Dahl & Penne, Inc. v. State Bank

RAND, J. It is urged on behalf of the superintendent of banks that the State Bank of Portland, until it 'closed its doors, was liable because of its error in an action at law for the recovery of the [71] money, or else, as a depositor creditor, for the amount shown on the deposit-book, plus the amount of the error. The petitioner, however, contends that because of this mistake the retention by the bank of the $1,000 constituted a special deposit and that the bank became a bailee of the money, holding the same in trust for petitioner. At the time this check was presented to the bank for payment, petitioner’s assignors had on deposit in said bank a greater amount than that called for by the check. The check was drawn against their account and payable to their order. Although not paid in full, the entire amount for which the check was drawn was charged against their account and the difference between the amount called for by the check and that paid remained in the hands of the bank. The relation of debtor and creditor between the bank and petitioner’s assignors was not altered or affected by this transaction, and the indebtedness owed by the bank was not discharged except to the extent of the amount actually paid. The result of the transaction was identically the same as if by mistake in addition or subtraction, the bank had erroneously credited itself and charged the depositor with $1,000 more than it was entitled to. In this jurisdiction a check is not an assignment of the funds upon which it is drawn, but merely authorize the bank to pay the amount of the check to the holder: Section 7981, Or. L. See, also, Marks v. First Nat. Bank, 84 Or. 601 (165 Pac. 673); United States Nat. Bank v. First Trust & Sav. Bank, 60 Or. 266 (119 Pac. 343). “The relation of banker and customer in respect to deposits, is that of debtor and creditor. When deposits are received, they belong to the bank as a [72] part of its general funds, and the banker becomes the debtor to the depositor, and agrees to discharge the indebtedness, by paying the checks of the depositor, his creditor. The contract between the parties is purely legal, and has no element of a trust in it.” Aetna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82 (7 Am. Rep. 314). “It is an important part of the business of banking* to receive deposits, but when they are received, unless there are stipulations to the contrary, they belong to the bank, become part of its general funds, and can be loaned by it as other moneys. The banker is accountable for the deposits which he receives as a debtor, and he agrees to discharge these debts by honoring* the checks which the depositors shall from time to time draw on him. The contract between the parties is purely a legal one, and has nothing of the nature of a trust in it. * * The relation between a banker and customer, who pays money into the bank, or to whose credit money is placed there, is the ordinary relation of debtor and creditor and does not partake of a fiduciary character.” Bank of Republic v. Millard, 77 U. S. 152 (19 L. Ed. 897, see, also, Rose’s U. S. Notes). It is obvious, therefore, that the failure of the bank to pay the full amount called for by the check and charged against the depositor’s account and its subsequent retention of the money and issuance of a certificate of deposit payable to the order of the bank for the difference in the amount, whether done by mistake or intentionally, where nothing else was done, could not convert the bank’s possession of the money into a special deposit. “A special deposit is where the whole contract is that the thing deposited shall be safely kept, and that identical thing returned to [73] the depositor.” 1 Morse on Banks and Banking (5 ed.), §183. “A special deposit is the placing of something in the charge or custody of the bank, of which specific things restitution must be made. A special deposit does not enter the general funds of the bank and form a part of its disposable capital. It is to be kept by itself and to be specifically returned.” 7 Words & Phrases (1 ed.), 6574. “When a thing has been specially deposited with a depositary, title to it remains with the depositor, and if it should be lost the loss will fall upon him.” 2 Bouvier’s Law Diet. (Rawle’s Rev.), p. 1018. The mere failure of the bank to pay the full amount of the check and the retention of the difference could not operate to create the relation of principal and agent or bailee and bailor or any fiduciary or trust relation between the bank and intervener’s assignors. The title to the money not paid remained in the bank and did not pass to petitioner’s assignors. Upon the bank’s refusal to correct the account and make it conform to the actual transaction, petitioner’s assignors had a right of action against the bank to recover the difference between the amount called for by the check and that actually paid, and if they wished to close their account, then for that amount plus the remainder of their deposit. The transaction left the parties in the same relation in respect to this deposit that they sustained to each other before the check was presented for payment, except that the amount of the indebtedness owed by the bank was diminished to the extent of the amount actually paid upon the check. The decree of the Circuit Court will therefore- be modified and the cause will be remanded, with directions to the superintendent of banks to correct the [74] account of intervener’s deposit in the State Bank of Portland by adding thereto the sum of $1,000, if not already credited, and to distribute upon said corrected account intervener’s proportion of the proceeds realized from the assets of the insolvent hank, hut without costs to either party upon this appeal, and it is so ordered. Modified. McBride, C. J., and Bean and Brown, JJ., concur.