Citizens' Sav. Bank v. Vaughan

• Decision Date: 07 December 1897
• Citation: 115 Mich. 156,73 N.W. 143
• Parties: CITIZENS' SAV. BANK v. VAUGHAN ET AL.
• Court: Michigan Supreme Court

73 N.W. 143

115 Mich. 156

CITIZENS' SAV. BANK v. VAUGHAN ET AL.

Supreme Court of Michigan

December 7, 1897

Appeal from circuit court, Clinton county, in chancery; Sherman B Daboll, Judge.

Petition by Citizens' Savings Bank against Coleman C. Vaughan and others. From a decree, both parties appeal. Modified.

Edwin H. Lyon and Fedewa & Walbridge, for appellants.

Gray &amp Gray, for appellee.

GRANT J. (after stating the facts).

1. Did the bank have the right to offset the deposit of the mortgage company? If the note was due, the offset was properly allowed. It is conceded that banks have a lien upon deposits for debts due from their depositors. No lien, however attaches until the maturity of the debt. Bolles, Banks, � 374; Gibbons v. Hecox, 105 Mich. 513, 63 N.W. 519. Palmer v. Palmer, 36 Mich. 487; Beardsley v. Webber, 104 Mich. 88, 62 N.W. 173; Bank v. Hosie (Mich.) 70 N.W. 890. If the note be due so that suit may be brought without demand, it is also due, for the purposes of offset, when the promisor sues the bank to recover claims against it. The receivers introduced evidence from which they argue that these demand notes were not intended as temporary loans, and would not become due until some future time. The plain terms of the contract cannot be thus changed. The paper is a demand note, pure and simple, and is to be controlled by the rules applicable to such paper. The circuit judge rightly held that the deposit is an offset.

2. The statute governing banks provides as follows (How. Ann. St. � 2369): "And no debts shall be contracted nor liability incurred for said association, except by one or more of said managers, and no liability for an amount exceeding five hundred dollars, except against the person incurring it shall bind the said association unless reduced to writing and signed by at least two managers." Undoubtedly both parties acted in ignorance of this statute, but the statute must control. The liability, being for more than $500 required the signatures of two of its managers to make it valid. Is the mortgage company liable on each note to the extent of $500? Counsel for the bank contend that the indorsement is good for $500, and void for the excess. We cannot concur in this view. The words of the statute are, "no liability for an amount exceeding $500," etc. We think the statute contemplates that the invalidity should attach to every contract in its entirety where the amount...