Shopert v. Indiana National Bank

• Decision Date: 31 January 1908
• Docket Number: 6,417
• Citation: 83 N.E. 515,41 Ind.App. 474
• Parties: SHOPERT v. INDIANA NATIONAL BANK ET AL
• Court: Indiana Appellate Court

83 N.E. 515

41 Ind.App. 474

SHOPERT v. INDIANA NATIONAL BANK ET AL

No. 6,417

Court of Appeals of Indiana

January 31, 1908

Rehearing denied April 7, 1908.

From Elkhart Circuit Court; James S. Dodge, Judge.

Suit by Horace Shopert against the Indiana National Bank of Elkhart and others. From a decree for defendants, plaintiff appeals.

Reversed.

J. D Osborne, for appellant.

Perry L. Turner, for appellees.

OPINION

HADLEY, P. J.

Appellant sued appellees to recover $ 500 in money alleged to have been left with appellee bank as a special deposit. The facts are undisputed and in substance are as follows: In September, 1903, appellant contracted with the American Shredder & Husker Company for one of their machines. He was to give $ 500 and a McCormick Husker for the same, provided said machine fulfilled the guaranty after ten days' trial. The machine company directed that he should leave the money at a bank subject to their order, and on the condition that said machine filled said guaranty. Appellant went to the bank, which was the bank at which he transacted his banking business and where he had a small deposit, drew out his balance, placed it with the money he had on his person, which in all amounted to $ 480, and gave it to the president of the bank at the cashier's window, the cashier also being present, and at the time told said officers of the bank that he was going to buy a shredder, provided it worked satisfactorily after ten days' trial. The arrangement between him and the shredder company was that appellant should put into said bank the sum of $ 500, subject to the order of said shredder company if it filled a guaranty to work well after ten days' trial, if not, then to be subject to the order of appellant. He thereupon paid into said bank the sum of $ 480. One of said officers of said bank received it and wrote a certificate of deposit in the presence of appellant, but appellant did not see the certificate of deposit or know anything of its contents. This certificate of deposit was as follows:

"Elkhart, Indiana, October 5, 1903.

Horace Shopert has deposited in this bank $ 480 payable to the order of the American Shutter & S. Co., in current funds on return of this certificate properly indorsed. Provided husker fills guaranty after ten days' trial. This deposit is not subject to check.

W. L. Collins, cashier.

Hold until notified to remit by H. Shopert."

This certificate was placed in an envelope and retained by the bank, the banker saying: "Now, it's all right." Appellant received no deposit slip, certificate of deposit, or other writing for the money so deposited. Subsequently the shredder company sent the bill of lading for the machine to said bank, with instructions to turn the same over to appellant when he had deposited $ 500 subject to the order of said company, upon the successful operation of the husker for ten days. On October 23 appellant left $ 20 additional with said bank under the same terms and conditions, and the same was received in like manner as the $ 480, thus completing the sum of $ 500, and at said time received the bill of lading for the machine. Afterwards, and within the ten days, appellant notified the bank that the machine had not filled the guaranty and that he did not think it would do so, and that the bank should not pay the money to the machine company. The president of the bank replied that a man had been in the day before, representing the company, and ordered them to pay the money to the company at once, but that they did not do it, and that they would not pay it to anybody without appellant's orders, saying: "That money is yours. "

The machine did not fill the guaranty, and it was afterwards returned and the contract rescinded. Meanwhile, and before appellant made demand for the return of the money, a receiver was appointed for the bank. There was cash on hand in said bank, at the time the receiver took charge, to the amount of $ 3,293.75. There was no separate package of $ 500 in said bank at said time.

The court made a general finding and rendered judgment for appellant for the sum of $ 500, to be paid pro rata as other creditors. Appellant moved to modify the judgment by ordering that said judgment be a preferential claim over the general creditors, and that the receiver be ordered to pay the same in full out of the funds in his hands. This motion was overruled and exception taken. Motion for a new trial was then filed by appellant, which was also overruled.

The only substantial question in this case is whether the facts just stated constitute a special deposit, and said amount of money should be paid to appellant in full as a preferential claim.

Deposits in banks are either general or special. McLain v. Wallace (1885), 103 Ind. 562, 5 N.E. 911.

In the case of a special deposit the bank is merely a trustee or bailee, the property right being in the depositor, and the relation of debtor and creditor is not thereby created. But a general deposit vests the property in the bank, and establishes the relation of debtor and creditor. McLain v. Wallace, supra; Union Nat. Bank v. Citizens Bank (1899), 153 Ind. 44, 54 N.E. 97; Anderson v. Pacific Bank (1896), 112 Cal. 598, 44 P. 1063, 32 L. R. A. 479, 53 Am. St. 228; Woodhouse v. Crandall (1902), 197 Ill. 104, 64 N.E. 292, 58 L. R. A. 385.

It is also a rule of law that receivers take property which comes into their hands for administration subject to all legal and equitable claims. Union Nat. Bank v. Citizens Bank, supra; Lamb v. Morris (1889), 118 Ind. 179, 4 L. R. A. 111, 20 N.E. 746.

It is also established that a trust fund may be followed and recovered even after it has changed its character or lost its original form, and the beneficiary may pursue it and reclaim it so long as it may be identified; provided it has not come into the hands of a bona fide purchaser without notice. In case the fund consists of money, identification does not require that the identical bills or coins be discovered, but the ascertainment of the fund into which it has entered and lodged is sufficient. Windstanley v. Second Nat. Bank (1895), 13 Ind.App. 544, 41 N.E. 956; Pearce v. Dill (1897), 149 Ind. 136, 48 N.E. 788; Massey v. Fisher (1894), 62 F. 958; Kimmel v. Dickson (1894), 5 S.D. 221, 58 N.W. 561, 25 L. R. A. 309, 49 Am. St. 869; Woodhouse v. Crandall, supra.

Was this a special deposit? Clearly it was not a general deposit it was a specific sum for a specific purpose, the payee determinable after the lapse of a specific time and the happening of a specific contingency. After the bank had delivered to appellant the bill of lading for the machine the bank could not rightfully deliver the money either to the appellant or to the shredder company until the contingency was determined. It is clear that the bank so understood its position, as each of said parties sought to control the fund before the expiration of the ten days stipulated for trial, and the bank clearly indicated its purpose to hold the fund until this question was settled. Appellant evidently intended to make a special deposit, since he drew out a small balance he had...