Otto v. Lincoln Sav. Bank of Brooklyn – Case Brief Summary (New York)

In Otto v. Lincoln Sav. Bank of Brooklyn (268 AD 400, 51 NYS2d 561 [2d Dept 1944]), a bank attempted to exercise its common-law right of setoff against one of its depositors to recover amounts concededly unpaid on a mortgage.

The statute of limitations to sue upon the mortgage had expired 14 years earlier. The bank nevertheless deducted from the depositor's bank account the sums due. The depositor sued the bank to recover the amount deducted.

As stated by the Court:

"The question then posed is whether, under such circumstances, the right of setoff survives. It is clearly established by ample authority that it does not." (Id. at 402.)