Gardner v. First National Bank

Be Witt, J. In the lifetime of the deceased, J. W. Story, he gave the bank authority to apply his deposits to the payment of the notes, and before maturity, if the bank so desired. This was the creation of an agency, or a power of attorney, a power which was never exercised during the life of Story, or prior to the knowledge of the bank of Story’s death. After his death, and notice to the bank thereof, the power was exercised, or the [153] agency acted upon, and the deposits applied. There is no question of consideration, or contract, or rights of innocent purchasers without notice, involved in the construction of the conduct of the bank in attempting to act under this agency, or power. Nor was the power coupled with an interest. The interest to be coupled with a power, which will cause the power to survive the death of its grantor, must be an interest or title in the thing, which interest or title is conveyed with the power, and not left to be conveyed afterwards, with the exercise of the power; it must pass with the power, and then vest in the grantee of the power. (Hunt v. Rousmanier’s Adm’rs, 8 Wheat. 174.) Such is not the situation in the transaction under review. No title in the money vested in the bank with the passing to it of the power. No title could be in the bank until the power was exercised. The subject of powers coupled with an interest is one not free from difficulty; but, that the power under consideration was not coupled with such an interest as secured its vitality after Story’s decease, is amply apparent upon a careful study of that luminous and convincing discussion of the subject by Chief Justice Marshall, in Hunt v. Rousmanier’s Adm’rs, cited above, from which opinion our views herein are taken. (See, also, Houghtaling v. Marvin, 7 Barb. 412; Norton v. Whitehead, 84 Cal. 263; 18 Am. St. Rep. 172; Story on Agency, §§ 488, 496; and Mechem on Agency, §§ 241-244, and the many cases cited in these text-books which we will not review.) We hence conclude that the authority of the bank was a naked power to apply, or rather to elect to apply, the money to the notes. The power was not exercised in the life of its creator, and perished with his death. “This is an ancient and well settled doctrine of the common law.” (Story on Agency, § 488. See, also, Hunt v. Rousmanier’s Adm’rs, supra, and Story on Agency, §§ 349, 490, 491, 496, and generally, 467-500; Mechem on Agency, §§ 238 — 246, and Evans on Agency [Elwell’s], p. 87, and numerous authorities cited in the text of these works.) Counsel for respondent suggest in argument that the bank had a lien upon the deposit for the indebtedness on the notes. But that defense is not made in the pleadings, nor was the case [154] tried on that theory, and furthermore the indebtedness on the notes had not matured, for which a lien might be attempted to be set up, and this is not an action in equity to subject the money to a lien for unaecrued indebtedness. (Wilson v. White, 84 Cal. 239; Morse on Banks and Banking, § 329, and cases cited.) The action of the bank in applying these deposits was without authority. The money belongs to the estate of J. W. Story. The judgment is reversed, and the case remanded to the District Court with directions to enter judgment in accordance with these views. Blake, C. J., concurs. Associate Justice Harwood, having been counsel in this case in the court below, takes no part in this decision.