85-1580 | Ala. | Dec 18, 1987
Jefferson Federal Savings and Loan Association filed suit against Robert F. Clark, in his capacity as administrator of the estate of Dr. William E. McKee, for money it had erroneously paid to the estate. The *466 trial court granted Jefferson Federal a summary judgment, from which Clark appeals.
When Dr. McKee died on March 16, 1981, he had $23,421.55 in his savings account with Jefferson Federal. At the same time, he had two notes outstanding that totaled $14,885.50 payable to Jefferson Federal, a debt which was secured by his savings deposit. As administrator, Clark requested payment of the balance owed to the estate. On May 16, 1983, Jefferson Federal paid the entire $23,421.55 account balance to the estate, not retaining the $14,885.50 it was entitled to. Jefferson Federal did not file a claim for this amount within the six months of the granting of letters of administration allowed by Ala. Code 1975, §
The circuit court granted Jefferson Federal's motion for summary judgment, ruling that it was entitled to the $14,885.50 plus interest and costs. The court reasoned that there was an equitable lien on the funds paid to the estate to the extent of the amount due on the promissory notes and concluded that it was not necessary for Jefferson Federal to file a claim against the estate in order to preserve its lien.
Jefferson Federal cites Title Insurance Co. v. Ward,
This is in stark contrast to the present case, where Jefferson Federal can show no fraud or similar transaction creating an equity weighing in its favor. To the contrary, it simply contends that it paid the balance in error and that "in good conscience" it ought to be repaid. Although conscience may dictate that the money be repaid, the law does not.
It is clear that Jefferson Federal had both a common law right of setoff and a contractual right to charge the savings account with the indebtedness. The notes both provided, in relevant part:
"In the event of the death of the maker . . . such event shall constitute demand for payment of this note and all indebtedness due hereunder shall immediately become due and payable and in any such event, the [Jefferson Federal Savings and Loan Association] or its designated agent, is authorized to forthwith charge said savings account with any sums due hereunder. . . ." (Emphasis added.)
In King v. Porter,
"It is further settled that a bank or broker has a lien on all moneys and funds of a depositor or customer, coming into his or its possession in due course of business, for any balance of general account due from the customer." (Emphasis in original.)
This "banker's lien" is recognized in the common law as a possessory security interest. See Norris v. Commercial Nat.Bank of Anniston,
In the present case, Jefferson Federal has failed to enforce either the common law lien or the contractual lien securing the debt. Its failure to present a claim under Ala. Code 1975, §
REVERSED AND REMANDED.
TORBERT, C.J., and MADDOX, BEATTY and HOUSTON, JJ., concur.