Mereness v. First Nat. Bank of Charles City

• Decision Date: 04 October 1900
• Parties: MERENESS v. FIRST NAT. BANK OF CHARLES CITY.
• Court: Iowa Supreme Court

112 Iowa 11

83 N.W. 711

MERENESS

v.FIRST NAT. BANK OF CHARLES CITY.

Supreme Court of Iowa.

Oct. 4, 1900.

Appeal from district court, Floyd county; C. H. Kelly, Judge.

The petition was filed October 19, 1895, alleging that on April 12, 1881, Isaac Mereness deposited with defendant $1,000, for which it issued a demand certificate of deposit, since lost; that said Mereness died October 10, 1888, and plaintiff was appointed administrator of his estate in May, 1889; that plaintiff demanded of defendant the money due on said certificate in June, 1889, whereupon he was falsely informed by defendant's cashier and president that there was no money due said Isaac Mereness on said certificate, or his representative, and refused payment; that said misstatement was knowingly made, for the purpose of preventing plaintiff from collecting the same; that to a written inquiry addressed the cashier he responded the same year that he had made an examination of the books of the bank, and could find no money to the credit of said Mereness, or belonging to him or his heirs, and requested plaintiff to look the matter up, whereas he knew said books showed a deposit of $1,000 due and owing to said Mereness or his representative, and made the communication with an intent to mislead and deceive plaintiff and conceal from him the facts; that plaintiff discovered the truth but a few months prior to bringing this action, and he asks judgment for the $1,000, with interest from date of deposit. The defendant's demurrer that the cause of action appeared to be barred by the statute of limitations was sustained. From judgment dismissing the petition, plaintiff appeals. Affirmed.Springer & Clary, for appellant.

Ellis & Ellis, for appellee.

LADD, J.

In the early case of Bean v. Briggs, 1 Iowa, 488, this court held a time certificate of deposit, in the usual form, negotiable, for that it possessed all the characteristics of a promissory note. Story defines a “promissory note” to be “a written engagement by one person to pay another person, therein named, absolutely and unconditionally, a certain sum of money at a time specified therein.” Story, Notes, § 1. The ordinary certificate of deposit is precisely within this definition, and it is generally held that such certificates are, in effect, promissory notes, and governed, with certain exceptions, by the same rules. Klauber v. Biggerstaff (Wis.) 3 N. W. 357;Bank v. Brown, 45 Ohio St. 39, 39 Am. St. Rep. 527;Institution v. Weedon, 18 Md. 320, 81 Am. Dec. 603; note to O'Neill v. Bradford, 42 Am. Dec. 575; 5 Am. & Eng. Enc. Law (2d Ed.) 803, and cases collected. The decisions reaching a contrary conclusion seem to rest on the peculiar wording of particular certificates. See Patterson v. Poindexter, 6 Watts & S. 227, 40 Am. Dec. 554; O'Neill v. Bradford, supra. The exceptions referred to relate to the necessity of a demand before suit may be maintained or the statute of limitations begins to run. The cases so holding seem to rest on the theory that the transaction not alone creates a debt against the drawer of the certificate, but is also in the nature of a bailment,--in contemplation of law a deposit, and not a loan,--and hence that a demand is essential before the holder is entitled to the return of his money. Payne v. Gardiner, 29 N. Y. 146 (divided court); Bellows Falls Bank v. Rutland Co. Bank, 40 Vt. 377;Brown v. McElroy, 52 Ind. 404;Munger v. Bank, 85 N. Y. 580; McGough v. Jamison, 107 Pa. St. 336; Schute v. Bank, 136 Mass. 487. The settled doctrine of this court, however, seems to be that, when a person deposits money in a bank in the usual course of business, he loans it to the bank, which becomes his debtor to the amount of his deposit, and not his bailee therefor. Lowry v. Polk Co., 51 Iowa, 50, 49 N. W. 1049;Long v. Emsley, 57 Iowa, 11, 10 N. W. 280. See cases collected in 3 Am. & Eng. Enc. Law, 826. The title to the money passes to the bank, and becomes subject to its absolute control. The depositor cannot lay claim to the specific money, nor can he maintain an action in replevin or trover therefor. His sole remedy is assumpsit. A promissory note payable on demand is due presently, and the statute of limitations begins to run from its date. See note to Merritt v. Todd, 80 Am. Dec. 243.

Why a different rule should be applied to a contract held to be an exact equivalent of such a note we are unable to discover. Certificates of deposit in the usual form are no more nor less than promissory notes by the banks issuing them, and, if there is any valid reason for declaring the one due at its date and the other only on demand, this has not been disclosed by the very eminent courts making such a distinction. The reasoning of Payne v. Gardiner, 29 N. Y. 146, is quite as persuasive when applied to a demand note. There appears to be no tenable ground for not applying the rule pertaining to promissory notes payable on demand, and holding that the statute of limitations commenced to run at the date of this certificate. Curran v. Witter, 68 Wis. 16, 31 N. W. 705;Mitchell v. Easton, 37 Minn. 335, 33 N. W. 910;Tripp v. Curtenius, 36 Mich. 494;Brummagin v. Tallant, 29 Cal. 504; Lynch v. Goldsmith, 64 Ga. 42; Hunt v. Divine, 37 Ill. 137. See First Nat. Bank of Rapid City v. Security Nat....