Plaintiff sues to recover the sum of $6,043.96, an alleged balance due with interest on an original deposit of $10,000 made with the defendant bank. The sufficiency of a counterclaim and certain defenses predicated on the theory that the liability of a third corporation to the defendant was properly chargeable to the plaintiff, is presented.
The first defense, also pleaded as setoff and counterclaim, is to the effect that plaintiff owned all the outstanding capital stock of the Jewish National Workers Alliance Institute, Inc., which was operating a camp for the benefit of plaintiff’s membership; that the organization by plaintiff of such subsidiary was merely an attempt to hide behind its corporate cloak so as to receive its benefits and, at the same time, to avoid the payment by the plaintiff of its just debts. Relying upon the close and inseparable relationship of plaintiff and its subsidiary, the defendant alleges that it loaned to the subsidiary the sum of $15,000, represented by two promissory notes in the sums of $10,000 and $5,000 respectively, the second of which was unsecured and has been paid, and the first of which was to be secured by the deposit of the $10,000 in question.
*396It is further pleaded that it was agreed that the deposit of the plaintiff in the defendant bank was to remain as security for the said loan of $10,000; that defendant in making the loans relied upon the combined responsibility of plaintiff and its subsidiary and would not have made it but for the financial statement of the plaintiff and in reliance upon the deposit. It is set forth that the loan was reduced from time to time and new notes issued by the subsidiary, and that there is now due and owing with protest fee and interest the sum of $5,401.46, evidenced by a note made by the subsidiary and delivered to the defendant in the sum of $5,400.
Upon the facts so pleaded the setoff and counterclaim are clearly insufficient. They are predicated upon the theory of Quaid v. Ratkowsky (183 App. Div. 428; affd., 224 N. Y. 624), in an attempt to pierce the corporate veil. We are of opinion that the defendant has not brought itself within the principle of that decision. The setoff and counterclaim come rather within the purview of Almirall & Co., Inc., v. McClement (207 App. Div. 320) and Wagner v. Manufacturers Trust Co. (237 id. 175). No fraud which would render it inequitable for the plaintiff to hide behind the separate entity of its subsidiary is charged, nor is any mistake as to the identity of the corporation with which it was dealing shown by defendant.
The second separate defense repeats the material allegations of the setoff and counterclaim. It then pleads that plaintiff falsely and fraudulently represented to the defendant that, although the subsidiary and itself were in fact one, the plaintiff did not borrow any money in its own name, but only through its said subsidiary. There are allegations of false and fraudulent representations on the part of the plaintiff as to the solvency of the subsidiary, and that the plaintiff, since it did not borrow money in its own name, “ would deposit in the defendant bank a sum of at least Ten thousand ($10,000) Dollars, which was to remain in the defendant bank during the entire period of the loan or any part thereof * * * as a security fund for the repayment of the said loans so to be made ” to the subsidiary. Reliance in making the loans is predicated upon these representations which are said to be false and known to be false to the plaintiff when made, with intent to induce the defendant to rely thereon in making the loan.
We are further of the opinion that this second defense is likewise insufficient. Again, there is not sufficient fraud shown to justify the ignoring of the corporate entity of the subsidiary. The representations as to the making of the deposit by way of security were promissory in nature. No damages are alleged. Furthermore, it appears that such deposit was in fact made by the plaintiff. Any *397right to apply the balance of this deposit to the repayment of the loan to the subsidiary will be sufficiently protected by the third defense to that effect.
It follows, therefore, that the order appealed from should be reversed with twenty dollars costs and disbursements, and the motion to strike out the first defense and counterclaim and the second defense granted, with ten dollars costs.
McAvoy, Martin and Townley, JJ., concur; Finch, P. J., dissents and votes for affirmance.