law was intended to provide for; and the depositor could not recover without a violation of the terms of the contract which the bank made with him. Goldrick V. Bristol County Sav. Bank, 123 Mass. 320. Similarly, it has been held, without special regard, apparently, to the question of reasonable care, but more by the force of a strongly worded contract, that where the by-law printed in the deposit book provided, "If any person shall present a deposit book at the office of this corporation, and allege himself or herself, untruly, to be the depositor named therein, and shall thereby obtain from the officers of this corporation the amount deposited, or any part thereof, and the actual depositor shall not have given notice at the office of his or her book having been lost or taken from him or her, this corporation will not be responsible for the loss so sustained by any depositor," this provision was reasonable and necessary for the protection of the bank, and was a complete defense to an action for the amount of a deposit withdrawn by a stranger presenting the book through the mail, with a forged check. Burrill v. Dollar Sav. Bank, 92 Pa. 134, 37 Am. Rep. 669. In an interesting New Jersey case, involving the construction of a similar by-law, where the defense to an action for a savings-bank account was payment to a woman who repre | sented herself to be one of the plaintiffs, and presented the book, whereupon the bank officers used due care to identify the payee, but the by-laws, printed in the plaintiffs' book, provided that deposits "shall be drawn out only by the depositors in person, or by their written order, or by some person legally authorized, and only upon production of the depositor's book, that such payments may be entered therein, and all payments to persons who present the deposit book shall be valid payments to discharge the bank,"-it was thought by the supreme court that by these terms only three classes of persons could lawfully draw a depositor's money: (1) The depositor, upon the presentation of his book; (2) a person presenting the book with the written order of the depositor to draw the money; (3) any person lawfully authorized to receive the money on presentation of the book; and hence a payment to a stranger, even if with due care, was no discharge to the bank; for the last clause of the by-law, that "all payments to persons who present the deposit book shall be valid payments to discharge the bank and its officers." meant payments to such persons as were legally entitled to receive payment under the conditions previously specified in the by-law, that is, one of the three classes named. But this decision of the supreme court was later reversed by the court of errors and appeals, which declared that the proper construction of the word "payment" as it was used in the last clause of the by-law in question was the turning over of money by the holder of it to any one of a designated class of persons; and that that class was not one inclusive merely of the three classes mentioned earlier in the by-law, but it was the class of "persons who present the deposit book." So a payment made by the bank in good faith and in the exercise of due care, to any person who produces the pass book, operates to discharge the bank, without regard Provident Inst. for Savings, 127 Mass. 183, | fact found is based upon sufficient evidence Defendant was only required to use ordinary care and diligence, and, having performed its duty in that respect, it is relieved from liability. Reed v. McCord, 160 N. Y. 330, 54 N. E. 737; McGuire v. Bell Teleph. Co. 167 N. Y. 208, 52 L. R. A. 437, 60 N. E. 433; General Savings Bank Act, Laws 1875, § 408; Appleby v. Erie County Sav. Bank, 62 N. Y. 12; People v. Third Ave. Sav. Bank, 98 N. Y. 661; Wall v. Emigrant Industrial Sav. Bank, 64 Hun, 252, 19 N. Y. Supp. 194; Hales v. Seamen's Bank for Savings, 28 App. Div. 409, 51 N. Y. Supp. 140. (Marden v. Dorthy, 160 N. Y. 39, 46 L. R. A. 694, 54 N. E. 726; Reed v. McCord, 160 N. Y. 330, 54 N. E. 737; People ex rel. Man hattan R. Co. v. Barker, 152 N. Y. 417, 46 N. E. 875), and the judgment must be sustained unless the conclusion of law upon which it is predicated is erroneous, or other fatal errors affect the rulings made upon the trial. The immediate question presented by this appeal is whether, upon the record before us, the plaintiff is entitled to recover; and, as the decision of this question necessarily involves an inquiry into the duties and responsibilities of savings banks toward their depositors, the case is one of more than ordinary professional interest and practical importance. Savings banks are prominent factors in our modern busi Werner, J., delivered the opinion of ness life. Many of them count their dethe court: Upon the foregoing facts the trial court dismissed the complaint. At the appellate division the judgment entered upon that decision was unanimously affirmed. This court must therefore assume that every to whether the person is entitled to draw the money. Cosgrove v. Provident Inst. for Savings. 64 N. J. L. 653, 46 Atl. 617, Reversing 64 N. J. L. 39, 44 Atl. 936. It was This is to be contrasted with a case in the New York court of appeals, Smith v. Brooklyn Sav. Bank, 101 N. Y. 58, 54 Am. Dec. 653, 4 N. E. 123. There the by-laws provided that "all payments made by the bank upon the presentation of the pass book, and duly entered therein, will be regarded as binding upon the depositor; money may also be drawn upon the written order of the depositor or his attorney when accompanied by the pass book." held that, although it might have been intended by the bank in framing the by-law that the phrase "all payments" should mean any sum of money delivered by it to any person who might, for the time being, have in his possession the pass book, yet, in order to make that understanding obligatory upon the customer, it was also necessary that he should have a similar understanding, or that the by-law should have been expressed in language incapable of any other fair construction; the phrase "all payments" could not be construed to mean any sums which the bank might choose to disburse, regardless of the person to whom they were made; so payment could be legally made only to the depositor or his authorized representative, and, in order to constitute any other transaction a payment, it is essential to its validity that it should be authorized by the person entitled to demand it. The by-law seemed to contemplate but two modes of payment. both requiring the presentation of the pass book, one providing for payment to the depositor personally, and the other for payment in his absence to a third person, presenting with the pass book a written order of the depositor. Hence, when the bank paid an account to a stranger presenting the pass book, but without any written order of the depositor, genuine or posits by the millions, and number their depositors by the thousands. Many, if not most, of these depositors are persons in the humbler walks of life, living in widely scattered sections of their respective communities, visiting the banks forged, if the bank were excused for making such a payment to a stranger having only the pass book, the provision authorizing the payment to a stranger having both book and order would be unmeaning. It was declared, also, that the case was not affected by the decisions in Schoenwald v. Metropolitan Sav. Bank, 57 N. Y. 418, and similar cases where the language of the by-law provided plainly for payment to other persons than the depositor. The by-law may be so loosely or liberally drawn, on the other hand, as to afford little protection to the bank for payment, even if made with due care, to one not entitled to it. This So although the bank book itself had printed upon its cover: "Caution to depositors. book should be preserved with great care. If it should be lost give immediate information to this office," when it also contained a copy of one of its by-laws, to the effect that "payment on deposits shall be made only to the depositor or to his or her order, or the de positor's legal representatives, on the presentation of the depositor's book;" and payment was made to a person who presented the bank book with a forged order.-under these circumstances the court held that the forged authority was no authority at all; and the presentation of the book alone is of no greater effect, for the book was not negotiable and might be presented by a thief, as was the case; in addition, the book itself denied the legality of the payment, for the by-laws as well as the printed caution pointed out how the money should be drawn, and such a book ought not to be clothed with the character of a blank power of attorney. So, although it was said that there was great difficulty in conducting this kind of business if more than the book was required as an authority for payment, that many of the depositors could not be identified by their handwriting, and that it was quite impracticable to infrequently having no personal acquaint-, their depositors which must be determined ance with bank officials or employees, and by broad and comprehensive legal rules of no convenient or satisfactory means of im- general application. One of these quesmediate identification when their identity tions arises out of the relations between is questioned. These conditions are in savings banks and the legal representatives striking contrast with those which prevail of deceased depositors. What degree of care in the intercourse between the officers and must a savings bank exercise in paying employees of discount banks and their pa- money out of a depositor's account after trons. The majority of the latter are per- his death, upon the production of his bank sons actively engaged in business, making book, and the presentation of a draft purdaily, or at least frequent, visits to their porting to bear his signature, when the respective banks. Their signatures are bank has had no actual notice of the defamiliar to the officers and employees of positor's death, and nothing has transthe banks, and if, now and then, there is pired to charge it with knowledge of that need of identification, it can usually be fur- fact? That is the question which undernished without much difficulty. These con- lies all other questions in this case. siderations clearly indicate the difference between the two classes of banks, as well as the necessity for the law which permits savings banks to adopt reasonable rules, adapted to the nature of their business, which rules, when properly adopted and promulgated, are binding upon them, their depositors, and those who succeed to their interests. Outside of these special rules, however, there are many questions affecting the interests of savings banks and know them personally or their places of residence, which were constantly shifting, yet with out some agreement to that effect these inconveniences could not annul the application of the principles of the common law. And even the general practice in the city, of paying in this way, could not justify the payment, because the bank declared that the money was payable to the depositor or his order or his legal representatives on the presentation of the book; and, further, such a practice could not of itself alter the general law. Eaves V. People's Sav. Bank, 27 Conn. 229, 71 Am. Dec. 59. And when the by-laws printed in the pass book provided that the depositor, in order to draw, must present the book at the bank, if he drew it personally, or that an absent depositor could draw his deposit on his order or check, properly witnessed; and when the book, with a forged order, was presented by a stranger without the authority of the depositor, but the order was without witnesses as the by-law required,--it was held that the bank was liable for the amount to the depositor, for the money was paid out in violation of the contract between the bank and the depositor. It could not be pretended that the money was paid out in conformity to the by-law in regard to payment, since the order was not only forged, but it was also not witnessed. People's Sav. Bank v. Cupps, 91 Pa. 315. In CHASE V. WATERBURY SAV. BANK the bylaw (§ 15) on which the defendant bank relied was strongly stated in order to afford immunity to the bank, and nominally released it from "any" liability on account of "any" fraud practised on it; and, in holding that the bank was still bound to the exercise of ordinary care, the decision is apparently contrary to that of Levy v. Franklin Sav. Bank, 117 Mass. 448, supra, although the Connecticut court declares that the intent of the bank was not to release In view of what has been said concerning the relations of savings banks and their depositors towards each other, it becomes obvious that any general rule that would require savings banks to act in such circumstances at their peril, without regard to the degree of care exercised, would ultimately cast as great a burden upon depositors and their legal representatives as upon the banks, and would disastrously affect the beneficent work which it from responsibility for losses which by the exercise of ordinary care it could prevent. b. By-law providing for payment to the depositor's representative after his death. The application to the rule of reasonable care of a by-law (in addition to that providing that all payments to persons producing the deposit books shall be valid payments to discharge the bank) to the effect that after the death of a depositor his account "shall be paid to his legal representative" presents the question of the construction of two inconsistent terms of the same contract, and is the subject of difference of opinion in KELLEY V. BUFFALO SAV. BANK. In that case the prevailing opinion (distinguishing Mahon v. South Brooklyn Sav. Inst. 175 N. Y. 69, 96 Am. St. Rep. 603, 67 N. E. 118) is to the effect that the provision as to the payment upon the death of the depositor does not prevail, so as to charge the bank, unless the bank has notice of the death; while the opinion of Vann, J., maintains that the lack of notice will not protect the bank, and that under the by-law involved the bank is absolutely liable. Several cases have been decided which are nearly in point. In Hunter v. Wallace, 14 U. C. Q. B. 205, the deposit was made according to an arrangement to the effect that any person producing the pass book should be entitled to receive the amount of the account; and upon a payment, after the depositor's death, of which the bank had notice, to a mere connection of the depositor, who pretended to be entitled to receive it, it was held that, whatever the special agreement was between the depositor and the bank officer, it was terminated by the death of the depositor, and the bank was bound, when its officer became aware of the death, to retain the money until some one legally authorized should such institutions are designed to accom- known depositor, whose place of residence plish. If it were the duty of savings may be remote from the banking house, banks to establish at all hazards the iden- and who may have no acquaintance with tity of every person presenting a deposi- anyone who would be of the slightest tor's bank book and draft, it would be assistance in identifying him? He would quite as impossible for them to continue have no way of getting money that rightbusiness as it would be for some persons fully belonged to him, or, at least, might to avail themselves of the best-known and find his efforts in that directon so burdenmost generally approved method of invest- some as to amount to the same thing. ing and accumulating the fruits of frugal This is not an extreme illustration, but and patient economy. The same would be one that is fairly typical of the relations true of any other rule so onerous in its between great savings banks located in operation that such institutions could not large centers of population, with many dedo business without great inconvenience positors, whose accounts are small, and both to them and their depositors. A whose deposits are made at rare intervals. single illustration will suffice to demon- Upon reflection it becomes obvious, therestrate this. Take the case of a large sav fore, that the only practicable general rule ings bank, with so many accounts that it to which savings banks can be safely held is impossible for the paying teller to know in such dealings is the rule of ordinary each depositor. It would be utterly im- care, leaving it to be applied in the light of practicable to do business if each applica- the special circumstances that characterize tion for a withdrawal of money had to be each separate case. This is the rule that delayed until a searching inquiry could be has been laid down by this court in a made as to the regularity of the transaction. variety of similar cases. Schoenwald v. But even if such a course were possible, Metropolitan Sav. Bank, 57 N. Y. 418; so far as the bank were concerned, what Appleby v. Erie County Sav. Bank, 62 N. would be the effect upon the poor and un- | Y. 12; Kummel v. Germania Sav. Bank, demand it, and was, of course, in the meantime | declares that a bank, although without knowlbound to the exercise of ordinary care. So under by-laws providing, in the first place, that all payments to any person producing the pass book should be valid payments, where the bank, having notice of the depositor's death, negligently paid to a third person, undeniably the rule stated was materially qualified, if it was not made entirely inapplicable, by another and later by-law providing that on the death of a depositor the amount standing to his credit should be paid to his legal representative, and hence the question of negligence in the bank should not be taken from the jury. Farmer v. Manhattan Sav. Inst. 60 Hun, 462, 15 N. Y. Supp. 235. And (following Farmer v. Manhattan Sav. Inst.) it was held in Podmore v. South Brooklyn Sav. Inst. 48 App. Div. 218, 62 N. Y. Supp. 961, when the usual by-law to the effect that all payments to persons producing pass books should be valid immediately follows another providing, as before, that on the death of a depositor his account shall be paid to his legal representative, the one first mentioned (and coming later in the by-laws) applies only to payments made during the life of the depositor, or, at most, without notice of his death. And upon appeal to the court of appeals this judgment was affirmed in 175 N. Y. 69, 96 Am. St. Rep. 603, 67 N. E. 118, the court saying that the exclusion of evidence offered by the defendant bank to show that the bank exercised due care in making the payment was proper, for the reason that the rule of diligence invoked by the bank applied only to the case of a living depositor, and not to the case of a dead one, who was unable to protect himself. The real effect of this case is borne out by a recent case in the appellate division, which, being based upon practically the same facts as KELLEY V. BUFFALO SAV. BANK, would seem to have been overruled by the latter. This case edge of the depositor's death, paying out his account to the depositor's attorney in fact, must make it good to the administrator. Hoffmann v. Union Dime Sav. Inst. 95 App. Div. 329, 88 N. Y. Supp. 686, Affirming on this point 41 Misc. 517, 85 N. Y. Supp. 16. For treatment of the question of limits of the rule of reasonable care as applied to payment after the depositor's death, vide infra, IV. e. III. The binding effect of the by-laws upon the depositor. a. Assent by the depositor. In most cases the depositor, when the first deposit is made, is required to subscribe the rules and by-laws of the institution, so that there can be no question of his being bound by them. In most cases, also, the by-laws are printed at length in the deposit book, and the attention of the recipient is then called to them at the time the book is given, which will have the same effect. But, nevertheless, even if the attention of the depositor is not specifically called to the rules in his book, he assents to them when he receives the book containing them, he becomes legally chargeable with knowledge of them, and they become a part of his contract with the bank. Heath v. Portsmouth Sav. Bank, 46 N. H. 78, 88 Am. Dec. 194; Hayden v. Brooklyn Sav. Bank, 15 Abb. Pr. N. S. 297; Schoenwald v. Metropolitan Sav. Bank, 57 N. Y. 418, Reversing 1 Jones & S. 440. And where the by-laws required that each depositor should subscribe the rules and agree to be bound by them, but one depositor was not present and did not sign them, by holding the book having the by-laws printed in it as his voucher, and continuing to make deposits, he |