Bank v. Mason

• Decision Date: 19 June 1880
• Citation: 95 Pa. 113
• Parties: First National Bank of Lock Haven <I>versus</I> Mason.
• Court: Pennsylvania Supreme Court

Page 113

95 Pa. 113

First National Bank of Lock Haven versus Mason.

Supreme Court of Pennsylvania.

June 8, 1880.

June 19, 1880.

June 8th 1880.

Before SHARSWOOD, C. J., MERCUR, GORDON, PAXSON, TRUNKEY, STERRETT and GREEN, JJ.

Error to the Court of Common Pleas of Clinton county: Of May Term 1880, No. 96.

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C. S. McCormick and Cline G. Furst, for plaintiff in error.— The question is whether, in a case of moneys deposited in a bank in his own name by the bookkeeper of an insolvent firm and so deposited with their knowledge and consent and for their benefit, it is competent for the bank, the depositary, when the creditor of such firm, to prove the true ownership of such moneys for the purpose of defeating a suit brought therefor in the name of the bookkeeper.

A deposit of money in a bank creates no relation of trustee or quasi trustee, but the money deposited is simply loaned to the depositary — this the cases abundantly show: Bank of Northern Liberties v. Jones, 6 Wright 538. A deposit may be shown to belong to a third person; the credit given in the book for the same is nothing more than prima facie evidence of ownership: Arnold v. Macungie Savings Bank, 21 P. F. Smith 290; Stair v. York National Bank 5 Id. 368; Farmers' and Mechanics' Nat. Bank v. King, 7 Id. 208 Against a depositor's balance a bank has the right of lien or set off for notes of the depositor past due: Morse on Banks and Banking 27, 34; Waterman on Set-off 143, 144; Reed v. Penrose, 12 Casey 235, and the authorities there cited. The court will search out the actual plaintiff and fix on him the responsibility of a party by subjecting him to a set off, where that may be necessary, to protect the defendant from loss: Armstrong v. Lancaster, 5 Watts 68. It is plainly taught by the authorities referred to that the true owner of a fund deposited by and in the name of his agent may maintain an action at law for the recovery of such property or fund, but in such suit the depositary has the right to detain because of lien or set off. And we submit when the suit chances to be in the name of the agent instead of the principal, that no valid reason can be assigned why, if the principal, the true owner of the fund, is the debtor of the depositary, the latter shall not be allowed to defeat such action by showing such ownership and indebtedness; and, moreover, with a denial of the right to make such proof, if the principal in such case be insolvent, the depositary must suffer irreparable loss. The possession of the agent being the possession of his principal; his acts being not his own, but the acts of his principal, it is equally difficult to see how the agent can recover by suit in his own name where his principal for the same cause of action cannot recover. A set off of Thomas & Mason's indebtedness lying in the way of a suit in their name, the suit is in the name of James D. Mason, their agent, but what will prevent a recovery by the former must defeat the action when it is, as here, by the latter; for there exists because of the system of rules and usages relating to banking, national, state or private, no "estoppel in law" that will help out such an enterprise.

S. R. Peale, for defendant in error.—As between the depositor and the bank, the latter has no right to refuse to pay checks of the depositor. The bank received the money as that of James D. Mason, and it was so deposited, and it was of no consequence what were his declarations at the time. And in all the cases cited by the plaintiff in error the plaintiff was the claimant to the ownership of the money. But certainly there is no authority for the position that in the absence of notice or claim by a third party the bank can set up an absolute title in a stranger to the plaintiff's deposit for the purpose of appropriating it to a note due by said stranger to the bank. The bank contracts with the depositor only, and to permit it to question his title to the fund deposited would destroy all banking and commercial transactions. The rightful owner of the fund as against the depositor might raise the question but not the bank: Jackson v. Bank of United States, 10 Barr 67; United States Bank v. Macalester, 9 Id. 481.

Mr. Justice PAXSON delivered the opinion of the court, June 19th 1880.

The plaintiff below...