Court Opinion

ID: 7958369
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:24:17.566343+00
Date Added: 2024-06-11T16:34:20.789995
License: Public Domain

W. F. Hood, J.
(dissenting). I respectfully dissent. If the bank’s claim against the plaintiff was for a tort or general breach of contract, I would concur with the majority opinion. Any such unliquidated claim would have to be established by separate suit or by counterclaim; and I agree that a counterclaim, at least at this state of the proceedings, was improper.
The bank’s claim, however, was for the amount past due on promissory notes. According to 3 Callaghan’s Michigan Civil Jurisprudence (2d ed), § 117, pp 282-283:
"The general rule is that a bank has a lien on all moneys, notes and funds of a customer in its possession, for any indebtedness of the customer to the bank which is due and unpaid.”
The bank’s right is more accurately termed a right of setoff than a lien. 10 Am Jur 2d, Banks, § 666, pp 635, 636. Whether termed a lien or right of setoff, I do not perceive any reason of policy or rule of law that would prevent such right from accruing to the bank the instant plaintiff Westland became the owner by reason of the consent judgment of the defendant’s bank account. A bank account may be transferred or assigned. 10 Am Jur 2d, Banks, § 354, pp 316-317. The consent judgment operated as an assignment.
A bank’s right of setoff or lien can be exercised without notice or demand and, consequently, without first having obtained judgment or filing suit or counterclaim. The setoff may be asserted simply as a defense, albeit an affirmative defense, to an *106action by the depositor against the bank in the same manner that the defense of payment is asserted in any action on a debt. Westland’s motion for judgment against the bank in this case was in the nature of an action on the debt.
Since the exercise by the bank of the right of lien or setoff is a private, self-help procedure, not state action, it is not barred by application of the principle of Sniadach v Family Finance Corporation of Bay View, 395 US 337; 89 S Ct 1820; 23 L Ed 2d 349 (1969). There is an annotation on this point at 65 ALR3d 1284, Anno, Post-Sniadach Status of Banker’s Right to Set Off Bank’s Claim Against Depositor’s Funds.
It is true that the bank originally asserted its claim on the notes only as a counterclaim, and not as a defense to plaintiffs motion for judgment. It appears, however, that the briefs of both parties filed with the trial court in connection with the motion for judgment touched upon the issue of the bank’s right of setoff as a defense to the motion. Immediately after plaintiffs motion for judgment was granted, the bank filed a motion to amend the judgment to allow the setoff. This latter motion more clearly raised the issue of the right of the bank to assert the setoff as a defense to plaintiffs claim on the account. The bank has appealed from the denial of that motion. Thus, I feel the issue was both raised and preserved as to whether the bank’s right of setoff may be asserted not as a counterclaim, but as a defense to plaintiffs motion for judgment against the bank. Moreover, GCR 1963, 111.7 provides in pertinent part:
"When a party has mistakenly designated a defense as a counterclaim * * * the court on terms, if justice so requires, shall treat the pleading as if there had been a proper designation.”
*107I would remand this case to the circuit court to determine whether the bank did indeed have a claim against the plaintiff on unpaid notes past due at the time the consent judgment transferred to the plaintiff ownership of the bank account. In the event such is determined to be the fact, then to the extent thereof the bank had the right to set off its claim simply as a defense to the plaintiff’s motion for judgment. If the setoff exhausted the bank account, Westland is not entitled to a judgment in any amount against the bank.