#### SPRY, Plaintiff, v. HIRNING, Superintendent of Banks, et al, Defendants.

(191 N. W. 833.)

(File No. 5179.

Opinion filed January 22, 1923.)

1. Banks and' Banking — Deposits—Bailment—Guaranty Funds — Delivery of Bonds to Bank Held. Bailment, Not Deposit, So That On Conversion of Bonds Depositor Had No Right to Preferential Payment From Bank Guaranty Fund.

Where a customer delivered his 'Liberty Bonds to a bank to be 'transmitted 'by it to another city for safe-keeping, receiving a certificate for the .par value thereof payable to the order of the customer in Liberty Bonds of that issue, the transaction was a bailment and not a deposit of the bonds, and the customer is not entitled, to preference in payment from the bank guaranty fund, after the bank converted the bonds to its own use and then became insolvent.

2. Banks and Banking — Special Deposit — Bailments—Guaranty Fund —Delivery of Bends Without Obligation For Return of Identical Bonds is Not “Special Deposit.”

A delivery of bonds to a bank for safekeeping, without a provision that 'the identical bonds were to be returned to the customer but only that bonds of -the same issue should be returned, is not a special deposit, to constitute which it must appear from the agreement of the parties that a return in kind was contemplated.

Original application for mandamus by W. • B. Spry against John Hirning, as Superintendent of Banks, and others.

Application for writ denied.

*Danforth & Barron,*of Sioux Ralls, for Plaintiff.

*Byron S. Payne,*Attorney General, and *B. D. Roberts,*Assistant Attorney General, for Defendants.

Plaintiff cited: Rev. Code 1919-, Secs. 8977, 9013, .9021; Fogg v. Tyler (Me.), 30 A. & E. Ann. Cases, 41 and note; Anderson v. Pacific Bank, IT2 Cal. 598, 44 P’ac. 1063; lams v. Farmers State Bank (Nebr.), 165 N. W. 145; American State Bank v. Wilson, 204 Pac. 709; Fourth National Bank v. Wilson, 204 Pac. 715; Abilene National Bank v. Dolly, 32 L. R. A. Í0Ó5; 3 R. C. L., Sec. 146, p. 517; Cutler v. American Exchange Bank (N. Y.), 21 N. E. 710, 25 R. C. L., Secs. 217 and' 218, pp. 961 to 964.

Respondent cited: Bank v. Wilnon, 204 Pac. 715; Lank-*238■ford v. Schroeder (Okla.), 147 Paq. 1049; Columbia Bank & Trust Oo. v. U. S. F. & G. 'Co. 126 Pac. 556; lams v. Bank (Nebr.), 165 N. W. 145, 7 C. J. 630, note 98; Koetting v. State, 60 N. W. 822; Officer v. Officer (la.), 94 N. W. 947; Cathin v. Savings Bank, 7 Conn. 487; Mutual Acc. Assn. v. Javobs (111.), 31 N. E. 414, 16 *b.*R. A. 516, 11 C. J. 77; Murphy v. Bank, 130 Cal. 542, 62 Pac. 1059; First National Bank v. Greenville National Bank (Tex.), 19 S,. W. 334; Farren v. Farmers State Bank (Nebr.), 163 N. W. 318'.

ANDERSON, P. J.

Some doubt has been expressed as to the jurisdiction of this court in this original proceeding. As to this we do not, at this time, express an opinion either way, but leave the matter open for subsequent determination.

This is an original proceeding in this court in which plaintiff seeks an alternative 'writ of mandamus against the defendants commanding the defendant John Hirning, as superintendent of banks, to approve and allow, as preferred claims payable out of the guaranty fund, the amount due upon three certificates of deposit of $200, $50, and $50, respectively. The certificates do not vary except as to the amount of each in dollars, and the number of the issue of the bonds. 'So far as the same is material, they are in the following form:

> “Certificate of Deposit Not Subject to Check.

> “No. 5831. Canova, S. D., Dec. 9, 1920.

> “This certifies that W. B. Spry has deposited with the People’s State Bank of Canova, $200, payable to the order of himself in 5th Liberty Bonds on the return of this certificate properly indorsed. Interest from December 15, 1920. With interest at the rate of 4 ¿4% per annum if left 6 or 12 months, for the time specified only. Lewis Poltratz, A. Cashier:”

It is stipulated that December 9, 1920, plaintiff Spry called at the People’s State Bank of Canova; had' a conversation with Wick, president of the bank; that it was suggested by Wick to plaintiff that he had in his safety deposit box in said bank some Liberty Bonds and that he (Wick) did not consider such bonds safe while being kept in that place; that the bank was issuing certificates for Liberty Bonds, and sending the bonds to a bank in Minneapolis for safe-keeping. He suggested to plaintiff that he exchange his Liberty Bonds for such certificates to be issued by *239the bank, and that by so do-ing plaintiff coul-d and would receive the bonds back, or “their equivalent.” That thereupon plaintiff delivered to the bank three Liberty 'Bond's as aforesaid. It appears t-hat the -bonds received- by the bank were by it converted into cash and used by the bank. October 26, 1921, the bank was dosed, and has ever since been in- the -charge of the defendant John Hirning, as superintendent of banks, for the purposes of liquidation. It appears that on December 9, 1920, the fifth issue bonds were worth $95.40, second issue $85.30, third- issue $88. ■It-further appears that -on October 26, 1921, the fifth'issue was worth $99.40, second issue $92.40, third issue $94.86.

[1, 2] It is the contention o-f plaintiff that the deposit of the bonds constituted! a special -deposit, and that by reason thereof it comes within the provisions of the Depositors’ Guaranty Act o-f this state; that hence the defendant Hirning, as superintendent o-f banks, should be commanded to- approve and allo-w, as a preferred -claim1 payable out of the guaranty fund, the amount due on the three certificates aforesaid. It will be observed1 that in the-certificates it is not provided that the identical bonds turned over to the bank be returned- to the depositor, biut that bonds of the designated issue should be returned to plaintiff upon return of the certificates. From the stipulation of facts it appears- that the bank did not bind itself to a return of the identical bond's delivered by plaintiff to the bank, but that it does provide that, upon the surrender of the certificates, the bank will return to plaintiff the bonds “or the equivalent.” To construe the wo-rdb “or equivalent” as permitting a return in money would amount to- a contradiction of the terms of the instrument by parol evidence, which is n-ot permissible. The only proper construction of the words “or equivalent,” in view o-f the writing, is that the very bonds deposited should- be returned, or bonds of like issue. W-e- believe that under the stipulation- of facts it is clear that the transaction amounted to nothing more than a bailment. The bonds were delivered to the bank for a specific purpose, viz., to be deposited' by the receiving bank for safe-keeping in- a Minneapolis bank to be selected 'by the bailee, the -Canova Bank. The conversion of these bonds into -cas-h by the bank, and1 the appropriation of the proceeds to its own use, in no sense constituted- the -deposit o-f su-ch funds by the owner of the bonds. No such transaction- was *240contemplated by the parties. It is conceded that not a dollar of money was ever deposited in the bank by plaintiff. The transmission of the bond to Minneapolis by the bank may have been a convenient service for plaintiff but it constituted no part of the banking business contemplated by the bank guaranty law. It may be possible that a deposit of these with the Canova Bank for safekeeping by that bank and a conversion thereof by the bank could be construed as a special deposit within the meaning of that law, but that was not the transaction in this case. The bonds were never deposited with the bank for safe-keeping; they were intrusted to it merely for the purpose of transmission to another bank for safe-keeping.

From the foregoing we think it clearly appears that there was no understanding to the effect that the identical bonds intrusted to the bank, and for which the certificates were issued, should be returned to the plaintiff. Unless there was such an agreement, there would1 not, under the law, be what is known as a special deposit.

Koetting v. State, 88 Wis. 502, 60 N. W. 822:

> “A special deposit is where the whole contract is that the thing shall be ‘safely kept/1 and the identical thing returned to the depositor.”

Bank v. Dean, 9 Okl. 626, 60 Pac. 226:

> “A special deposit is one in which the depositor is entitled to the return of the identical thing deposited, and the title remains in the depositor.”

Association v. Jacobs, 141 Ill. 261, 31 N. E. 414, 16 L. R. A. 516, 33 Am. St. Rep 302:

> “There is a wide difference between a special deposit and a general deposit, as these terms are understood, not only by bankers, but by the public, who are transacting business daily with banks. Where money of any description- is deposited in the bank, and the identical gold or silver or bank bills which were deposited are to be returned to the depositor, and not the equivalent, the deposit will be special; while * * * a general deposit is ‘a deposit which is to be returned to the -depositor in kind.’ ”

In order to constitute a special deposit, it -miust clearly appear from the agreement of the parties that a return in kind was contemplated.

*241Taking into consideration the entire record in this case, we think it clearly apparent that the contract shown did not contemplate a return in kind, and hence did not constitute a special deposit.

The application for the writ should be and is denied.

Note — Reported in 191 N. W. S33. See American Key-Numbered Digest, (1) Banks and Banking, Key-No. 15, Bailments, -6' C. J. Sec. 3; (2) Banks and Banking, Key-No. 153, 7 C. J. -3*06.

As to whether a deposit in bank is special so that 'the title remains in the depositor, see note 16 L. R. A. 516; 39 L. R. A. (N. S.) 847 and L. R. A. 1918A, 65.

On bailment as distinguished from special deposit within rule that national 'bank may receive special deposits, see note L. R. A. 1918A, 75.