Milne v. Capital Trust & Savings Bank of St. Paul
| Decision Date | 21 January 1927 |
| Docket Number | 25,813 |
| Citation | 211 N.W. 954,170 Minn. 66 |
| Parties | A. A. MILNE v. CAPITAL TRUST & SAVINGS BANK OF ST. PAUL AND A. J. VEIGEL |
| Court | Minnesota Supreme Court |
Defendants appealed from a judgment of the district court for Ramsey county, Olin B. Lewis, J. Reversed.
When owner of special deposit in bank which becomes insolvent can claim only as general creditor.
While money paid into a bank for the express purpose of discharging a mortgage debt may be, nothing else appearing, a special deposit, it ceases to be such where the mortgagee accepts and retains for over 20 days a cashier's check for the amount payable to his own order. The relation of debtor and creditor is thereby established and, the bank having become insolvent in the meantime, the payee of the check can claim only as a general creditor.
Clifford L. Hilton, Attorney General, William H. Gurnee, Assistant Attorney General, and E. O. Wergedahl, Special Attorney for commissioner of banks of the state of Minnesota, for appellants.
John A. Burns and Kerr, Nelson, Burns & Mohan, for respondent.
In this action to recover as on a preferred claim certain money from an insolvent bank, there was a trial without a jury. After decision for plaintiff defendants appeal from the judgment. April 8, 1924, one Riehl paid to Capital Trust & Savings Bank of St. Paul $1,227.38, being the amount, principal and interest, which he then owed on a mortgage loan held by plaintiff, then and now a resident of St. Paul. The payment was accompanied by a satisfaction ready for the signature of plaintiff as assignee of the mortgage. The bank commingled the money with its general funds but immediately sent a representative to plaintiff to procure the latter's signature to the satisfaction, and, if possible, his consent to the money's remaining with the bank for reinvestment. That consent was refused by plaintiff who demanded his money. Thereupon a "treasurer's check" of the bank was delivered to plaintiff. Inadvertently and because apparently of an extended absence from St. Paul, plaintiff did not get around to negotiating that check until May 3, 1924. When he offered it for deposit then at his own bank he was informed that the Capital Trust & Savings Bank had closed its doors that morning. Mr. Veigel, as superintendent of banks, was then in charge and has been ever since, and for that reason is joined as a defendant.
No more need be said to show that the payment to the bank was for a special and limited purpose. When received it constituted a special deposit by the payor and the bank thereby became a bailee or trustee of the money. Pierson v. Swift County Bank, 163 Minn. 344, 204 N.W. 31; Stein v. Kemp, 132 Minn. 44, 155 N.W. 1052. It is immaterial that the money was "indistinguishably mixed" with the general funds of the bank. Bishop v. Mahoney, 70 Minn. 238, 73 N.W. 6; Central Nat. Bank v. Conn. Mut. Life Ins. Co. 104 U.S. 54, 26 L.Ed. 693.
But the case does not stop there. The treasurer's check was what is ordinarily termed a cashier's check. It was equivalent to a bill of exchange accepted or a demand promissory note made by the bank. 5 R.C.L. 528. It was plaintiff's privilege to refuse to permit the bank to reinvest the money for him and he did so. It was also his privilege to refuse to become its...
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