Agard v. Peoples National Bank of Shakopee
| Decision Date | 07 January 1927 |
| Docket Number | 25,577 |
| Citation | 211 N.W. 825,169 Minn. 438 |
| Parties | WM. A. AGARD v. PEOPLES NATIONAL BANK OF SHAKOPEE AND ANOTHER |
| Court | Minnesota Supreme Court |
Defendant bank appealed from a judgment of the district court for Scott county, Tifft, J. Affirmed.
Bank not allowed to offset against agent's matured notes money of plaintiff deposited by his agent in latter's name.
His agent deposited plaintiff's money to his own credit in the defendant bank which, without otherwise changing its position upon the faith of the deposit or being prejudiced in any way, attempted to appropriate the deposit by offsetting it against matured notes of the agent, a depositor. Judgment for plaintiff affirmed.
Joseph J. Moriarty, for appellant.
Thompson, Loth & Lowe and L. H. Ostrander, for respondent.
Action to impress a trust for the benefit of plaintiff upon funds in possession of defendant, Peoples National Bank of Shakopee. After a decision for plaintiff the bank appeals from the judgment.
For many years the late Charles A. Lindbergh was a resident of Little Falls. Apparently he occasionally negotiated and sold farm loans. Plaintiff had purchased one from him. May 2, 1924, the mortgagor called at Mr. Lindbergh's Little Falls office and left with the person in charge, one Bolander, upwards of $2,000 in payment of the mortgage debt. Note, mortgage and satisfaction, the latter executed by plaintiff, had been placed by him with Lindbergh in anticipation of the payment and were all delivered to the mortgagor in exchange for his money. Bolander forthwith remitted the money by a bank draft in favor of Lindbergh to the latter's office in Minneapolis. Lindbergh himself during all this time was confined in a hospital at Rochester with the ailment which soon was to result fatally. His Minneapolis office was in charge of an agent who knew that the money belonged to plaintiff. May 5th she indorsed with Lindbergh's name the draft which had come from Little Falls and deposited it in a Minneapolis bank for the credit of defendant, Peoples National Bank of Shakopee, herein called the bank for convenience. Mr. Lindbergh had an account with the latter and was forthwith credited with the deposit. He died May 25, 1924. His estate is insolvent. August 12, 1924, the bank attempted to appropriate the Lindbergh credit balance, which included plaintiff's money, as an offset on certain notes which it held against the deceased, all of them antedating the deposit of plaintiff's money and all past due at that time.
Again we are dealing with one of those vexed questions concerning which courts of last resort are in rather emphatic disagreement. It is said that this court has adopted the minority view, the "Federal" or "equitable" rule, so-called. 5 Minn. L.R. 471, citing Douglas v. First Nat. Bank of Hastings, 17 Minn. 18 (35); Third Nat. Bank of St. Paul v. Stillwater Gas Co. 36 Minn. 75, 30 N.W. 440; Platts v. Metropolitan Nat. Bank of Mpls. 130 Minn. 219, 153 N.W. 514. To whatever extent our former decisions may have committed us, we have given the problem a thorough reinvestigation, with a view to choosing anew that side of the issue which seems best supported by reason.
The bank did not change its position nor suffer detriment on the faith of the deposit in Lindbergh's name of plaintiff's money. So it has no equity superior to that of plaintiff, there being no anomalous and dominant quality in the banker's right of offset. The argument contra is put upon the currency of negotiable paper, and the "ancient foundation that money has no earmarks and therefore when honestly taken can be kept." What is meant is that where money has been honestly received, for a consideration and without notice, in the independent right of the taker himself, as in payment of a debt, it may be kept. But the same author goes on to say that Bolles, Modern Law of Banking, 748.
But, while money has no more sanctity than any other property and not as much as some, it has and must continue to have a currency, a fluidity, that is denied other property. That quality must continue or it will cease to be money. But allowing fully the premise, building even on this "ancient foundation" of no earmarks, how can it follow that a bank, more than anyone else, can by its own act, unaided by superior equity, appropriate the money of another which happens quite by chance and temporarily to have been placed in its control? Here it was intended to be merely the conduit of that money on its way to the rightful owner. The final remittance was prevented, the record shows, because at the time being Mr. Lindbergh was incapacitated for business and remained so to the end.
What has happened to plaintiff's right to his money? Nothing but the unilateral act of the bank in asserting a right of offset. But no equity attends that right, at least none superior to that of plaintiff. The bank has not changed its position on the faith of the deposit. It certainly did not accept Lindbergh as a depositor, nor loan him money, nor buy his notes, expecting payment out of any funds not his own.
The currency of money and commercial paper and the absence from the former of all earmarks have never, alone, procured their escape from equity's pursuit of trust property in the hands of those who, with notice or as volunteers or without consideration, have taken the property from the trustee. In such a case equity follows not only the original property but the proceeds if there has been a conversion into money. 3 Pomeroy, Eq. Jur. (3d ed.) § 1048. The doctrine predicated upon the currency of money, the lack of earmarks still applies where the trustee himself effects the conversion and uses the money of his principal or cestui in payment of his own debt. Smith v. Crawford County State Bank, 99 Iowa 282, 61 N.W. 378...
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