From March 24, 1933, to June 5, 1934, defendant trust company was operating on a restricted basis which, under the authority of the Superintendent of Banks, prohibited it from paying out more than ten per cent of its deposits. Patricia R. Chimanz had on deposit with defendant the sum of $1,285.41. She had purchased real estate from plaintiff and, in part payment therefor, she drew her draft for $128, ten per cent of her deposit, and executed a written assignment to plaintiff for the balance. This is the language of that instrument: "For value received, I hereby assign, transfer and set over unto Gibraltar Realty Corporation the balance of $1,285.41 of my account and interest thereon accrued or to accrue thereon deposited in the Special Deposit or Interest Department of the Mount Vernon Trust Company, East Side Branch, East Third Street, at Fulton Avenue, Mt. Vernon, N.Y., represented by Pass Book No. 385, and direct that such sums so assigned be delivered to said Gibraltar Realty Corporation or to its order. I do hereby appoint said Gibraltar Realty Corporation or its attorney irrevocably my attorney with full power to demand, sue for and collect the amount thereof in my name or its name as it may deem proper. Patricia R. Chimanz (L.S.). In Presence of Sol. H. Lewis."
The original document was not filed with defendant nor was a copy served at that time but under date of April 4, 1933, plaintiff's attorney caused the following notice to be delivered to defendant trust company; "Please be informed that the balance of the deposit by Patricia R. Chimanz represented by your Pass Book No. 385 in the Special Deposit or Interest Department Account was assigned by Patricia R. Chimanz to the Gibraltar Realty Corporation to secure the payment of the balance of the purchase price for premises No. 102 North Road, Bronxville Manor, which she was obligated to pay pursuant to her contract of purchase thereof. Please make a record accordingly and inform mewhen the *Page 362 balance of this deposit account may be withdrawn. Copies to Mr. Morgan, Mr. Baker." Defendant ignored this notice for nine months until January 2, 1934, and then refused, in a letter by its attorneys, to recognize the assignment. In the meantime during the process of the reorganization, defendant, then in receipt of the notice of the assignment and without making the slightest inquiry either from the assignor or assignee, accepted from the assignor a depositor's agreement dated May 23, 1933, consenting to the plan of reorganization and a subscription dated October 9, 1933, for thirty shares of stock of defendant payable out of the balance of her deposit. These certificates have been issued to her.
Neither in the record nor in the brief of defendant is the validity of the assignment assailed. It defends on the ground that the assignment was never filed with it and that it never received due notice thereof. In defendant's affidavit opposing plaintiff's motion for summary judgment it states its position to be "that the sole controversy in this action is whether or not the stock subscription signed by Patricia R. Chimanz and directing that it be charged against her deposit and thus deducted from the available balance should be recognized, and whether or not the notification of the assignment as made was duly and validly given to the defendant."
The notice of April 4, 1933, is not sufficient to compel defendant, without some inquiry such as would satisfy a prudent business man, to give to plaintiff all the rights of an assignee. The law seems equally clear, however, that without inquiry it was not warranted, in the face of this notice, in continuing to accord to the assignor all the rights of a depositor. On the undisputed facts of this case, defendant as a banking institution, was put on notice to the same extent as any other corporation or individual.
If the validity of the assignment were subject to doubt or even if any one expressed any doubt concerning it, then plaintiff and the assignor might be deemed adverse *Page 363 claimants and the application of subdivision 5 of section 134 of the Banking Law (Cons. Laws, ch. 2) might require consideration. However, when the depositor, in an instrument which no one attacks, wrote that she did "direct that such sums so assigned be delivered to said Gibraltar Realty Corporation or to its order" she relinquished all claim and ceased to be a claimant. If she ever again became a claimant, she must have done so by invitation of defendant.
Defendant concedes in its brief that in the ordinary situation where a creditor assigns the debt to a third party, any notice of such assignment to the debtor is sufficient and that if the debtor then, disregarding such notice, pays the assignor he is still liable to the assignee. It argues, however, that this rule does not apply to the facts here because the debtor is a bank and it invokes as authority the decisions of this court in Crawford v. West Side Bank (100 N.Y. 50) and Glennan v. Rochester T. S.D. Co. (209 N.Y. 12). These cases do not appear to control. They deal with conditions existing when banks are operating according to full legal capacity and responsible for payment of deposits by check in the usual course of business. In the present situation, defendant was not engaged in the usual course of business but was prohibited from paying out any of the balance then in the assignor's account by check or by any other method. It could accept the assignment and transfer the Chimanz account to the credit of Gibraltar Realty Corporation but could not pay it out. Plaintiff's notice of April 4, 1933, requested: "Please make a record accordingly and inform me when the balance of this deposit account may be withdrawn." Defendant could not, at that time of restricted operation, allow this balance to be withdrawn but it was under a duty, before it continued to recognize and accord to the assignor all the rights of a depositor, to make a record of the transaction and at least inquire from the assignor concerning the facts and to *Page 364 request the assignee to display to it the assignment. It had no right after such notice to ignore the assignee. There is no case cited which compels courts to sustain a defense of lack of due notice when, with the exercise of the slightest degree of ordinary business prudence, defendant could have satisfied itself concerning the validity of this assignment which has never been attacked. In the Crawford case, the check, as held by this court, never was a legal obligation enforceable against the drawer by its owner and holder. In the Glennan case, the bank, without knowledge of the death of a depositor, paid in the usual course of business a check drawn by him shortly prior to his death. In this court's opinion in the Glennan case occurs this statement: "Its [the bank's] contract with the depositor is to pay his checks as long as his deposit is sufficient for the purpose, and for a failure to pay the checks the bank is liable for any injury to the credit of the drawer occasioned thereby" (p. 17). That rule can have no application to the facts in this case. Under the restrictions placed upon this defendant between March, 1933, and June, 1934, it could not have honored any checks which might have been drawn by the assignor. She had checked out her ten per cent before she made the assignment. The exercise of ordinary care and diligence would have satisfied defendant of the validity of this assignment.
Moreover, on defendant's motion, the assignor was brought in as a party defendant and defendant trust company was authorized to serve an amended answer upon her.
CRANE, Ch. J., LEHMAN and LOUGHRAN, JJ., concur with HUBBS, J.; O'BRIEN, J., dissents in opinion, in which FINCH and RIPPEY, JJ., concur.
Judgments reversed, etc. *Page 365