118 Ind. 179 | Ind. | 1889
The questions for decision in the present ease arise out of the following facts: On the 26th day of May, 1881, Alfred and John C. S. Harrison were partners, engaged in a general banking business in the city of Indian
The foregoing, among other facts, were set up in an intervening petition by Morris, who asked that the receiver be ordered to pay over the money so collected from Adams to him. The judgment at special term, which was adverse to the petitioner,,was reversed on appeal to the general term, and the receiver now prosecutes this appeal.
Whether,or not the petitioner may require the receiver to
On the receiver’s behalf it is contended that the rights of the parties were in nowise affected by the agreement; that without the agreement the bank had the right to appropriate a sufficient amount of Morris’ deposit to the payment of the note after it became due, and that the agreement therefore conferred no right which the bank did not have before it was made. This position is untenable. It is a peculiarity of a deposit of money in bank that the moment the money is deposited it becomes the property of the bank, and the bank and the depositor assume the legal relation of debtor and creditor. Bank of Republic v. Millard, 10 Wall. 152; Carr v. National Security Bank, 107 Mass. 45; Commercial Nat’l Bank v. Henninger, 105 Pa. St. 496; Morse Banks and Banking (3d ed.), section 289.
The general rule in keeping the account of a depositor is, that as money is paid in and drawn out a balance' may be considered as struck at the date of each payment or entry on either side of the account, and it is the right of the bank, in ■case the depositor becomes indebted to it, by note or otherwise, and the deposit is not specially applicable to a particular ■purpose, or there is no express agreement to the contrary, to apply a sufficient amount thereof to the payment of any debt due and payable from the depositor to the bank. Second Nat’l Bank, etc., v. Hill, 76 Ind. 223 ; National Mahaiwe Bank v. Peck, 127 Mass. 298; Commercial Nat’l Bank v. Henninger, supra. This results from the right of set-off, which obtains between persons occupying the relation of debtor and creditor, and between whom there exists mutual demands. It is familiar law, however, that mutuality is essential to the validity of a set-off, and that, in order that one demand may be set off against another, both must mutually exist between the same parties. Accordingly, it is settled that a bank can ■claim no lien upon the deposit of one partner, made on his
It follows that, in the absence of a contract giving it the right to do so, the bank could not have applied money due the petitioner, as a depositor, to the payment of the note upon which he was surety, any more than it could have successfully pleaded the note as a set-off, in case the petitioner had brought suit to recover the balance due him on deposit.
Did the agreement change the previously existing relations between the parties in respect to the deposit account, and confer upon the bank any new rights or impose upon it any new duties in respect to the deposit? That it did seems clear beyond any question. In the absence of a special agreement, it is the right of a depositor, so long as the balance of his account exceeds the amount of any debts due and payable by him to the bank, to draw his cheek against the amount, and the bank is bound to honor his check, even though it may hold notes upon which the depositor is surety, unless circumstances of an extraordinary character exist. Hence, as we have seen, the petitioner had the right, in the absence of any agreement, to check out his entire balance. People’s Bank v. Legrand, 103 Pa. St. 309. A bank deposit is subject, however, to any arrangement which the depositor and the bank may make concerning it, so long as the rights of third parties are not injuriously affected. Howard v. Roeben, 33 Cal. 399; Chiles v. Garrison, 32 Mo. 475; Nat’l Bank, etc., v. Smith, 66 N. Y. 271; McEwen v. Davis, 39 Ind. 109; Morse Banks and Banking, section 188.
A case in all respects parallel in principle to the present, arose out of the following facts: A depositor, having a bal
In Coats v. Donnell, 94 N. Y. 168, it appeared that the cashier of a bank in Kansas City orally agreed with a banking house in the city of New York, that if the latter would accept drafts amounting to $35,000, which the Kansas City bank had drawn upon it, the Kansas City bank would keep on deposit with the New York house an amount equal to the drafts drawn, and that the drawees should have a lien on the fund, with the right to appropriate so much of it as remained unpaid on the acceptances. Shortly after the arrangement was consummated the Kansas City bank failed, and made an assignment for the benefit of its creditors. The assignee brought suit to recover the amount of the deposit from the banking house in New York. It was held that the agreement authorized the bank to appropriate the deposit to the payment of the acceptances.
It is an uneontroverted fact in the present case, that the petitioner directed the bank to charge the amount of the note and interest to his account, and although it was arranged at the suggestion of the bank that the actual entry should not be made at the time, it was agreed that it might be made at any subsequent time, and that the bank should retain the note, and collect it for the depositor’s benefit. This amounted to an equitable satisfaction of the note so far as respects the petitioner, and made it his property. The agreement was upon a sufficient consideration, and after it was made the de
The depositor having fully performed his part of the agreement, equity will regard that as done which ought to have been done. Receivers and assignees take the property which comes into their possession as such, subject to all legal and equitable claims of others. Cook v. Tullis, 18 Wall. 332; Stewart v. Platt, 101 U. S. 731; Smith v. Felton, 43 N. Y. 419; In re Howard Nat’l Bank, 2 Low. 487. Casey v. Cavaroc, 96 U. S. 467, is not in conflict with anything herein decided.
There was nothing in the conduct of the petitioner upon which to predicate an estoppel in pais.
The judgment of the general term is affirmed, with costs.