Platts v. Metropolitan National Bank of Minneapolis
| Decision Date | 02 July 1915 |
| Docket Number | 19,239 - (161) |
| Citation | 153 N.W. 514,130 Minn. 219 |
| Parties | ENOS A. PLATTS v. METROPOLITAN NATIONAL BANK OF MINNEAPOLIS |
| Court | Minnesota Supreme Court |
Action in the district court for Hennepin county to recover $2,000. The facts are stated in the opinion. The case was tried before Jelley, J., who denied defendant's motion for judgment on the pleadings, made findings and ordered judgment in favor of plaintiff. From an order denying its motion for a new trial, defendant appealed. Affirmed.
Bank -- insolvency of depositor -- unmatured note.
1. The general rule is that a bank holding an unmatured note of a depositor may upon his insolvency offset the deposit against the note.
Bank -- deposit impressed with a trust -- plaintiff entitled to recover.
2. Four farmers in South Dakota gave mortgages on their farms through an agent there to Barnes Brothers at Minneapolis. The agent had authority to receive the money. He directed the mortgagees to deposit the money in the defendant bank to the credit of a bank at Fort Pierre which had an account with the defendant bank. Barnes Brothers drew their checks on the Northwestern National Bank and sent them to the defendant bank with directions to notify the Fort Pierre bank. The bank did not know of the deposits nor claim them, nor indorse or see the checks, nor make directions relative to them. The defendant bank had no communication with the Fort Pierre bank relative to them. Immediately after they were deposited the Fort Pierre bank became insolvent. It then owed the defendant bank on a promissory note exceeding the amount of the checks and its own money on deposit. It is held that the $2,000 was impressed with a trust, the defendant bank cannot retain it upon the doctrine of equitable set-off, and that the plaintiff, the assignee of the four mortgagors, is entitled to recover.
Jay W Crane, for appellant.
Powell & Simpson and Gaffy, Stephens & Fuller, for respondent.
Action by the plaintiff, as assignee of four different persons, to recover the sum of $2,000 received by the defendant bank under the circumstances hereafter stated. There were findings for the plaintiff. The defendant appeals from the order denying its motion for a new trial.
1. The rule is general that a bank, holding a not yet due note of a debtor who is a depositor, has, upon the debtor's insolvency, an equitable right of set-off of the note against the deposit. Wunderlich v. Merchants Nat. Bank, 109 Minn. 468, 124 N.W. 223, 27 L.R.A. (N.S.) 811, 134 Am. St. 788, 18 Ann. Cas. 212. This case discusses at some length the basis and application of the doctrine of equitable set-off, and reviews the earlier cases. It leaves no present need of further discussion.
2. The defendant bank seeks to retain the $2,000 by the application of the doctrine of equitable set-off to the facts now to be stated.
In April, 1913, the Citizens State Bank of Fort Pierre, South Dakota, borrowed of the Metropolitan National Bank of Minneapolis the sum of $4,500 on its 90-day note. The sum was credited to the Fort Pierre bank on the books of the Metropolitan Bank on April 18, 1913.
One John Hayes was the president of the Fort Pierre bank and negotiated the loan for it.
Hayes was engaged in the farm loan business. Four farmers living in South Dakota employed him in April, 1913, to get them loans of $500 each on their farms. He was their agent. His loan business was a private business unconnected with that of the bank. He negotiated these loans through Barnes Brothers of Minneapolis. He was authorized to receive the proceeds. The money which he got belonged to the four farmers. He directed...
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