County of Oneida v. First Citizens Bank & Trust Co.

Per Curiam.

The judgments appealed from were entered on orders granting the plaintiffs’ motions for summary judgment. The orders struck out the defendant’s answer and dismissed its counterclaim in each action. In Action No. 1 the plaintiffs recovered judgment for $52,197.22 which recovery included an item of interest in the amount of $8,260.54. In Action No. 2 the plaintiffs recovered judgment for $23,072.10 which recovery included an item of interest in the amount of $6,206.28. The plaintiff county operated a mutual self-insurance plan in which plan the cities, towns and villages of the county participated. The plan was managed by a committee of five men appointed by the chairman of the board of supervisors of the county of Oneida. Frank P. Gifune, assistant clerk of the board of supervisors, was appointed clerk of this committee with the title of “ Director.” Over a period of many years, Gifune prepared the false and fraudulent claims for compensation referred to in the complaints, had them approved by the chairman of the compensation committee, who was innocent of the fraud, presented the fraudulent claims to the comptroller of the county, who, unaware of the fraud, issued the county warrants described in the complaints. These warrants were drawn to the order of the fictitious payees on the treasurer of the county of Oneida. Gifune forged the names of the fictitious payees to the warrants, presented them to the defendant bank and received the proceeds thereof which he converted to his own use. The defendant, in turn, presented the warrants, which it had cashed, to the county treasurer and received payment thereon. The county treasurer was unaware of the fraudulent nature of the various transactions upon which the warrants were founded. Upon discovery of the fraud, the plaintiffs tendered the warrants to the defendant and demanded the return of the moneys paid to the defendant thereon. Upon defendant’s refusal to comply with the demand, these actions, for money had and received, followed. In addition to a denial of liability, the defendant interposed, among others, the defense of estoppel and of laches and a counterclaim in each case. The counterclaims charged the plaintiffs with gross negligence to the defendant’s damage to the amount demanded in each action. The court struck out the answers and dismissed the counterclaims as insufficient in law. We think this was reversible error. An action for money had and received, and these are such (Cohen v. City Company of New York, 283 N. Y. 112; Miller v. Schloss, 218 id. 400; White v. Continental National Bank, 64 id. 316), is in its nature a substitute for a suit in equity and it is to be ruled by broad considerations of equity and justice. Such an action aims at the abstract justice of the case, unfettered by technical rules. It is the most favorable way in which a defendant can be sued. In such an action the defendant “ may defend himself-by everything which shows that the plaintiff ex sequo et bono is not entitled to the whole of his demand or any part of it.” (Chapman v. Forbes, 123 N. Y. 532, 536; American Surety Co. v. Conner, 251 id. 1, 11; Myers v. Hurley Motor Co., 273 U. S. 18, 24; United States v. Jefferson Electric Co., 291 id. 386, 402, 403.)

The pleadings and the moving and reply affidavits contain charges and countercharges of negligence, ordinary and gross, and a defense of estoppel. These were triable issues (City of New York v. Bronx County Trust Co., 261 N. Y. 64, 70), and the decision of such serious questions should not have been “ flung off on a motion for summary judgment.” (Gravenhorst v. Zimmerman, 236 N. Y. 22.) If it should appear upon a trial of the issues that both parties were negligent, the trial court might, upon equitable principles, apportion the loss according to the degree of the negligence of the respective parties. Moreover, in this form of action, interest is not recoverable as a matter of right. In Pease v. Barber (3 Gaines, 266), Chief Justice Kent, discussing the question of the right to recover interest in an action for money had and received, said (at p. 267): “ There may be cases in which the defendant ought to refund the principal merely, and there may be other cases in which he ought, ex sequo et bono, to refund the principal with interest. Each case will depend upon the justice and equity arising out of its peculiar circumstances, to be disclosed at the trial.” The rule laid down by Chief Justice Kent in that case has been cited with approval in National Bank of the Commonwealth v. Mechanics’ Nat. Bank (94 U. S. 437, 440); Nolte v. Hudson Navigation Co. (8 F. [2d] 859, 867); Woerz v. Schumacher (37 App. Div. 374, 379; affd., 161 N. Y. 530), and Tuzzeo v. American Bonding Co. (226 id. 171, 179). It appears from the plaintiffs’ moving affidavits that had the funds in suit remained on deposit with the banks designated by the board of supervisors as depositaries for county funds, and ¡the defendant was one, the county would have received not to exceed one per cent interest thereon. There is no suggestion in the papers that the defendant enriched itself in any degree by ' cashing the warrants in suit.

The judgments and orders should be reversed on the law and facts and new trials should be granted, with costs to the appellant to abide the event, and the motions should be denied, without costs.

In Action No. 1: All concur, except Cunninghan and Taylor, JJ., who dissent and vote for affirmance in an opinion by Cunningham, J. Present — Crosby, P. J., Cunningham, Taylor, Dowling and McCurn, JJ.

In Action No. 2: All concur, except Cunningham and Taylor, JJ., who dissent and vote for affirmance in an opinion by Cunningham, J.