Weitzel v. Traders' National Bank

Opinion by William W. Porter, J., On August 16, 1893, the plaintiff deposited with the teller of the defendant bank the sum of $339.75, to be applied to the payment of an outstanding note of the plaintiff, which was payable at the said bank on or about the date named. The plaintiff having no account in the bank, the money was entered as a credit in the account of the plaintiff’s father. That the purpose of the deposit, however, might be clearly understood, upon the deposit slip was written, “For E. B. W. note.” The note was not presented for payment for more than a year after maturity. In the mean time, the father of the plaintiff had overdrawn his account and had been permitted by the bank to withdraw his son’s money. When the note was presented, the bank declined payment. At or about this time the plaintiff first learned that the note had not been paid. The holder of the note sued the plaintiff and recovered. The plaintiff now sues the bank for damages for failing to hold and apply the money received on deposit, to the discharge of the note. It is contended that the bank is not bound by the act of its teller in accepting the deposit and in agreeing to its application. He was both the receiving and paying teller. As such it was beyond doubt within his power to accept, on behalf of the bank, money on deposit from any customer new or old and to agree that the money so deposited [619] should be held subject to the order of the depositor. By the by-laws of the bank, the teller was held responsible for all money, property and funds of every description placed in his hands by the cashier, or which otherwise should “ come into his possession as teller.” He was further required to give bond conditioned for the faithful accounting for and payment of all moneys, property and funds of every description that might come into his hands “ by virtue of his office as teller,” to the order of the board, “ or to such person or persons as may be authorized to demand and receive the same.” Clearly if the plaintiff had deposited in his own name the money to meet the note and the teller had accepted the fund for that purpose, the bank would be liable for any application other than that agreed upon. In such case the deposit slip supported by the oral testimony would have bound the bank to the application of the money to the payment of the note, and to that alone. A depositor has full control over his deposit up to the point where the rights of other persons attach. He may draw it out by check. He may apply it to a particular purpose by making it a special deposit or by special directions communicated to the bank: German Nat. Bank v. Foreman, 138 Pa. 474. But the money was deposited in the father’s account. The purpose of the deposit, the intended application of the money, and the agreement to apply, were not hereby changed. If the note had been presented before the withdrawal of the money, no one can doubt that the money would have been applied to the payment of the note. This is practically admitted by the testimony. Whether the money was deposited in the father’s account at the suggestion of the son, or of the teller, makes little difference. The deposit was accepted by the bank on the terms agreed to by the teller.. The mere fact that it was entered on the books of the bank in the account of the father of the plaintiff, gave the father no rights over it enforceable against the bank. A demand by him for the money would have been met by the assertion of the obligation to apply the money as agreed upon with the son whose money it was. A bank, of course, is justified in paying to a depositor money standing to his credit, if not notified that it belongs to another. But where the bank has notice and knowledge that the moneys belong to another and are held in special account for application to-the payment of a particular [620] indebtedness of such other person, the bank pays to the depositor at its own risk: First Nat. Bank v. Bache, 71 Pa. 213; Farmers’, etc., Nat. Bank v. King, 57 Pa. 202. We are of opinion that it was the duty of the bank to hold the money and apply it to the payment of the plaintiff’s note, for which purpose alone it was deposited, and that having failed to do so, the bank is liable to the plaintiff for the damages resulting to the plaintiff therefrom. Judgment affirmed.