Court Opinion

ID: 3875509
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:08:38.785589+00
Date Added: 2024-06-11T07:41:44.069406
License: Public Domain

The leading opinion announces and sustains two propositions, neither of which, in my opinion, is a correct statement of the law:
(1) That where the owner of money deposits it in a bank in the name of himself and another, and the certificate is made payable at maturity to the order of either, the issuing of the certificate creates a "power" in the alternative payee to withdraw the funds; that this power can be exercised only during the lifetime of the depositor; that the death of the depositor revokes the "power"; and that the bank thereafter paying the certificate to the alternative payee is required to pay it again to the administrator of the depositor.
(2) That a certificate of deposit issued under the circumstances stated confers no enforceable right upon the alternative payee, and that for that reason the bank, in honoring his demand for the money, acts without authority and is required to pay it again to the administrator of the depositor.
It will thus be seen that the right of the administrator of the depositor to recover from the bank the amount so paid to the alternative payee is based upon both of these propositions, neither of which, in my opinion, is tenable.
Attention is called in limine to the fact that the present controversy is not between the depositor or his administrator and the alternative payee, but between the depositor or his administrator and the bank which has paid out the money to the alternative payee and in apparent compliance with the terms of the certificate. It must be evident, therefore, that the obligations and rights of the parties to the controversy must be determined by the contract relations which existed between them, the depositor and the bank, and not between others, the depositor and the alternative payee. *Page 105 
Now, considering the two propositions above stated, upon both of which the right of the administrator to recover from the bank is based:
As to the first proposition the facts were these: W.A. Bright owned $3,550.00 in cash. He wished to deposit it in the savings department of the bank at interest. Of course, at his suggestion, the certificate was made out in the name of himself and J.G. Bright, and made payable at maturity to either. He thereby vested J.G. Bright with a certain right or interest in that fund, and if after maturity, during the lifetime of W.A. Bright, J.G. Bright had presented the certificate properly indorsed by him, the bank could not have refused payment to him. The inability of J.G. Bright to demand payment after the death of W.A. Bright is placed in the leading opinion upon the ground that the privilege extended to J.G. Bright by the terms of the certificate of deposit was a "mere power of attorney," revoked by the death of W.A. Bright. I do not think that it has the faintest resemblance to a "power of attorney," which involves the relation of principal and agent, where one person is authorized in writing to act in the name of another, dealing with the rights of such other person. The certificate did not assume to confer upon J.G. Bright the power to act in the matter in the name of W.A. Bright. There is no such conception in the certificate. It contemplates that if J.G. Bright acted at all, it would be in his personal right, and in no sense in a representative capacity. As a matter of fact, when he did act, he presented the certificate indorsed in his own name, drew out the money, and appropriated it; he acted under what he supposed was a personal right, a vested interest conferred upon him by the certificate. Whether or not he had a legal right to do so is aside from the immediate question.
That he did not act under a "power of attorney" seems to me perfectly clear. Nor can it be said, I think, that he acted under a "power" in any sense of the word. A "power" *Page 106 
is an authority enabling one person to dispose of the interest which is vested in another. 26 R.C.L., 773. Note that it is "to dispose of it," not to acquire. If the instrument purports to enable him to acquire an interest in the subject of negotiation, it vests him with an estate or interest in it, which is the antithesis of the act of disposition. 31 Cyc., 1038:
"A power is not an estate or interest in lands; unexercised, it is an incumbrance; and when exercised the act performed by virtue of it is considered and construed as done by the donor of the power."
See Root v. Stuyvesant, 18 Wend. (N.Y.), 257.
But, assuming that it was a "power," it is conceded in the very authority cited in the leading opinion that, where the power is coupled with an interest, it is not revoked by the donor's death. It will scarcely be contended that the power which enabled J.G. Bright to draw out the money was not coupled with an interest. I think it is clear, therefore, that the conclusion cannot be sustained upon the doctrine of the revocation by death of a power.
As to the second proposition: The declaration in the leading opinion that the case of Sawyer v. Mabus, 107 S.C. 369;92 S.E., 1029, is controlling, is equivalent to holding that under the facts of the case at bar J.G. Bright did not have an enforceable right to the fund, and that for that reason the bank was not authorized under the contract with W.A. Bright to pay the money to J.G. Bright — a non sequitur, as I think.
I have no criticism to make of the decision in the Sawyerv. Mabus Case, and if it had appeared in the case at bar that J.G. Bright was not entitled to enforce his interest acquired by gift, trust, or contract for valuable consideration, so far as he is concerned, the case referred to would be controlling. My objection to the proposition under consideration is that the effect of this decision is that the justification of the bank in paying out the fund to the alternative *Page 107 
payee, according to the terms of the certificate, is made to depend, not upon the validity and binding force of the contract entered into between the depositor and the bank, as evidenced by the certificate of deposit, but upon the legal enforceability of the alternative payee's claim to the fund on deposit.
In other words, the rights of the bank, under its contract with W.A. Bright, are made to depend upon the rights of J.G. Bright under an entirely distinct contract or arrangement with W.A. Bright.
It is a novel proposition to me that the rights of a party under a specific contract are determinable by the rights of another party under an entirely distinct and separate contract.
It appears to me that the controversy, if it exists, between W.A. Bright or his administrator and J.G. Bright, touching the right to the fund, is one thing, and that between W.A. Bright or his administrator and the bank touching the payment of the certificate is an entirely different one.
Whatever arrangement, agreement, or promise existed between W.A. Bright and J.G. Bright prior to the actual deposit of the money by W.A. Bright, and whether or not J.G. Bright was thereby vested with an enforceable right to the fund, are matters entirely wide of the mark. The questions are whether or not there was a valid contract between the depositor and the bank, and whether or not the bank has complied with its obligations under that contract.
It may be conceded that nothing which preceded the issuing of the certificate of deposit in the nature of a promise or contract on the part of W.A. Bright and nothing in the terms of the certificate conferred upon J.G. Bright an enforceable right to the fund on deposit, and yet it by no means follows that the contract between W.A. Bright and the bank, an entirely separate and distinct contract, was thereby annihilated. *Page 108 
Whether or not J.G. Bright's right to the fund was supported by a contract with W.A. Bright upon a valuable consideration, or his right to the fund was otherwise enforceable, was not a matter which the bank was required to investigate; it would have been an impertinence on the part of the bank to have done so. By its certificate of deposit indorsed by W.A. Bright, the bank assumed the relation of debtor to both W.A. Bright and J.G. Bright, and their relations with each other interested it not.
In Folk v. Moore, 103 S.C. 266; 88 S.E., 18, quoting from the syllabus, it is held:
"A certificate of deposit in writing containing an unconditional promise to pay absolutely a certain sum of money to the order of the payee at a definite time is, in effect, a promissory note."
In Bank v. Massey, 192 U.S. 138; 24 Sup. Ct., 199;48 L.Ed., 380, it is said:
"A deposit of money upon general account with a bank creates the relation of debtor and creditor. * * * It creates an ordinary debt, not a privilege or right of a fiduciary character. * * * `The deposit of money by a customer with his banker is one of loan, with the superadded obligation that the money is to be paid, when demanded, by a check.'"
If the justification of the bank in paying the fund to J.G. Bright depended upon an enforceable contract between W.A. Bright and J.G. Bright, that condition would have prevailed before as well as after the death of W.A. Bright.
Here, evidently at the request of W.A. Bright, the certificate was made out in the names of "W.A. Bright or J. G. Bright," and was payable upon the order of either, six months after date. The bank obligated itself, as a debtor of these parties, to pay as directed. It had the right to assume that satisfactory and valid legal grounds existed in the relations of these parties to justify that arrangement. *Page 109 
If it was a valid obligation on the part of the bank to pay as directed, how is it conceivable that the bank should suffer by a compliance therewith?
The money belonged to W.A. Bright. He had the right to dictate the terms upon which the certificate of deposit should be issued. He dictated those terms, and the bank issued the certificate accordingly, payable either to him or to J.G. Bright. That this constituted a valid contract between W.A. Bright and the bank by which each was bound, regardless of any legal claim that J.G. Bright may or may not have had under some previous agreement with W.A. Bright or under the terms of the certificate, does not seem to me open to argument.
I think that this is clear under a consideration of the situation if W.A. Bright had survived the maturity of the certificate. Even then J.G. Bright would have had no right to come into Court upon a refusal by the bank to honor his demand for the money, unless he could have shown a gift, or trust, or an enforceable contract; and yet it will not be contended that the bank should be required to pay again the money if it had acted in conformity with its contract with W.A. Bright in paying it to J.G. Bright. The justification of the bank in paying the money to J.G. Bright would have been referred to its contract with W.A. Bright, and not to the existence of an enforceable contract between W. A. Bright and J.G. Bright. If W.A. Bright, alive, could not have questioned the right of the bank to pay to J.G. Bright, how can his administrator do so?
In L.R.A. 1917C, 550, there is an elaborate note which is confined to the right of the alternative payee (i. e., the person other than the owner of the fund) where there is no enforceable contract between him and the actual depositor. It is there concluded that the alternative payee has no enforceable claim upon the grounds: (1) the supposed agreement is without valuable consideration; (2) the deposit is not a gift for the depositor retains the right himself *Page 110 
to withdraw it; (3) it is not a trust practically for the same reason that it is not a gift, no present right is transferred; (4) it is not a testamentary disposition, for it lacks the essentials of a will.
Nowhere in the note or in extracts from several hundred cases cited is there a suggestion that the interest which the alternative payee takes is a power revoked by the death of the depositor.
Assuming that W.A. Bright had the power to revoke the authority which he gave to the bank by contract to pay the money to J.G. Bright, he did not do so, and imposed no limitation in the certificate as to the payment to J.G. Bright which he could so easily have done. He put it in the power of J.G. Bright, by his own unlimited contract, to collect the money after his death. If J.G. Bright was not entitled to the money, he should be required to refund it; but I do not see the justice of requiring the bank, which has paid out the money in conformity with W.A. Bright's unlimited contract, to pay it again to his administrator, when, if he were in Court demanding it under similar circumstances, he would not be heard for a moment.
While, as stated, the note in L.R.A. 1917C, is limited to controversies between the depositor or his personal representative and the alternative payee, the annotator says:
"If the contest were between the depositors and the bank, it may be true that the depositors, even the one other than the original owner, could stand on the contractual relation created by the deposit in this form, or that the bank, having paid the fund to the one other than the original owner, might defend an action by the original owner on the ground that it had complied with its contract in such payment."
The case of Sawyer v. Mabus, 107 S.C. 369;92 S.E., 1029, is not at all controlling. On the contrary, it emphasizes the distinction which I have endeavored to draw, and demonstrates the fallacy of making the bank's justification *Page 111 
depend upon the validity or enforceability of J.G. Bright's claim to the fund.
In that case Paul Mabus had deposited certain money in the bank payable to the order of himself or Sally Mabus. After his death, the money still remaining on deposit, a suit was brought by his administrator against the bank and Sally Mabus to determine who was entitled to it. The bank had not paid out the money and the suit was really between the administrator and Sally Mabus; the bank practically occupying the position of an interpleader. The majority opinion of this Court was to the effect that, as the evidence showed that the intention of the depositor was that Sally Mabus should have the deposit at the death of the depositor, such an arrangement, being testamentary in effect, could not be enforced; that it was not a gift in praesenti. The Circuit decree, approved by two of the Justices, contains an admirable review of the authorities and a clear statement of the rule. The question whether or not the bank would have been justified, after the death of Mabus, in paying the money to Sally Mabus, under its contract with the depositor, was not involved and was not discussed.
For the foregoing reasons I am of opinion that the bank was entirely within its rights in paying the money to J.G. Bright, and that the judgment should be reversed.