Knecht v. United States Savings Institution

Lewis, J., delivered the opinion of the court. . Plaintiff’s intestate was a depositor on current account with the defendant, a banking institution. At the time of his death there stood to his credit the sum of $1,177.70, while the bank held a draft, not yet matured, for $4,000, which he would be liable to pay when due. Plaintiff, as administrator, demanded the balance of the deposit, which •defendant refused to pay. When the deposit became payable, defendant presented in the Probate Court, for allow — 564 — anee . against .the estate,- its account-current, including the amount of -the draft, and giving credit for the deposit balance, whereby a,balance .appeared in defendant’s-favor of $2,825.55, which was allowed and classified 'in due form. Afterwards this suit .was instituted by .the plaintiff, administrator, to recover the intestate’s deposit balance, notwithstanding the proceedings in the Probate Court. The cause was heard without a jury, and'judgment rendered for the defendant. The plaintiff appears to have fallen into the common error of supposing .that, in bank deposits on current account, the bank is a mere custodian, agent, or trustee of the depositor. If such were the relation between the parties, there might have been some ground for the present action. The-attempt has often been made, bofh in England and America, to attach that relation to such cases, but has always failed. The wholé current of authority, without any considerable dissent, is to the effect that the ordinary relation existing between a bank and its current depositor is simply that of debtor and creditor. “ The original and every subsequent deposit by the customer is, in strict legal effect, a loan, by the customer to the bank, and, e converso, every payment by the bank to, or on account of, the customer is a repayment of the loans, pro tanto.” This doctrine is forcibly illustrated in Com. Bank v. Hughes, 17 Wend. 94, and in Marsh v. Oneida Central Bank, 34 Barb. 298. Thus treating the deposit balance as an ordinary-debt due from the banfc to the estate, the case is easily settled by an application of the general provisions of the statute concerning administrators. ' Every creditor of an estate, against whom a cross-demand exists in its favor, may -strike the balance and obtain an allowance for the amount so appearing due1 him, whether’ the estate- be -insolvent or not. By section 22' page '104, Wagner’s Statutes, any creditor may establish his demand, though not yet due, with the same incidents and privileges. The proceeding in the Probate Court was, — 565 — -therefore,' conclusive of 'the rights -of the parties/and the •defendant’s plea of res adjudicata was properly susiáined in this cause. The credit given'by defendant in obtaining its ¡allowance was not voluntary, as .the-' plaintiff; contendsbut was compulsory, under the-statutory oath of the claimant. ' The'case of Ford’s Administrator v. Thornton, 3 Leigh, 695, illustrates the principles herein recognized. One Gregory was indebted to a bank by- a noté at sixty days, and. died before its maturity, having on deposit in the-;bank"a . sum greater than the amount of the note. His estate was insolvent. It was held that the bank had a right to,'deduct..the •whole amount of the note from the sum on-deposit,;even though there-were claims against the estate of supei-ior dignity to the debt-due the bank. It thus appears that, between the administrator and the bank, a balancing, of accounts was necessary to establish their true relations, even as to the cash on deposit at the intestate’s death,.'-before . the maturity of his note. All-the-judges concurring, the judgment is affirmed."