8

in the name of a trustee, it does not undertake any supervision of the trust. But if the bank has reason to think or has notice that the funds do not belong to the person in whose name they are standing, it is sometimes placed in a position of much difficulty. Instances sometimes occur as between husband and wife. If the husband deposits money for both himself and his wife to draw upon, the pass-book being issued to the husband, the bank may safely assume the deposit to belong to the husband.' But if the deposit is made in the name of the wife as her money, the bank cannot permit the husband to check it out on any statements of his. Express authority or ratification by the wife must appear." Yet, if the money really belonged to the husband and was not a gift to the wife," the bank would be protected in paying to the order of the true owner as in all other cases."1 Even though the bank is informed that the money belongs to the husband when it is deposited in the husband's name, the wife can reclaim it if the bank has suffered no injury, but merely seeks to apply it on the husband's debt.12 The same is true of all other cases where funds are in the bank as the property of one person, but in fact belong to another. So long as the bank has not paid them out without notice or lent credit or suffered a detriment, but itself seeks to hold the funds as belonging to the ostensible depositor, it will not be permitted to do so.13 Where money is deposited to

Pa. 616. If the bank permits the trust fund to be credited to the trustee personally, it is accountable to the principal, for it assists in the breach of trust. Farmers' Loan Co. v. Fidelity Trust Co., 86 Fed. R. 541. 6 Evans v. Evans, 82 Iowa, 492; Eyrich v. Capital State Bank, 67 Miss. 60. The difficulty always lies in determining what puts the bank upon inquiry as to a misappropriation. As to agent, see Union Stock Yards Bank v. Gillespie, 137 U. S. 411; National Bank v. Insurance Co., 104 U. S. 54. As to trustee, see Howard v. Deposit Bank, 80 Ky.

496; Hammel v. First Nat. Bank, 2 Colo. App. 571; Scranton v. Farmers' Bank, 24 N. Y. 424; Gate City Ass'n v. National Bank, 126 Mo. 82. 7 Brown v. Brown, 23 Barb. 565. 8 Bates v. First Nat. Bank, 23 Hun, 420, 89 N. Y. 286.

9 Case last cited. 10 People v. State Bank, 36 Hun, 607, 102 N. Y. 740.

11 Kerr v. People's Bank, 158 Pa. 305. But see German Bank v. Himstedt, 42 Ark. 62.

12 Citizens' Bank v. Harrison, 127 Ind. 128.

13 Armstrong v. National Bank, 53

17

pay to a certain person, if the person is not interested in the deposit and has not ordered or procured or agreed that the deposit should be so made," the deposit may be withdrawn. at any time before notice to the person for whose use the deposit is made or a promise to pay that person.15 In case of corporate funds deposited in the bank,16 the bank cannot transfer them to the individual credit of an officer; " but it was said in one case that the check of the corporation transferred by the officer to himself would not be notice of a misappropriation by the officer.18 But government deposits known to the bank to be government deposits cannot be permitted by the bank to be drawn out on private check.19 Some further cases will be noticed under the section in regard to a bank's application of deposits to pay off its own claims.20 There are other cases where the bank actually acts as a trustee.21

§ 137. Attachment and garnishment of deposits.- A levy of a writ of attachment properly made, or a garnishment under a writ of attachment, or an execution upon a

Iowa, 752; Union Stock Yards Nat. Bank v. Moore, 79 Fed. R. 705; Anderson v. Market Nat. Bank, 1 N. Y. Supp. 136. Contra, Boettcher v. Colorado Nat. Bank, 15 Colo. 16, which is wrongly decided because the bank lost nothing; Wood v. Boylston Nat. Bank, 129 Mass. 358, which is rightly decided because the bank lost its debt. See further, Burtnett v. First Nat. Bank, 38 Mich. 430; Johnson v. Payne Bank, 56 Mo. App. 257. But this rule does not apply to a trust completed.

16 Lindsey v. Lambert Ass'n, 4 Fed. R. 48.

17 Cushman v. Illinois Starch Co., 79 Ill. 281.

18 Gate City Ass'n v. National Bank, 126 Mo. 82. This case is wrong, because the fact would be notice, unless the check was of such a character that the bank could assume that the check was transferred properly by the officer to himself. The court in its decis ion does not see the point at all, nor does the annotator of 47 Am.

14 Mayer v. Chattanooga Bank, 51 St. R. 633. Ga. 325.

15 Brockmeyer v. Washington Nat. Bank, 40 Kan. 744; Trustees v. Pace, 15 Ga. 486; Mayer v. Chattanooga Nat. Bank, 51 Ga. 325, citing four English cases.

19 United States v. National Bank, 73 Fed. R. 379.

20 See § 140, post.

21 See § 341, post. Under such circumstances it is chargeable with all the duties and liabilities of a trustee.

deposit, creates a lien upon the property of the debtor in the writ or the execution, which is always considered to be a legal interest. The property sought to be reached may be either a legal interest in the chose in action, the deposit, or it may be merely an equitable one. Thus, if the deposit stands in the debtor's name, the debtor has a legal interest. If it stands in the name of some other person, but really belongs to the debtor, the latter has an equitable interest. Legal interests can generally be reached in the method fixed by the statutes of the particular jurisdiction. Sometimes equitable interests may be reached, also, by legal process. Thus in Massachusetts a fund in the name of a guardian may be reached by trustee process against the beneficiary,1 and in New York a deposit in the name of another is reached by an attachment against the true owner.? Whenever equitable interests cannot be reached by process at law they can generally be reached by a creditor's bill. The bank is always a party to such an action, and the suit amounts to a lis pendens, therefore, as against the bank; but generally an injunction should be issued. In Pennsylvania that extraordinary thing called a scire facias bill of discovery seems to create a lien upon subsequent deposits. But assuming that the proceeding, whatever it may be, is sufficient to notify the bank, the bank must respect the lien, or the claim amount

1 Simmons v. Almy, 100 Mass. 239. U. S. 296; Rev. Stat. of Ill., ch. 22, 2 Gibson v. National Park Bank, sec. 49. 98 N. Y. 87. Contra in Kansas (Scott v. Smith, 2 Kan. 438) as to a mere levy of execution and delivery of the deposit by the bank. But see, as to New York rule, Bills v. Park Bank, 89 N. Y. 343; O'Connor v. Mechanics' Bank, 54 Hun, 272, reversed in 124 N. Y. 324; and § 134, ante, note 23.

3 Illinois is an exception if the moneys are trust moneys for a beneficiary, where the trust has been created by some one other than the beneficiary. Potter v. Couch, 141

4 Payments made in violation of an injunction are not good as to the bank. Springfield Marine Co. v. Peck, 102 Ill. 265. But a state court cannot issue an injunction against a national bank until final judg ment, while a United States court can. See § 352, post.

5 Schram v. Cartwright, 16 Pa. Co. Ct. R. 618. The early error of Pennsylvania in refusing its courts chancery jurisdiction has produced some singular results.

10

The

ing to a lien, from the time it has notice thereof. garnishment only applies to the amount actually due at the time, whatever be the condition of the account as shown by the books of the bank, for payments made before notice, although not entered upon the books, are good. The bank's prior lien is protected, and the bank, if it has notice of the claim of some one else than the depositor, cannot pay the deposit to the depositor's garnishing creditor. But it seems to be held that money deposited to pay a check or other claim can be garnished as the property of the depositor until paid or promised to be paid to the third party called the usee." 99 11 The true owner, whether indicated in the deposit 12 or not,13 is entitled to the deposit as against the depositor's garnishing creditor. But even if the fund is deposited to the credit of an agent, if no third party claims the fund the garnishment is good." The trustee must protect the rights of his beneficiary as well as his own.15 If the bank is adjudged to pay over the amount after notice to the beneficiary, the payment will be a discharge as to the amount paid.16 The bank must exercise the greatest care in regard to the garnishment, because a misnomer, even as to the middle initial, would exonerate the bank for not regarding the garnishment, if it had no other knowledge on the sub

13

6 Merchants' Bank v. Meyer, 56 Ark. 499; Exchange Bank v. Gulick, 24 Kan. 359. All the cases cited to this section recognize the principle. But it is held that an assignment of the deposit before garnishment gives the assignee the better title. See § 362, post, notes 8-10.

Johnson v. Brant, 38 Kan. 754. 8 Foster v. Swasey, 3 Woodb. & M. 364.

11 Mayer v. Chattahoochie Nat. Bank, 51 Ga. 325.

12 Cotton Mills Co. v. Cooper, 93 Iowa, 654. The deposit was to the credit of a person as agent.

13 Skilman v. Miller, 7 Bush, 428. 14 Proctor v. Greene, 14 R. I. 42. 15 Randall v. Way, 111 Mass. 506. 16 Randall v. Way, 111 Mass. 506; Leonard v. New Bedford Bank, 116 Mass. 210; Woods v. Milford Sav.

9 Rice v. Third Nat. Bank, 97 Mich. Inst., 58 N. H. 184. But if the bank

414.

was negligent in defending the ac

10 Adams Co. v. National Bank, 9 tion, or if it was guilty of collusion, N. Y. Supp. 75.

it will not be a defense. See § 363, post, note 1, as to savings banks.

ject." The amendment of the writ would not cover intervenient payments.19 This matter is of special importance where the holder of a check can sue the bank after presentation, while funds to meet the check were in the bank. The fact that checks are outstanding is no defense against the garnishment of the deposit,19 unless the checks have been certified or accepted,20 except in those states which permit the holder to sue the bank, and in that case checks outstanding would be a defense only after the checks had been presented.21

§ 138. Death of depositor.- We have already examined the cases as to ownership of a deposit caused by a voluntary transfer or assignment, and those caused by a transfer by act of the law upon garnishment or other legal proceeding. We come now to the transfer that takes place upon the death of the depositor. If the depositor has made a valid assignment at law of the whole deposit in his life-time,1 although the time of the assignee's enjoyment was postponed until the death of the depositor,2 the deposit belongs to the assignee and not to the personal representative of the deceased depositor. But where the depositor has died owning the deposit, the property of the deceased devolves, as to the personalty, upon the personal representative of the deceased.

17 German Nat. Bank v. National State Bank, 3 Colo. App. 17, and cases cited therein; Terry v. Sisson, 125 Mass. 560. In the former case the court retails some interesting morsels of knowledge. If it could have referred to the report of the argument of Kinnersley v. Knott, 7 C. B. 980, found at 9 Am. Law Rev. 176, copied from the Albany Law Journal, it might have quoted one of the most amusing passages in all legal literature.

18 German Nat. Bank V. National State Bank, supra; Terry v. Sisson, supra.

19 This follows from the nature of the check.

20 Certifying or accepting a check makes the bank the debtor and releases the drawer; but see note 23, § 134, ante.

21 The levy gives a lien which is legal, not equitable, which would prevail over any equitable assignment. See the next section.

1 Risley v. Phoenix Bank, 83 N. Y. 318; Foss v. Lowell Sav. Ass'n, 111 Mass. 285.

Schollmeier v. Schoendelen, 78 Iowa, 426.

3 Gammond v. Bowery Sav. Bank, 15 Daly, 483.