Esling v. City Nat. Bank & Trust Co. of Battle Creek

• Decision Date: 28 December 1936
• Docket Number: No. 94.,94.
• Citation: 270 N.W. 791,278 Mich. 571
• Parties: ESLING v. CITY NAT. BANK & TRUST CO. OF BATTLE CREEK.
• Court: Michigan Supreme Court

278 Mich. 571

270 N.W. 791

ESLING

v.CITY NAT. BANK & TRUST CO. OF BATTLE CREEK.

No. 94.

Supreme Court of Michigan.

Dec. 28, 1936.

Action by Gladys Irene Esling against City National Bank & Trust Company of Battle Creek. Judgment for defendant, and plaintiff appeals.

Affirmed.

POTTER and TOY, JJ., dissenting in part.

Appeal from Circuit Court, Calhoun County; Blaine W. Hatch, judge.

Argued before the Entire Bench.

William J. Kearney, of Albion, and Ronald M. Ryan, of Battle Creek, for appellant.

Bernard J. Onen, of Battle Creek, for appellee.

NORTH, Chief Justice.

This suit in assumpsit was tried before the court without a jury. The appeal is from a judgment entered in favor of defendant. For some time prior to August 17, 1932, plaintiff's grandmother, Mrs. Hannah C. Lewis, had a deposit in the defendant bank. On that date plaintiff and Mrs. Lewis went to the bank and opened a joint account in their names. This was accomplished by Mrs. Lewis transferring $2,000 from her individual account to the joint account of the two. Each of them signed a card which contained on its face the following:

‘Notice

‘We certify that before signing, we read the notice on the reverse side of this card, relative to joint deposits, and we agree to the terms thereof.’

On the reverse side of the card was printed:

‘Notice-Where deposits are made in name of two persons, payable to either or the survivor, such deposits may be withdrawn in whole or in part, by either payee, irrespective of the source of the deposit or rights of the payee, as between themselves. In the case of death of one payee, payment may be made by the bank to the survivor.

‘Payment by the bank to either payee, before or after the death of the other, shall to the extent of such payment, safisfy all liability of the bank to both payees, their representatives and assigns. The bank may make such payment to one payee notwithstanding any notice, order or direction by the other payee or his legal representatives.

‘These terms are applicable to both pass books and certificates and are in addition to the regular by-laws governing savings deposits.’

The statute governing such deposits provides: ‘When a deposit shall be made in any bank or trust company by any person in the name of such depositor or any other person, and in form to be paid to either or the survivor of them, such deposits thereupon and any additions thereto, made by either of such persons, upon the making thereof, shall become the property of such persons as joint tenants, and the same together with all interest thereon, shall be held for the exclusive use of the persons so named and may be paid to either during the lifetime of both, or to the survivor after the death of one (1) of them, and such payment and the receipt or acquittance of the same to whom such payment is made shall be a valid and sufficient release and discharge to said bank for all payments made on account of such deposits prior to the receipt by said bank of notice in writing not to pay such deposit in accordance with the terms thereof.’ 3 Comp.Laws 1929, § 12063.

On November 10, 1932, Mrs. Lewis was informed by plaintiff, who had possession of the bank book, that she was going to withdraw the money from the bank. Mrs. Lewis protested against such withdrawal, and while plaintiff was on her way to the bank Mrs. Lewis, through another, telephoned the bank and stopped payment. This stop order was noted on the account. When plaintiff arrived at the bank and presented the book and demanded payment of the deposit, she was informed of Mrs. Lewis' stop order and payment was refused. Plaintiff testified: ‘The teller said, ‘When there is a controversy between the two parties, we will have to have it ironed out between the parties.’ I said, ‘All right’, and went to my home. That is the last time I talked with anyone about the transaction until I talked with Mr. Green, (the president of the bank) quite a while afterward.'

Later the same day Mrs. Lewis came to the bank. While there she served written notice on the bank to pay no funds from this account except on her written order. Thereupon the funds from this joint account, amounting to $2,020, were withdrawn by Mrs. Lewis and redeposited in an account standing in her individual name. Some time later these and other funds which Mrs. Lewis had on deposit in the defendant bank were transferred by her to accounts in the names of other relatives. At the time suit was started, October 30, 1933, Mrs. Lewis was living; but her death occurred before trial in the circuit court.

Plaintiff's theory is that she is entitled to recover from the bank because it had no right to pay the deposit to Mrs. Lewis (who did not then have possession of the bank book) after plaintiff had made demand of payment as above recited. In this connection plaintiff asserts that the bank was not justified in refusing payment to her upon presentation of the passbook, notwithstanding the previous telephone stop order by Mrs. Lewis.

It is important to note that the bank teller through whom the joint account was made testified that at the time of the deposit Mrs. Lewis said that the money was to go to her granddaughter after Mrs. Lewis' death. This was denied by plaintiff. However, the testimony discloses facts which tend to negative an intent on the part of Mrs. Lewis that by opening an account in the joint names of herself and her granddaughter, she was to release her right to and control of the money deposited. She was well advanced in years, enfeebled in health, and it was fair to assume that her necessities might require the use of this deposit in whole or in part. Obviously with this in mind Mrs. Lewis reserved the right to withdraw from this account. The undisputed testimony is that the money placed in this joint account belonged to Mrs. Lewis and the bank was aware of such being the fact. And further, both by plaintiff's own statement and by the order to stop, the bank knew Mrs. Lewis was opposed to payment being made to plaintiff. But assuming plaintiff, as well as Mrs. Lewis, could make withdrawals, the rights of plaintiff in this joint deposit during the lifetime of Mrs. Lewis are, under the facts of this case, rather definitely settled by former decisions of this court as well as those of other jurisdictions:

‘Under the form of the deposit, with or without the passbook representing the same, either could have withdrawn the entire amount during the lifetime of the other.’ Negaunee Nat. Bank v. Le Beau, 195 Mich. 502, 161 N.W. 974, 975, L.R.A.1917D, 852.

‘I think it may be a matter of common knowledge that many of them [married people] have their savings deposited in banks payable to them or either or the survivor of them, or words of similar purport. The Legislature of the State has taken cognizance of this fact and has provided a rule of evidence in such cases. Section 8040, G.L.1915 [being section 12063, 3 Comp.Laws 1929]. But it has gone no further.’ Ludwig v. Bruner, 203 Mich. 556, 169 N.W. 890, 891.

In construing the provisions of the New York statute which, as to the rights of joint depositors while both are living, is strikingly similar in its terms to the Michigan statute, Justice Cardozo in an exceedingly well-reasoned opinion states:

‘The statute, as I view it, does not mean that between the persons named as depositors a joint tenancy ensues at once and automatically, as an irrebuttable presumption, with the result that neither will be permitted even during the joint lives to prove against the other that the deposit was made with a contrary intention. For the bank which has paid, the form of the account is, indeed, an absolute protection, unless written notice has been given by either one of the depositors (cf. Banking Law, §§ 149, 198) ‘not to pay such deposit in accordance with the terms thereof.’ For the depositors themselves, the form is not conclusive in any contest during their joint lives as to the title to the moneys, nor conclusive after the death of either as to moneys then withdrawn. * * *

‘The plain implication is that as between the depositors themselves, the form of the deposit gives rise to a presumption and nothing more. * * *

‘It [the bank] is protected in the absence of written notice that it is ‘not to pay such deposit in accordance with the terms thereof.’ When such a notice is given and a contest in the courts ensues during the joint lives of the depositors, distribution is to be determined, not solely by the terms of the deposit, which then cease to be conclusive, but by the realities of ownership.'

Moskowitz v. Marrow, 251 N.Y. 380, 167 N.E. 506, 511, 66 A.L.R. 870.

In a recent decision in this court it is held that the act of a woman who had created a similar joint account in the name of herself and a nephew might later of her own motion have the nephew's name stricken from the bank records, thus leaving it an account in her individual name. In speaking of the respective rights of this woman and her nephew, Justice Wiest said:

‘It is clear that Mrs. Currey felt very friendly toward Mr. Rasey, who was her nephew, and intended at one time to make him a gift to take effect at the time of her death, but she was shrewd enough to not place her means beyond her control, and later she expressly withdrew the prospective gift. The money was all deposited by Mrs. Currey. Here was no gift, by way of absolute transfer, or to take immediate effect, but at the inception of the arrangement and in its very designation of terms, was contingent upon survivorship of John Rasey. It was not irrevocable. * * * If a depositor directs a bank to pay the deposit to the depositor, or another designated, the depositor may change the designation or limit payment to himself or his order. The designation of the bank account as one subject to the order of Mrs. Currey or Mr. Rasey did not constitute a gift inter vivos, for it did not strip Mrs. Currey of all ownership of and dominion over the deposit.’ Rasey v....