Rosenstein v. Mechanics & Farmers Bank

HILL, Judge. Four questions are raised by the bank on appeal, but we find one to be dispositive. Did the court err in finding and concluding that the Robertses’ savings accounts were validly assigned to the Rosensteins? It is undisputed that a savings account may be assigned or transferred by a depositor. Lipe v. Bank, 236 N.C. 328, 72 S.E. 2d 759 (1952). This is simple contract law, but a contract must be construed by looking at it from all “four corners.” The passbook rules governing the account at issue include, among other things, the following: 11. No assignment or transfer of the Bank Book need be recognized by the Bank unless it consents thereto, and a memorandum thereof entered in said Book. The Rosensteins would distinguish between an assignment of the passbook (bank book) and the deposit. Such an argument is illusory. The passbook is a record of the contract transaction between the bank and the depositor. Other than this purpose, it is practically worthless. A deposit may be validly assigned without the delivery of a passbook. McCabe v. Union Dime Sav. Bank, 150 Misc. 157, 268 N.Y.S. 449, 451 (1934). We conclude that the passbook rule quoted above refers to the money repre [439] sented by the passbook as the subject of transfer or assign-ability. The Rosensteins further contend that the bank failed to show at trial that in adopting the regulations affecting the passbook it complied with G.S. 53-66. This statute reads as follows: § 53-66. Savings Deposits. — Any bank conducting a savings department may receive deposits on such terms as are authorized by its board of directors and agreed to by its depositors. The board of directors shall prescribe the terms upon which such deposits shall be received and paid out, and a passbook or other evidence of deposit shall be issued to each depositor containing the rules and regulations adopted by the board of directors governing such deposits. By accepting such book or such other evidence of deposit the depositor assents and agrees to the rules and regulations therein contained. (Emphasis added.) The Rosensteins demanded that the original books of the board of directors in which the rules and regulations were adopted be produced. They were not offered into evidence, but two officers testified the rules had been in effect for years — one testifying they had been in existence since 1948 or 1949. Any failure to produce the minute book of the board of directors was harmless. The last sentence of the statute put a depositor on notice. The board of directors could have ratified the rules and regulations at anytime. We conclude the trial judge erred in his conclusion that the accounts were validly assigned to the Rosensteins. The bank acted with all haste upon receipt of notice of the purported assignment in advising the Rosensteins that it refused to acknowledge the assignments and sales of the deposits. The notice of such refusal was received by the Rosensteins and their attorney. What the bank and Mr. and Mrs. Roberts did with the accounts thereafter was immaterial. The judgment of the trial judge is Reversed. Judge Webb concurs. Judge Hedrick dissents.