Court Opinion

ID: 9828155
Source: CourtListenerOpinion
Date Created: 2023-09-01 18:09:25.799943+00
Date Added: 2024-06-11T07:42:44.803691
License: Public Domain

On Motion for Rehearing.
In addition to the grounds appearing in our former opinion for affirming the judgment in the case at bar, there is another which we omitted to develop.
It was pleaded and proven that A. A. Luther had made a special deposit of $904 in the appellant bank, and that at the time of making the special deposit a list was furnished the appellant of the name of each party to be paid and the amount to be paid each of the named parties. On that list was written that $500 of the amount so specially deposited would be checked out to H. A. Herron. It was also proven that after Willie Hawkins, for the bank, had accepted and promised to pay the said check for $500, the bank diverted about $503, the balance of that special deposit of $904, and without authority or notice applied it to the liquidation of a debt due the bank by A. A. Luther. There is evidence that the bank, at the time the special deposit was made, had agreed to extend the time of payment of the-indebtedness from Luther to the bank.
The law applicable to these facts is thus expressed by Magee on Banks & Banking (2d Ed.) p. 475, § 254:
“When a customer makes a special deposit in a bank, of funds for the purpose of paying notes made by him, and which may he from time to time presented to the bank for payment, it becomes a deposit which cannot be used by the bank for any other purpose. Such funds are held by the bank more' in the nature of trust funds and must be applied as directed by the debtor. A special deposit cannot be used to pay a note due the bank unless when the deposit was made it was understood and intended to be used for such purposes.” Stebbins v. Lardner, 2 S. D. 127, 48 N. W. 847; Hall v. Marston, 17 Mass. 575.
The motion for rehearing is overruled.