Opinion ID: 1678589
Heading Depth: 2
Heading Rank: 3

Heading: Gilbert's individual claims.

Text: The trial court also granted summary judgment on Gilbert's individual claims of negligence and implied trust asserted in the second amended complaint. The court based this judgment on UNB's motion and supporting brief, which argued that UNB owed no duty to Gilbert and that no implied trust was created.
Gilbert claims that UNB was negligent in permitting CLM funds to be fraudulently transferred to a phony corporation. He argues that there were numerous red flags during UNB's dealings with Etter, Ensz, and Nelson which should have led to further inquiry and investigation by UNB prior to transferring the funds. Gilbert claims that UNB's actions raise a jury question and that the trial court improperly granted summary judgment as to UNB's negligence. He cites Lovell v. Oahe Electric Co-op, 382 N.W.2d 396, 399 (S.D.1986), which states that questions relating to negligence ... are generally questions of fact for the jury. Actionable negligence requires a duty on the part of the defendant to protect the plaintiff. Erickson v. Lavielle, 368 N.W. 2d 624 (S.D.1985); Blumhardt v. Hartung, 283 N.W.2d 229 (S.D.1979). The determination of whether a duty exists is a question of law for the court. Erickson, supra; 57 Am.Jur.2d Negligence § 37 (1971). For the law to impose a duty, a sufficient relationship must exist between the parties. Erickson, supra ; Cuppy v. Bunch, 88 S.D. 22, 214 N.W.2d 786 (1974). UNB persuasively argues that it owed no duty to Gilbert as an outsider to the transaction. Courts have recognized that a stranger to a bank-depositor relationship is owed no duty in the absence of a contract, statute, or other special circumstance giving rise to such a duty. Sheiman v. Lafayette Bank & Trust Co., 4 Conn.App. 39, 492 A.2d 219 (1985); Portage Aluminum Co. v. Kentwood Nat'l Bk., 106 Mich.App. 290, 307 N.W.2d 761 (1981); Pennsylvania National Turf Club Inc. v. Bank of West Jersey, 158 N.J.Super. 196, 385 A.2d 932 (1978), petition for certification denied 77 N.J. 506, 391 A.2d 520 (1978). Gilbert presents no authorities to challenge this position, nor does he argue that special circumstances exist to create such a duty. In absence of such special circumstances UNB owed no duty to Gilbert as a matter of law. Erickson, supra . Therefore, the trial court properly granted summary judgment on Gilbert's negligence claim.
Gilbert claims that an implied trust in the GSC-CLM account arose in his favor. He bases this claim on SDCL 40-15-31, [2] which provides: No livestock auction agency shall make such use or disposition of funds in its possession or control as will endanger or impair the faithful and prompt accounting for any payment or such portion thereof as may be due the owner or consignor of livestock or other persons having an interest therein, and to this end shall so handle all such funds as to prevent their being intermingled or confused with other accounts or funds of the auction agency kept or used for other purposes. Gilbert argues that this statute transformed the deposited funds into a special deposit and created an implied trust under SDCL 55-1-8 and SDCL 55-1-9. [3] Gilbert further argues that UNB should have known the special nature of these funds and the protection afforded livestock sellers such as Gilbert under SDCL 40-15-31. Gilbert's interpretation of SDCL 40-15-31 would place an obligation on UNB to inquire as to the claims of owners or consignors of livestock simply because UNB knew the deposited funds were connected with CLM. SDCL 40-15-31 does not require a bank to inquire as to the source (or future use) of the funds where deposits of a livestock auction agency are transferred to that bank from another bank. The only affirmative obligation created under this statute is imposed on the livestock auction agency itself. Some of Gilbert's arguments may apply to a bank maintaining an account for a livestock auction agency, but not to a subsequent transferee bank. A bank may also become a trustee, under the implied trust statutes, where it has knowledge that money is deposited for a special purpose. Calmenson Clothing Co. v. First Nat'l Bk. and Trust Co., 63 S.D. 338, 258 N.W. 555 (1935). However, there is no indication that UNB had knowledge that the deposited funds consisted of money claimed to be owed to Gilbert or other sellers of livestock. Gilbert has claimed but has not presented any facts to show that the deposited funds were owed to him for livestock. The UNB transaction was completed and closed before the Sumitomo checks were issued to Gilbert. Unlike the situation urged by the dissent in Estate of Jahnel v. First N.W. Trust Co., 428 N.W.2d 528, 533 (S.D.1988) (Sabers, J., dissenting), UNB does not have the funds but was simply a temporary conduit through which the funds passed. UNB is not an implied trustee under either SDCL 55-1-8 or 55-1-9 under the circumstances of this case. Although Gilbert's allegations of fraud may stand against CLM, Etter, Ensz, Nelson, and even Dockendorf, Gilbert makes no allegations of fraud against UNB in this case. Therefore, summary judgment is affirmed.