Joler v. Depositors Trust Co.

• Decision Date: 03 October 1973
• Citation: 309 A.2d 871
• Parties: 13 UCC Rep.Serv. 515 Jeannette JOLER and Jerome G. Daviau v. DEPOSITORS TRUST COMPANY.
• Court: Maine Supreme Court

Page 871

309 A.2d 871

13 UCC Rep.Serv. 515

Jeannette JOLER and Jerome G. Daviau v. DEPOSITORS TRUST COMPANY.

Supreme Judicial Court of Maine.

Oct. 3, 1973.

Daviau, Geller & Daviau, by Jerome G. Daviau, Waterville, for plaintiffs.

Locke, Campbell & Chapman, by Frank G. Chapman, Augusta, for defendant.

Before DUFRESNE, C. J., and WEATHERBEE, WERNICK and ARCHIBALD, JJ.

WERNICK, Justice.

Louis N. Ware of Winslow, Maine died on March 6, 1968. Plaintiff, Jeannette Joler, is a beneficiary under his will. Plaintiff, Jerome G. Daviau, was named in the will as executor and qualified on June 21, 1968.

Nor later than April 2, 1968 a proof of claim (dated March 25, 1968) was filed by defendant bank, Depositors Trust Company, in the Kennebec County Registry of Probate against the estate of decedent, Ware. It disclosed a $410.00 indebtedness due from him to defendant, evidenced by a promissory note executed by decedent on December 13, 1967 payable ninety days thereafter.

Even though the indebtedness had matured by the time the proof of claim was filed, defendant never 'commenced and served within 12 months after . . . (the) qualification . . .' of the executor a civil action against the executor-thus to avoid the bar, established by 18 M.R.S.A. § 2651, against maintenance of an action later commenced.

Approximately three years after his qualification plaintiff-executor, on May 28, 1971, sent one of his employees to a branch of defendant in Winslow to close out two separate accounts of decedent-one a sayings account containing $3,759.37 (as constituted by a principal balance, on May 1, 1967, of $3,325.94 plus interest accumulated to the date of decedent's death) and the second a non-interest bearing checking account in the amount of $1,109.07. Plaintiff-executor had earlier informed the branch manager that he was planning to close out the accounts and, thus alerted, the manager had checked the records of the decedent's financial status with the bank and ascertained the existence of the unpaid debt.

When the employee of plaintiff-executor appeared at the bank and was in process of losing out the accounts, the branch manager (already advised by counsel) placed a telephone call to the plaintiff-executor. He told him that defendant bank proposed to deduct $410.00 in payment of the outstanding indebtedness and requested plaintiff-executor to approve it. Plaintiff-executor not only refused to consent to the deduction but vigorously denied the right of defendant bank to make it or in any manner to be repaid the $410.00. After further discussion between plaintiff-executor and the branch manager, it eventuated that defendant bank paid no money from either of the two accounts to plaintiff-executor.

On June 9, 1971 the plaintiffs commenced the instant civil action in the Superior Court of Kennebec County.

In one of two counts the complaint alleged that, as a beneficiary under the will of Louis N. Ware, the plaintiff, Jeannette Joler, had requested payment of her legacy and plaintiff-executor had sought to obtain the funds needed to honor her request by closing out the accounts of decedent with defendant bank. The complaint alleged that (1) a demand had been made upon the defendant bank for the amounts of both deposits and any interest accrued, the demand being accompanied

'by letters and orders and a copy of . . . (the plaintiff-executor's) appointment, together with the submission of the deposit book, . . .'

and (2) defendant had refused to pay the money in 'either or both of said accounts', requiring as the precondition of the payment of any money whatever that plaintiff-executor write a letter assuring payment of the bank's $410.00 claim in full. Characterizing defendant's refusal to pay as an attempt to achieve a pecuniary advantage to which the bank was not legally entitled, tantamount to 'extortion' constituting a 'prima facie tort', plaintiffs claimed damages both compensatory and punitive.

In a second count which realleged all of the paragraphs of the first count descriptive of the conduct of the parties, plaintiffs asserted ultimate conclusory characterizations that defendant had committed a 'breach of statutory obligation' and had acted with 'gross negligence' towards plaintiffs. Plaintiffs again claimed entitlement to both compensatory and punitive damages.

Defendant filed an answer denying liability. Additionally, defendant pleaded, in the form of a 'permissive counterclaim' (pursuant to Rule 13(b) and (c) M.R.C.P.), that there was

'an outstanding unpaid principal balance of $410.00 . . . as a counterclaim to demands of plaintiff',

evidenced by a promissory note. By the 'counterclaim' pleading, defendant sought court adjudication that defendant was legally entitled to repayment of the $410.00 due it from the decedent, Are. Concomitantly with the filing of its answer and counterclaim defendant delivered to the Clerk of the Superior Court its check in the amount of $4,458.44 (this amount being $410.00 less than the total of the balances of the two accounts), together with the promissory note which had been executed by decedent.

Plaintiffs filed a reply to the counterclaim averring that defendant's delivery into Court of its check in the amount of $4,458.44 is 'improper and legally impermissible' because: (1) plaintiffs' claim in this action is '. . . not in any way (a) claim (for) the money on deposit belonging to Plaintiffs' interstate' and (2) hence, 'the court has no jurisdiction to order that any sum be paid over to the Plaintiff(s), so far as the deposits are concerned.'

The pleadings were subsequently supplemented with answers of defendant to interrogatories propounded by plaintiffs, affidavits, depositions and various exhibits.

On August 30, 1971 plaintiffs moved for summary judgment in their favor. On September 2, 1971, defendant moved for a summary judgment that the action of plaintiffs be dismissed. On January 4, 1972 the Justice presiding in the Superior Court ruled that defendant was legally entitled to repayment of the $410.00 owed it by decedent, Ware, and plaintiffs should have the balance of $4,458.44 remaining in the two accounts. On this rationale the presiding Justice denied the motion of the plaintiffs for summary judgment in their favor, granted defendant's motion for summary judgment and ordered the action of plaintiffs dismissed.

Plaintiffs have appealed from the judgment of dismissal of their action.

We sustain the appeal.

Widely accepted, as embodying the application of conceptions of equity and fairness to the basic creditor-debtor relationship established when a person makes general deposits in a bank, is the principle:

'When . . . (the depositor) owes to the bank independent debts, already due and payable, the bank has the right to apply the balance of his general account to the satisfaction of any such debts of his.' National Mahaiwe Bank v. Peck, 127 Mass. 298, 300, 301 (1879)

Also: Krinsky v. Pilgrim Trust Company, 337 Mass. 401, 149 N.E.2d 665 (1958); Kress v. Central Trust Company of Rochester, 272 N.Y. 629, 5 N.E.2d 365 (1936); American Lumberman's Mutual Casualty Company of Illinois v. Bradley Construction Company, 129 N.J.Eq. 278, 19 A.2d 242 (1941); Joseph v. Carter, 382 Ill. 461, 47 N.E.2d 471 (1943); Melson v. Bank of New Mexico, 65 N.M. 70, 332 P.2d 472 (1958); Adelstein v. Jefferson Bank & Trust Company, Mo., 377 S.W.2d 247 (1964); and Sharpe v. Metropolitan National Bank, Colo.App., 503 P.2d 1043 (1972).

We hold this principle governing law in Maine subject to statutory modifications introduced by enactment of the Uniform Commercial Code- specifically, the provisions of 11 M.R.S.A. § 4-303(1)(a)-(e).

When, therefore, defendant bank proposed to deduct the $410.00 amount owed it by decedent, Ware, it was purporting to exercise the legal right of 'self-help' ordinarily available to it, as above delineated, consistently with a limitation defendant might have conceived to be imposed by 11 M.R.S.A. § 4-303(1)(b)-that the bank's 'set-off' might come 'too late' were it to be

'. . . exercised after the bank has . . . paid the item in cash . . ..'

The present situation, however, involved the further special facts that the depositor had died and, in the course of the administration of the estate, defendant, although having filed a timely proof of claim, had omitted to institute against the executor within the twelve months period prescribed by 18 M.R.S.A § 2651 a civil action to obtain a court judgment. The question is thus precipitated whether these special facts rendered here inapplicable the usually existing right of defendant bank to apply the deposits to the matured debt owing to it by the depositor.

In Littlefield v. Eaton, 74 Me. 516 (1883), after cataloging various consequences produced by the operation of the statute barring maintenance of actions against executors or administrators to recover on debts due from decedents, this Court observed that the statute

'has been considered to be . . . a practical extinquishment of claims not prosecuted within the time limited; . . ..' (pp. 519, 520) (emphasis supplied)

The care taken to characterize the 'extinguishment' as 'practical' is a recognition, precisely, that conceptually the debt is not truly 'extinguished.' Although the legal vitality of the indebtedness due from a decedent may be sharply attenuated for most practice enforcement purposes after expiration of the statutory period for commencing an action against the executor or administrator, it nevertheless remains theoretically possible that in rare situations, and by particular means, satisfaction of such indebtedness may be lawfully achieved notwithstanding a lack of consent by the personal representative.

We decide that the context now before us presents one such rare occasion, and particular methodology, for lawful satisfaction of the indebtedness owed defendant by the decedent regardless of a lack of consent by his personal representative and...