McMahon v. German-American National Bank of Little Falls
| Decision Date | 01 July 1910 |
| Docket Number | 16,548,16,549 - (129,130) |
| Citation | 127 N.W. 7,111 Minn. 313 |
| Parties | JOHN McMAHON v. GERMAN-AMERICAN NATIONAL BANK OF LITTLE FALLS, MARY McMAHON v. SAME |
| Court | Minnesota Supreme Court |
Actions in the district court for Morrison county by the guardian of John McMahon, a minor, and Mary McMahon, a minor to recover for each $500 deposited with the German American National Bank. The answers alleged that the cause of action did not accrue within six years before its commencement, and that, if any money of the minor or for him was ever deposited with defendant, the same was, long prior to the beginning of this action, duly paid to and upon the order and direction of the person lawfully entitled to receive the same under and pursuant to said deposit and without knowledge of or notice to defendant of plaintiff's alleged ownership or of any rights of his inconsistent with the payment. The replies were general denials. The cases were tried together before Taylor J., who dismissed them on the merits. From orders denying plaintiff's motions for a new trial, they appealed. Reversed and new trial granted.
Certificate of deposit payable to guardian -- payment to another -- action by guardian.
A mother of two minor children, through her deceased husband's cousin, T., deposited $1,000 in bank and took two certificates of deposit, each in one-half of that sum, in the name of her two minor children, respectively, payable to the order of each, or guardian, on return of the certificates properly indorsed. T. retained the certificates. The bank knew the children were minors, and dealt with T. as their guardian. T. subsequently surrendered the original certificates and obtained new ones. The certificates were finally issued to the order of the minors, respectively, or their guardian, T. T. cashed the certificates and became bankrupt. He had never been appointed guardian by the probate court, or otherwise. Actions were brought against the bank by the duly appointed guardian of the minors to recover the amount deposited. It is held:
1. The evidence showed the gift to the minors to have been completely executed.
2. The bank did not discharge the original obligation by payment to T.
(a) A payee, who has given his agent credit with the payor by employing that agent in obtaining the obligation, and then, by allowing him to retain its possession, has clothed him with apparent authority to receive the payments of interest and principal according to the tenor of the instrument.
(b) Payment of money to a person not authorized to receive it does not discharge the debt.
(c) Apparent authority, attributed to a party to whom is intrusted an instrument to secure the payment of money, permits payment to be made only according to the terms of the instrument.
(d) The original certificates of deposit determined the obligation of the bank.
(e) When a certificate of deposit is made payable to the order of a minor or guardian, and the bank pays a person not named in the certificate, the burden rests on the issuing bank to show that the person to whom it pays the money was a legally appointed guardian.
(f) The payment of such money to a person supposed to be, but who is not in fact, the guardian of the minors, does not estop the minors from subsequently requiring the bank to pay the certificates.
Harris Richardson & Harold C. Kerr and Gilbert & Greenman, for appellants.
Archibald H. Vernon, for respondent.
Bridget McMahon received $2,000 insurance money on the life of her deceased husband. She instructed one Tomelty, a relative of the deceased, to deposit in the defendant and respondent bank $500 for her minor son, John, and the same sum for her minor daughter, Mary. Tomelty took certificates of deposit in the names of John McMahon and Mary McMahon (minors), respectively payable to the order of each, or guardian, on return of this certificate properly indorsed. New certificates were subsequently issued in the same terms, except that the name of Tomelty was finally added as guardian. The certificates were in Tomelty's charge from the time of issuance until surrendered, and were never in any other person's hands. The only transactions the bank had in respect to the certificates were with Tomelty. The bank finally paid the money to Tomelty, who subsequently became bankrupt. In point of fact, Tomelty had never been appointed guardian by the probate court.
Actions were brought by the son and daughter, respectively, through their guardian, to recover $500 each from the defendant bank. The actions were tried together. The court found as a fact that the money sought to be recovered in these actions had been duly paid by the defendant to said Tomelty, to whom defendant was authorized to make such payment. The actions were accordingly dismissed on their merits. This appeal was taken from the order of the trial court refusing defendant's motion for a new trial.
1. The first question presented by the record is whether or not the money was an executed gift by the mother to her children. The mother, having insurance money, was asked by Tomelty to give some of it to her minor children. To this she assented. The money she retained she deposited in another bank. She went with Tomelty to deposit this money in the defendant bank, but does not appear to have gone to the deposit window. He made the deposit and received and retained the certificates. The mother parted with all present and future power, control, and dominion over the property. She neither retained the possession of the certificates, nor had them made payable to her order. She delivered the evidences of the deposit, not to the minor children themselves, but to their so-called "guardian." She transferred to him "the present right of property in possession." The "guardian" and bank both accepted the money, not as hers, but as belonging to the children. The acquiescence of the minors is presumed. There was a practical delivery. Tomelty was the mother's agent, in the sense that he was to deposit the money and retain the certificates. Defendant's cashier testified: "Mr. Tomelty brought in this money, and deposited the amount stated in these certificates, and said that he would leave that as their guardian, guardian for these two people." Defendant itself in its brief urges: "Both parties to the transactions evidenced by the certificates of deposit understood that guardian meant Tomelty, and acted upon that understanding." The fact of minority appeared upon the face of one of the original certificates. The conclusion necessarily follows that the gift was executed.
2. The question then arises whether the bank discharged its obligation by paying the money to Tomelty on the surrender of the certificates. The learned trial court reasoned: There must be some fact, in addition to the mere possession of the note by the assumed agent, to give validity to such a payment. ...
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