Hansen v. Northwestern National Bank of Minneapolis

Holt, J. The appeal is by plaintiff from a judgment in favor of defendants. There is no settled case, and the only error assigned is that the con- *454 elusions of law and the judgment are contrary to the findings of fact and without support therein. The facts found are in substance as follows: Plaintiff, ever since 1920, has been and now is the administrator of the estate of Christian Hansen, deceased. On June 3, 1922, the defendant Citizens National Bank of Albert Lea, Minnesota, issued its certificate of deposit reading as follows: “Certificate of Deposit. “Not Subject to Check “Albert Lea, Minn., June 3, 1922, No. 60030 “The Citizens National Bank of Albert Lea “Christian Hansen Estate has deposited in this Bank $2,187.05 Twenty-one Hundred Eighty-seven Dollars Five Cents. Payable to the order of Self in current funds on the return of this Certificate properly endorsed. “Oscar C. Olson, “Cashier.” Thereafter, with the knowledge and consent of plaintiff, said defendant delivered the certificate of deposit to Axel A. Eberhart, who was the attorney for plaintiff as such administrator. On June 5, 1922, Eberhart deposited the certificate for collection in his personal account in the defendant Northwestern National Bank of Minneapolis, said certificate being indorsed as fellows: “Christian Hansen Estate. Axel A. Eberhart, Attorney for Christian Hansen Estate. Axel A. Eberhart.” The latter bank presented the certificate for payment to the first mentioned bank on June 6, 1922. Payment was received and the amount placed to credit of Eberhart’s personal account, and afterwards during that month all thereof was drawn out by Eberhart. When the certificate was deposited by Eberhart the defendant Northwestern National Bank had no notice of any infirmity in the instrument and took the same in good faith and for value. The court concluded from these facts that the certificate was payable to bearer and as such was transferable and *455 negotiable by delivery without indorsement. And also that the Northwestern National Bank was a holder in due course and was authorized to enforce payment against the Citizens National Bank, and the latter was required to pay the certificate when it was presented for payment by the former. Section 9 of the uniform negotiable instruments act (G. S. 1923, §.7052) reads: “The instrument is payable to bearer: * * (3) When it is payable to the order of a fictitious or non-existing person, and such fact was known to the person making it so payable; or (4) When the name of the payee does not purport to be the uame of any person; * * *.” Section 191 of the act (G. S. 1923, § 7235) defines the term person thus: “ ‘Person’ includes a body of persons, whether incorporated or not.” Christian Hansen Estate is not a person or a body of persons or a legal entity. In Scott v. Parker, 5 N. Y. S. 753, 754, it is said of a note payable to the order of the estate of William N. Beach: “The note was in legal effect payable to bearer. * * * The estate of William N. Beach could neither speak, think, nor act. It consisted of certain inanimate and incorporeal things called ‘property,’ of which he died seized. The testator had no transaction with the defendants. They owed him nothing, and when he died they were not indebted to his estate. They could not become indebted to it after his death. * * * The note in suit must, in view of all the facts, be regarded as one payable to a ‘fictitious,’ for it is not payable to a ‘real,’ person. * * * The words ‘estate of Wm. N. Beach,’ as payee of the note, do not represent either an individual or a corporation, or any legal entity whatever.” The drawer or maker of the certificate of deposit here involved knew that Christian Hansen Estate, the payee, was not an existing person or legal entity, and under the decision cited the certificate *456 was payable to bearer. See also Tittle v. Thomas, 30 Miss. 122, 64 Am. D. 154; Lewisohn v. Kent & Stanley Co. 87 Hun, 257, 33 N. Y. S. 826. Such also appears to be considered the law in this state prior to the adoption of the uniform negotiable instruments act, for in McIntosh v. Lytle, 26 Minn. 336, 337, 3 N. W. 983, 37 Am. R. 410, Chief Justice Gilfillan says: “Checks drawn payable to an impersonal payee, as to ‘bills payable’ or order, or to a number or order, are held to be payable to bearer, on the ground that that use of the words £or order’ indicates an intention that the paper shall be negotiable; and the mention of an impersonal payee, rendering an indorsement by the payee impossible, indicates an intention that it shall be negotiable without indorsement — that is, that it shall be payable to bearer.” Surely an estate must be classed as an impersonal payee. In decisions relating to other subjects than negotiable paper, this court has held the estate of a decedent as possessing “no legal personality.” Estate of Columbus v. Monti, 6 Minn. 403 (568). It cannot be a grantee in a sheriff’s certificate of sale, and was declared “neither a person nor a legal entity” in Kenaston v. Lorig, 81 Minn. 454, 457, 84 N. W. 323. But it is perhaps clearer that this certificate of deposit is payable to bearer under subd. 4 of § 9, viz: “When the name of the payee does not purport to be the name of any person.” Within the definition of the act above quoted the “Christian Hansen Estate” was not a person. The maker or drawer of a negotiable instrument determines whether it is to pass current by indorsement of the payee or by simple delivery. In this case the Citizens National Bank was both drawer and drawee of the certificate. It knew that the estate was not a person or legal entity capable of indorsing the instrument or of assuming the obligations of an in-dorser. In American Exp. Co. v. Peoples Sav. Bank, 192 Iowa, 366, 369, 181 N. W. 701, involving forged indorsements upon drafts payable to fictitious parties of which the drawer had no knowledge, the court said: “The intent of the drawer is the test, and this intention must necessarily arise from knowledge, and exist as an affirmative fact *457 in tbe mind of tbe drawer at tbe time of tbe delivery of tbe paper. Tbe names of tbe payees in these drafts are not in the same category as ‘cash/ ‘bills payable/ ‘expenses/ ‘estate’ and words of similar import.” In re Ziegenhein (Mo. App.) 187 S. W. 893, where tbe lower conrt sentenced Ziegenhein to prison for contempt of court in refusing as a distributee of the estate of Henry Ziegenhein to indorse drafts payable to the estate of Henry Ziegenhein, the proceeds from the adjustment of a fire loss under policies written to protect the estate. He was discharged on habeas corpus upon the ground among others that the drafts were payable to bearer and needed no indorsement. The court said [187 S. W. 895]: “Our negotiable instrument law, by section 9980, Revised Statutes 1909, provides that an instrument is payable to bearer, ‘(4) when the name of the payee does not purport to be the name-of any person.’ That is the case here. These drafts are payable ‘to the estate of Henry Ziegenhein/ and not to any person. Hence in requiring any indorsement by the petitioner or any one else on these drafts, it was requiring an unnecessary act.” We are of the opinion that the name of the payee — Christian Hansen Estate — clearly does not purport to be the name of a person; hence the certificate is payable to bearer. Plaintiff relies upon Scala v. Miners & M. Bank, 64 Colo. 185, 171 P. 752; Stern v. Eichberg, 83 Ill. App. 442; McKinney v. Harter, 7 Blackf. (Ind.) 385, 43 Am. D. 96; Esley v. People of Illinois, 23 Kan. 510; Shaw v. Smith, 150 Mass. 166, 22 N. W. 887, 6 L. R. A. 348; Peltier v. Babillion, 45 Mich. 384, 8 N. W. 99. In none of these cases save the first was the question raised that the instrument was one payable to bearer. It ivas either the right of a holder to sue, or a challenge to the validity of the instrument or its negotiability because of the designation of the payee. The certificate of deposit here is conceded to be a valid negotiable instrument in the hands of any holder in due course. In the Scala case the point was made that the check payable to the order of “The Royal Consulate of *458 Italy” was a negotiable instrument payable to bearer, and hence the forgery of the indorsement by a clerk of the consul was unimportant. The court said [64 Colo. 188]: “Neither is there any ground for the contention that the check was payable to bearer. It was drawn to the ‘Royal Consulate of Italy,’ and the payee, while not expressly named therein, is manifestly otherwise designated with reasonable certainty.” It was not a case of a fictitious or nonexisting payee, nor, as here, “when the name of the payee does not purport to be the name of any person.” No reference Avas made to the uniform negotiable instruments law of Colorado. In view of the conclusion above expressed, we need not consider the effect of the finding that the certificate of deposit was delivei’ed by the Citizens National Bank to plaintiff’s attorney on June 5, 1922, with the knowledge and consent of plaintiff, and the attorney was suffered to collect and use the money, and no objection made until more than three years thereafter when the present action ivas brought. The judgment is right and is affirmed.