THE New York Supplement VOLUME 54, AND New York State Reporter, VOLUME 88. (34 App. Div. 45.) DYKMAN v. KEENEY et al. (Supreme Court, Appellate Division, Second Department. November 3, 1898.) 1. BANKS AND BANKING-EXTENDING DISCOUNTS AND OVERDRAFTS-EVIDENCE -SUBMISSION TO JURY. Laws 1892, c. 689, § 26, requires that all debts owing a bank which had remained overdue a year without prosecution or payment of interest shall be computed as losses. A bank, being creditor of a depositor for overdrafts, took his notes for the principal and interest, and marked the overdraft “Paid,” and before a year marked two of the notes "Paid,” and charged the amount to the depositor's account as an overdraft. That overdraft was marked "Paid," and taken up by new notes. were other transmutations of the form of such indebtedness, but no money was ever paid on the principal or interest. Held sufficient to require a submission to the jury whether such transactions were merely the taking up of defaulted notes, in evasion of the statutes, or were loans in the regular course of business. 2. SAME-CUSTOMS OF OTHER BANKS-ADMISSIBILITY. There On an issue whether purported loans in extending a depositor's paper and taking up its overdrafts were loans in the regular course of business and in good faith, evidence of the custom of extending discounts in other banks is inadmissible. Appeal from trial term, Kings county. Action by William N. Dykman, as receiver, against Seth L. Keeney and others. From a judgment for defendants, dismissing the complaint, plaintiff appeals. Reversed. Argued before GOODRICH, P. J., and CULLEN, BARTLETT, HATCH, and WOODWARD, JJ. James C. Bergen, for appellant. Alfred E. Mudge and Henry M. Dater, for respondents. 54 N.Y.S.-1 and 88 New York State Reporter. CULLEN, J. This action is brought by the receiver of the Commercial Bank to recover from the defendants, who were formerly directors of the bank, the amount of a dividend declared by them in December, 1892, on the ground that at the time the bank had no surplus profits. A similar action has already been twice before this. division of the court. Dykman v. Keeney, 10 App. Div. 610, 42 N. Y. Supp. 488; Id., 16 App. Div. 131, 45 N. Y. Supp. 137. On the first appeal a judgment rendered in favor of the plaintiff was reversed, and on the second appeal a judgment for the defendants, entered on a verdict by direction of the court, was affirmed. The opinions rendered by the court on these appeals discussed fully the general principles pertaining to the maintenance of the action and the liability of the defendants as directors, and also the basis or method of the computation by which the financial condition of the bank should be determined. It is therefore necessary for us to consider on this appeal only the question presented by the additional evidence adduced on the trial of the present action as to the character of certain securities held by the bank at the time of the dividend. As to the financial status of the bank, it is sufficient to say that on the face of the books there was an apparent surplus, which the plaintiff sought to convert into a deficiency by showing that various items were improperly credited as assets. It was proved that these notes or securities, while, by their terms, they were not in default with interest unpaid for over a year, were renewals of previous obligations, the original loans having been made in some cases as far back as six years prior to the time of the dividend; and that during such time neither interest nor principal had been paid, except so far as the interest was included in the amount of the renewal notes, or in separate obligations. One class of notes had been renewed in this manner from 6 to 23 times. Among the assets of the bank were four notes of the St. Kivin Mining Company, aggregating $93,181.92. The following is their history: On October 1, 1889, the mining company, a depositor with the bank, had overdrawn its account to the extent of nearly $90,000. Interest was computed on this sum, and four notes were taken for the principal and the interest of the overdraft, and the overdraft marked "Paid." On March 12, 1890, two of these notes were marked "Paid," but no money was received by the bank. The account was adjusted by charging the amounts of the notes to the deposit account of the mining company as an overdraft. The overdraft was subsequently marked "Paid," but in fact was paid only by giving new notes. There were other transmutations in the form of this indebtedness prior to the declaration of the dividend, but nothing was paid on the debt, principal or interest, from its original inception. The history of the other securities was of a similar character, payments being made thereon only by bookkeeping entries, or by giving new obligations. Under the statute (section 26, c. 689, Laws 1892), all debts owing the bank which had remained due without prosecution, and upon which no interest had been paid for more than a year, or on which judgment had been recovered, and remained for more than two years unsatisfied, were to be computed as losses. In |