*1 Ross WIGHTMAN and Erin Jen Michael By Wightman Through their
nell Wightman Howard
next friends
Evelyn Wightman, Appellants (Plain below), v.
tiffs
AMERICAN NATIONAL BANK OF
RIVERTON, Appellee (Defendant Party below), and Third Plaintiff MALODY, Jr.,
William a/k/a William M. Benesch, R. as Admin and John Page Malody, the Estate of
istrator
deceased, Party Third Defendants.*
No. 4949. Wyoming.
Supreme Court 13, 1979.
Rehearing Granted June appeal. to this
*Not *2 death. The of the Toner, Rodle, Arney, & execution collateral Yonkee Tom C. is not with an Sheridan, appellants. agreement inconsistent in- for present vest the children with a tent to White, White, Avery & How- P. Donald in the certificate of beneficial Riverton, appellee. for ard, deposit.” McCLINTOCK, J., RAPER, C. Before summary judgment will reverse the We GUTHRIE, ROSE, JJ., and and THOMAS remand with for ANB and directions to J., Retired.** summary judgment appellants. enter RAPER, Justice. Chief we decide the Although relatively case on rights pledged simple legal principles to a and on a narrow involves This case (C.D.). A issue, background motion deposit of the factual somewhat in favor of judgment granted was summary Page Malody and William involved. were American National defendant-appellee, 1,1971, January a second marriage married (ANB). Plaintiffs-appel- Riverton Page’s grandfather Bank of In for each. had that district court found The appeal. lants and left her a one-half interest died “Page Malody of names ranch, in trust until she reached Nebraska Malody Erin Jennell Malo- Ross Michael age 30. pledged by depositors, dy” October, 1973, the Malodys In met with of William joint indebtedness to secure Executive Vice-President of ANB and wife, Malody, husband and was Page with him their intent purchase discussed by ANB to properly applied upon default Lander area. At a ranch in the that time court also found The district debt. $75,000 deposited from her inheritance Page in the three names the C.D. stood while payment as a down on the ranch. to be used upon default were not shown, rights ANB’s also Malodys wished to obtain a line of The though Page Malody died be- even affected purchase from ANB to credit livestock and issues, The as stat- matured. the debt fore machinery. statement, A financing farm that: appellants, assert by the ed time, at that given Page’s bank noted certificate of purchase “1. expectancy Nebraska ranch joint in the children a in- vested deposit relied as a ANB consideration in deposit of with a in the certificate terest granting Malodys. January, loans to In survivorship. right began advancing money ANB to the which the is evidence from There “2. month, this same Malodys. Page In had a Page Malody intend- find that jury could cyst leg. removed from her malignant in the certifi- present interest to vest a ed early spring Page In grant received in her children and cate of City, for cancer Salt Lake survivorship in the certifi- treatment them time, arrange- that same Utah. At about deposit. cate of made to sell the ments Nebras- Malody’sinterest in the certifi- Page “3. While in Nebraska and ka ranch. after terminated on her death. cate of cancer, Page had learning she consulted agreement collateral The note which attorney about establishing until after with an a trust was not due her to secure was with the proceeds lien or set-off neces- children The Bank’s for the death. Page Malody’s agreement an Page terminated on inheritance. sarily ** Guthrie, J., argument, offspring 1. These oral children were the At the time of of an earli- Malody. They marriage Page retired from the court on Justice. He er were never Chief court, By Malody adopted by formally order of the William never December 1, 1979, name, January during marriage re- he has been but on his entered took pursuant judicial Malody they service to § in active used his name in tained and William V, Wyoming day-to-day 5-1- Art. Constitution lives. their W.S.1977, partici- 106(f), and has continued opinion pate of the court in the decision this case. William that her children would ANB applied the C.D. to the indebtedness. property and William’s children inherit application This property to marriage a former would inherit his the indebtedness was termed by ANB as a Page continued to receive property. radi- “set-off”. until, treatments for cancer in August, um died, When Howard and Evelyn 1974, she was told her cancer had been *3 Wightman, grandparents Page’s chil- cured., . dren, asked the President of ANB to serve October, 1974,the In Nebraska ranch was as administrator of Page’s estate. He as- $182,300 Page received and which she sold sured them he would attend to the chil- savings in a deposited account at ANB. A dren’s interests but did not advise them $150,000 days few later she withdrew and that the children’s names were on the C.D. purchased a C.D. her name alone. On apparent It became that without the C.D. 1974, 29, Malodys the November reduced $7,000 $9,000 only there was in Page’s es- — loans, apparently part at least in their ranch, tate. The all cattle and machinery $182,300 also withdrawn from the funds passed to William Malody because it savings deposit, and consolidated several jointly was held as husband and wife with They well. executed a promissory loans as right the of survivorship. Eventually all 29, 1974, November note to ANB dated machinery cattle and were sold and $154,775,payable the amount of December apply used to to a deficiency in the original 15, they 1975. At this same time executed indebtedness as well as to the indebtedness security agreement covering a the cattle William by Malody incurred after Page’s machinery purchased with the and loans death. Since indebtedness was still not request, ANB.2 At ANB’s from Malo- extinguished, ANB received a second mort- dy pledged the C.D. in her name alone as gage on the ranch itself in September, 1976. depositor security as additional for the loan. Evelyn When Howard and Wightman 1975, Page Malody’s In symptoms cancer Page’s learned that names of children recurred. ANB officials were aware of her were present on the action was illness in 1974 and that it was cancerous in brought to recover its face amount with January, 1975. The C.D. which had been at its stated rate for the children. October, 1974, purchased in matured on simple question The we have to answer is 1, reissuance, Upon 1975. and at what interest in the C.D. did Malody request, a new Page’s C.D. in the sum of pledge 1, to the bank on March 1975. Gen- $154,875 “Page Malody, named or Michael erally speaking, a bank deposit is in the Malody Ross or Erin Jennell Malody,” as nature of a contract and is owned depositors. question ANB did not the use depositor depositors, or is payable to the payees either upon of alternative reissuance person deposit to whose order the subject, is pledge the C.D. or when a new agree- whose thereto the bank may not dis- signed by Page. pledge ment was The pute. 10 Am.Jur.2d 345, Banks pp. 308- agreement provisions contains no regarding 309. The bank holds in a payees appears the alternative but debt- to be a relationship or-creditor with the agreement prepared by depositor, form ANB with a subject paid and is to be space description blank out property. reissued C.D. had a direction of the creditor maturity according to the 1,1975, September but by print- imposed date terms and conditions by him. 10 “automatically 339, terms was ed renewable.” Banks pp. Am.Jur.2d 301-304. As October, Page Malody died in 1975. When depositor bank, between the promissory note came due on December deposit agreement is conclusive. O’Hair v. 15, 1975, O’Hair, 1973, William 236, defaulted and 66, 109 Ariz. 508 P.2d 68. mortgaged These loans were made at of the val- up to the F.H.A. and ended 100% thing according being ue —an unusual to ANB offi- worthless. The cattle market deteriorat- usually only cers. Such loans are made at pur- ed in 1975 and cattle which had been 66% purchased of value. At least 33 of the cattle $450 $250. chased for became worth In bar, “pledge”, addition the use of the word Page purchased at
In the case deposit in her own name bears all the the transaction characteristics children, two names of her creditor, property and pledge: a held by statute in It is established alternative. debt, payment prop- that, depositor and a as between this state specified redeemable on terms erty the names of bank, standing in to sale the event of default. in the alternative be persons or more two 50, Transactions pp. Secured 68 Am.Jur.2d or survivors wholly to the survivor longs 876-878; 11; Pledges C.J.S. §§ 13-29.1, depositor. one death of upon the Bank, 1970, see, Piqua Walton State (as after amended W.S.19573 466 P.2d 326-329. A 204 Kan. place, this statute is case took of this events recognized by the Uniform Com- 34-1-140, W.S.1977); 13-3-601(b), now (U.C.C.).5 However, mercial Code 34-21-316, W.S.1977; 34-21-310 and §§ with the rights does not deal U.C.C. comments in Uniform (see official *4 W.S.1977 arising pledges. out of obligations Common Annotated, Uniform Commercial Laws gap.6 are used to fill this principles law 3-116). We hold Code, 2, 3-110 and Vol. §§ 49, pp. Secured Transactions Am.Jur.2d § Page Malody on purchased by the C.D. that recognizes While the U.C.C. 875-876. 1975, joint tenancy 1, was held in March not specifically it does deal with pledges, any persons of of the death upon the obligations arising out of thereup the survivors would therein named Moreover, 34-21-904(a)(xi) specifi- them. value of the C.D.4 the entire on own pledge savings of a cally excludes de- 1975, 1, Malody also On obliged peruse we are to posit. Thus security for as additional the C.D. pledges determining the matter law of ANB to her and hus by loans made that the agreement us. We hold before Page signed document band. ANB and was a between agreement: pledge was a governing pledges and the law is the “ * * * undersigned pledged, has of reference in this case. frame proper to said Bank and delivered transferred Page Malody pledged the time At Security viz.: following property, C.D., only an interest that was she Deposit and Certificate Agreement $154,875.00.” subject to terminated her death the amount of # A-1053 added.) virtually equivalent and which (Emphasis 1, contract, W.S.1957, (§ depositors. Cum.Supp. the quently and the Fre- 3. 13-29.1 1, 14, 156, S.L.Wyo. S.L.Wyo.1963, deposits challenge Ch. such are to Ch. 1969): variety legal grounds and the on a intention See, controlling parties is the factor. of the deposit has been made or shall “When (1972). Anno., state, We make no 43 A.L.R.3d any bank this be made hereafter in the band and attempt the interests of Michael persons to determine who are hus- two names of Malody wife, and Erin Jennell as be- Ross and when a has been made in the names hereafter be tween them. or shall made of two or to one or either, persons payable to or to either or more them, payable any or 34-21-902(b), (see 5. W.S.1977 U.C.C. 9- them, to the survivor of such or more or one deposits, 102(2)): thereof, any part or interest or or “(b) applies security inter- This article to thereto, may or additions dividends thereon by including pledge, created contract ests any persons, paid or of said to either be whether living, or others be or not the other 34-21-103, (see 1-103): W.S.1977 U.C.C. § payment by person receipt paid persons be a valid and suffi- so shall particular provi- or cient release displaced “Unless * * discharge to the bank for *, principles of this act sions any payment made.” so including equity, the law merchant law and in Wambeke this court’s decision Enacted after contract, capacity to to and the law relative principal 470, Wyo.1962, Hopkin, P.2d cited fraud, estoppel, misrep- agent, ANB. duress, coercion, mistake, resentation, bank- validating invalidating ruptcy, other emphasize here that this is conclusive 4. We supplement provisions.” its ANB, cause shall stranger which is not a to between
9Q7
See, Anno.,
971,
life estate.
A.L.R.3d
The pledge agreement does not purport to
Savings
Survivor,
Joint
Account-Gift
pledge anything more than Page Malody’s
10,
8,
(see
pp.
9 and
1007-1014
footnotes
§§
interest
the C.D. There is no mention of
8,
p.
p. 1013).
and 2 on
and footnote
her children’s interests. The pledge agree-
may
argue,
do,
ANB
not
as it appears to
ment is
form contract drawn up by ANB
they
duped
into this
transaction
protect
its interests and it must be strict-
legal
not know
consequences.''
and did
its
ly
against
construed
them. Atlantic Union
ANB,
others,
as is true of all
charged
Seventh-Day
Conference of
Adventists v.
knowledge
prevailing
law which
Savings
Co., 1970,
Western
& Loan
257 Or.
part
into and becomes a
enters
contracts
266,
his debt Transaction, 62, p. (Empha- obliged. 893. We can conclude that ANB cured omitted.) footnotes it added and was satisfied with the interest received. sis pledge agreement It relied but pledged, the C.D. was Thus, during the time a Upon what it did “set-off”. her called right special property a have ANB did death, existed, Malody no her Page longer special property right But the C.D. bypassed, representative was personal property not exceed the obviously could ended; the account over there dominion Malody. right pos- ANB’s right of nothing set-off. A.L.R.3d was death, by Page’s was terminated session 202-203, 5(c), concept which pp. ap- we Page Malody’s interest in the C.D. just as prove. children, at her death. The terminated death, are upon Page’s enti- as true owners This case comes to us on motion property to follow reclaim tled summary judgment favor ANB. The 68 Am.Jur.2d the value thereof. recover granting summary propriety judgment 57, pp. 884-885. An Transactions § Secured on correctness the court’s depends 35(a), concept is Re- found analogous genuine there is findings that no issues dual Law, Security: statement any prevail- material fact and that the as to Pledgee and Third Priorities of “§ judgment is entitled to mat- ing party as a Persons. Soulis, Wyo.1975, ter of law. Johnson priorities and third pledgee “The P.2d 867. The material in this facts an persons having pledged interest in the case are uneontroverted: C.D. listing following are determined chattel payees, alternate agree- three rules: pledged only Page Malody’s ment
“(a) any person having an antecedent C.D., and the fact interest legal pledgor no ty over the chattel, power *6 pledgee; [*] in a who has [*] pledge, [*] >) non-negotiable has given priori- matter secured Malody died before the The district ANB was entitled to of law. A trial court part court by the incorrectly debt, judgment was in may determined which was resolve default. as a a summary judgment in motion for favor of face it to be The C.D. on its declares “non- though party, only even one filed either has .negotiable.” Diefenderfer, a Morrow v. such motion. record, the It is not clear from or the 601, 604; Wyo.1963, 384 P.2d Summerlin v. in granting district court’s comments the Transportation Wyo. Company, Robinson summary exactly what judgment, legal 427 P.2d In view of the upon relied the principles deciding undisputed facts and the status of the law summary judgment. Apparent- motion for applicable in this case the district court the ly the district court decided that reis- justified in entering would have been sum- into all sued C.D. came burdened plaintiffs. mary judgment for We treat between previous dealings ANB and summary judgment though motion for legal principle know of no Malody. We before us for v. originally disposition. Seay such a decision supports and none is which Wyo.1977, 567 Vialpando, P.2d 285. From out us. The record reveals that pointed to readily apparent it is the record that all a new agreement on March Page executed necessary facts to a pertinent judicial sound 1, 1975, place preced- took the the which are before the court determination and fur- 1, 1975, After March this ing agreement. proceedings lower ther court would agreement existing the between be futile. only agreement is on parties ANB, and her coten- Reversed and to remanded the district ants, At the time the C.D. was may rely. summary with directions to vacate court its reissued, questions judgment plain- ANB “asked no and was and enter judgment Page simply tiffs-appellants to have for the of the C.D. no lies.” asked amount told
QQ9
Platt,
(N.Y. 1848);
in accordance with its
v.
for the dispose must of one incidental Lastly, I certificate of de- exchanging it for another agree that the Uniform Commer- matter. I as collateral under substituted posit to be adopted Wyoming does not cial Code as pledges law of contem- pledge. The presented factual situation to the pertain a substitution. Restatement of plates such provisions case because this (A.L.I. Security, p. the Law view, 34-21-904(a)(xi), my W.S.1977. In 1941). however, following appearing statement majority opinion accurately does not It follows that the transfer of an interest law: state the Page Malody n children, however it may “However, the U.C.C. does not deal with described, be to the pledge to rights obligations arising out of the American National Bank. These chil- law pledges. principles Common are used dren, whom I identify would third-party as gap. this to fill Am.Jur.2d Secured beneficiaries of a contract deposit be- 49, pp. (Foot- Transactions 875-876.” tween and the American Na- omitted.) *8 majority by Rehearing, the decision set represented Bank chose to off funds W.R.A.P., court, pursuant to Rule against the certificate its debt it is than foreclose its security rather pledged collateral. There ap- does rehearing be ORDERED in the record letter from pear the bank to granted appellant’s pro- and that answer is Malody’s husband stating. so How- 8.03, by Rule W.R.A.P. vided ever, appears there also testimony of bank deposition officers which for me suffi-
ciently clarifies factual situation as to
make it unreasonable conclude that there notes Bank, hardly tional could qualify as bona Am.Jur.2d, Perusal of 68 Secured Transac- purchasers in the fide context of this rule. tions, 49, p. (1973), discloses the fol- grounds to reverse the Only possible two language at lowing very beginning of appear in this instance. The court trial the section: that there exists an issue of would be first “Article 9 of the Uniform Commercial relative to the fact intention of material security applies Code interests created parties If the could be found to * parties. * by pledge intended some different result from have The same conclusion is to be drawn from foregoing authorities that dictated statute, 34-21-902(b), our portion given should be to their inten- then effect W.S.1977, quoted at footnote 5 in the ma- My per- examination of the record tion. Succinctly, it is jority opinion. my view me that reasonable men suades could not perfect create and a security that one can the intention of parties as to differ by placing possession of the collat- certificate of the first was to be hands of the party. eral in the secured This Malody only available for the made pledge, is a purpose and limited it special converting governed by then are to be Article 9 of the certificate of into the second to be adopted Uniform Commercial Code as substituted the American Wyoming. Consequently Bank. I National would not trial for that reason. remand for REHEARING ORDER GRANTING suggestion A is found in the argument of Petition appellee’s consideration of After appellant that American National