Opinion
Argued November 12, 1879
Decided November 18, 1879
H.E. Sickels, for appellant.
Frederick Smyth, for respondent.
This is an action to foreclose a mortgage executed by the defendant and his wife to one Hall and by him assigned to the savings bank of which the plaintiff has become the receiver. The defendant was one of the trustees of the bank, and there was a deficit in the assets of the bank to the amount of $70,000, and defendant executed this mortgage and had it assigned to the bank, for the express purpose of making up this deficit and thus enabling the bank to go on with its business.
The learned counsel for the appellant seeks the reversal of this judgment upon two grounds which I will briefly notice. He claims that the mortgage was given in violation of section 21 of chapter 371 of the Laws of 1875, and that therefore it is illegal and void. That section prohibits a trustee of such a corporation from becoming a surety or an obligor for moneys loaned or borrowed of such corporation. It is a sufficient answer to this claim that defendant did not become a surety or obligor for any money loaned. No money was loaned upon the faith of his mortgage. The bond and mortgage were executed to make up a deficiency in the assets of the bank, which deficiency was caused by a loss upon a loan made by the bank a long time before the mortgage was given.
The further claim is made that the mortgage was without any consideration and therefore void. To this claim there are two answers. First. The mortgage was under seal and the seal was presumptive evidence of a consideration: (3 R.S. [6th ed.], 672, § 124; Gray v. Barton, 55 N.Y., 68; Torry v. Black, 58 id., 186.) This presumption was not clearly overcome. The defendant was one of the trustees of the bank, and there was a claim that he was personally liable for the deficiency. The bank superintendent informed the trustees that they were all so liable, and that unless they made up this deficiency, their individual liability would be enforced. It was upon this requisition of the superintendent that the mortgage was given; and if given to discharge a personal liability, it was not without consideration. It is true that there is no finding that there was such personal liability for the deficiency. Neither is there a finding that there was not. The claim of the liability was made by one in authority, and in pursuance thereof the securities were given. It is sufficient to say that the presumption of a consideration was not clearly overcome. Second. The defendant is estopped from denying the legal validity of the mortgage. It was given expressly to make up the deficit in the assets of the bank and to enable it to go on with its business. It was reported to the banking department as a portion of the assets and was in effect represented to the depositors of the bank as a portion of the assets, and all this was done by the defendant and with his knowledge and assent. It was in consequence of this and other securities given by other trustees, that the superintendent of the banking department, acting officially for the public and all the creditors of the bank, permitted the bank to continue its business. It was in reliance upon this and the other securities given, that depositors were induced to make and leave deposits in the bank; and hence, upon the clearest principles of justice and morality, the defendant should be estopped from denying the validity of this mortgage: ( Farrar v. Walker, Assignee, 3 Dillon, 506, n.)
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.