Opinion ID: 2178367
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Heading: Contractual Right

Text: As early as 1886, Indiana recognized the inherent contractual nature of certificates. In Long v. Straus (1886), 107 Ind. 94, 95, 6 N.E. 123, 124, our Indiana Supreme Court wrote: `This instrument is more than a mere receipt, for it embodies an agreement... . The language used creates a contract, and the law implies, as a part of the contract, that upon reasonable demand the depositor is entitled to receive back that which belongs to him. The deposit of money is a transaction well known to the law, and it is one out of which well-defined legal rights emerge... .' Describing the essential nature of the resulting contract, the Court continued: `It is a written acknowledgment of the receipt of money, and a promise to repay it on reasonable demand.' [1] Long v. Straus, supra, 107 Ind. at 97, 6 N.E. at 125. See also DeVay v. Dunlap (1893), 7 Ind. App. 690, 35 N.E. 195; Mock v. Stultz (1932), 97 Ind. App. 138, 179 N.E. 561 and Note, 8 U.Val.L.Rev. 140 (1973), n. 30. The certificates of deposit purchased by Wildus Fanning were third party beneficiary contracts which made Mar cella Seavey a donee-beneficiary. The RESTATEMENT OF CONTRACTS § 133 (1932) defines donee-beneficiary as follows: `(1) Where performance of a promise in a contract will benefit a person other than a promissee, that person is ... `(a) A donee-beneficiary, if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promise in obtaining the promise of all or part of the performance thereof is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due nor supposed nor asserted to be due from the promisee to the beneficiary; ... `(2) Such a promise as is described ... is a gift promise... . Also see National Surety Co. v. Foster Lumber Co. (1908), 42 Ind. App. 671, 85 N.E. 489. A third party beneficiary contract may have many other provisions such as the time that the money shall remain on deposit, rate of interest, and presentment of the certificate for withdrawal. Badders v. Peoples Trust Co. (1957), 236 Ind. 357, 140 N.E.2d 235. The donee-beneficiary does not need to know of the certificate's existence to effect a valid contingent contractual right in the donee-beneficiary. RESTATEMENT OF CONTRACTS § 133, et seq. Thus Marcella Seavey's lack of knowledge was not an indispensable element in determining her right to possession of the certificates. Wildus Fanning's purchase of the certificates in the form presented here was a gift in praesenti of a contingent contractual right. [2] Hibbard v. Hibbard (1947), 118 Ind. App. 292, 73 N.E.2d 181. This contingent contractual right could have been extinguished during the lifetime of Wildus Fanning. Wildus Fanning could have extinguished the contingent contractual right by requesting the bank to change the donee-beneficiary or by expressing a contrary intent. Wildus Fanning did neither. Indiana recognizes the right of a donor-creditor to rescind or modify a third party beneficiary contract. A comprehensive statement of this rule is found in 17 AM.JUR.2d Contracts § 317 (1946): `317. Recission or modification of contract. `According to the rule followed in most jurisdictions, the parties to a contract entered into for the benefit of a third person may rescind, vary, or abrogate the contract as they see fit, without the assent of the third person, at any time before the contract is accepted, adopted, or acted upon by him, and such rescission deprives the third person of any rights under or because of such contract. This rule has been applied, for instance, in the case of an agreement to pay another's debts. Moreover the statutes of some jurisdictions provide in effect that a contract may be revoked before it is accepted by the beneficiary... .' Also see Zimmerman v. Zehendner (1905), 164 Ind. 466, 73 N.E. 920; Ransdel v. Moore (1889), 153 Ind. 393, 53 N.E. 767. These acceptance facts were stipulated: `After the death of Wildus Fanning, Marcella Seavey obtained possession of the said certificates of deposit, received $431.03 interest on said certificates, has cashed the certificates, and has retained the interest and proceeds.' When Marcella accepted the contractual right given to her in the certificates, her right to the possession of the certificates of deposit became absolute. In the absence of a proceeding which contests the absolute right to possession, a custodian has a duty to deliver the certificates. Blackard v. Monarch's Manufacturers & Distributors, Inc. (1960), 131 Ind. App. 514, 521-22, 169 N.E.2d 735, RESTATEMENT OF CONTRACTS § 135 (1932). Also see Hibbard v. Hibbard, supra ; I.C. 1971, XX-X-XX-X(a) (Burns Code Ed.).