Court Opinion

ID: 3409334
Source: CourtListenerOpinion
Date Created: 2016-07-05 19:26:53.742373+00
Date Added: 2024-06-11T13:50:05.753185
License: Public Domain

In banking circles a deposit for a special, or specific, purpose is as well recognized as a general or special deposit. Whether a deposit is general, special or for a special purpose depends upon the agreement of the parties to the deposit. (Northern Sugar Corp. v. Thompson, 13 Fed. (2d) 829; Stephensv. Chehalis Nat. Bank, 82 Wash. 254, 141 P. 340.)
The contract entered into between the Title Abstract Company, trustee for the Pacific States Savings  Loan Company, and the Commercial State Bank, on July 15, 1921, controls the character of the deposits made thereunder. It is perfectly clear that the deposits were to be made for a specific purpose, namely, to be remitted on or before the 20th of each month by the Title Abstract Company; and in case of the absence or inability of said company to act, the Commercial State Bank was authorized and instructed to forward to the Pacific States Savings  Loan Company, on the 23d of each month, the amount on deposit. It was further stipulated in the contract that any amount deposited to the credit of the Title Abstract Company for the Pacific States Savings  Loan Company should be forwarded *Page 488 
to said company on its written request. The contract also stipulated that the money deposited in this account was the property of the Pacific States Savings  Loan Company, and was placed in the Commercial State Bank for safekeeping only. The money so deposited was, under the agreement, the property of the Pacific States Savings  Loan Company, title to the money remaining at all times in the Pacific States Savings  Loan Company. To hold otherwise is to defeat the positive terms of the contract and to set at naught the intention of the parties, making for them a contract different from the one entered into. Contracts should not thus be swept away or held for naught, but should be enforced as written, and the intention of the parties carried out.
The parties to the contract did not consent to a commingling of the funds deposited with the funds of the bank, but even if there was a commingling, and sufficient funds were in the bank at the time of its closing for insolvency to cover the amount on deposit in this particular account, which is not disputed, they constituted a trust fund. The character of the deposit is clearly specified in the contract, and, as was said inNorthern Sugar Corp. v. Thompson, supra:
"Where the depositor, at the time a deposit is made, enters into an understanding and agreement with the bank that the money deposited is for a specific purpose, and for that alone, . . . . such deposit partakes of the nature of a special deposit, the relation between the depositor and the bank is that of principal and agent, and the title to the deposit remains in the depositor. Fralick v. Coeur d'Alene Bank  TrustCo., 36 Idaho 108, 210 P. 586, 588; Morton v. Woolery et al.,48 N.D. 1132, 24 A.L.R. 1107, 189 N.W. 232; First NationalBank of Ashland v. Prickett, 19 Ala. App. 204, 95 So. 920;Eshbach v. Byers, 164 Ill. App. 449; Sawyers v. Conner,114 Miss. 363, Ann. Cas. 1918B, 388, 75 So. 131, L.R.A. 1918A, 61; Payne et al. v. Burnett et al., 151 Tenn. 496, 39 A.L.R. 1125, 269 S.W. 27; Cottulla State Bank v. Herron
(Tex.Civ.App.), 191 S.W. 154; Decatur Creamery Co. v. West Side Trust Savings *Page 489 Bank, 213 Ill. App. 220; Paige v. Springfield Nat. Bank,12 Ohio App. 196; Moreland v. Brown, 86 Fed. 257, 30 C.C.A. 23;Montagu et al. v. Pacific Bank et al. (C. C.), 81 Fed. 602; notes, 24 A.L.R. 1111, and 39 A.L.R. 1138; 7 C. J., p. 631, sec. 307; Morse, Banks  Banking, vol. 1, sec. 185."
In Skinner v. Porter, 45 Idaho 530, 263 P. 993, it is said in the course of the opinion:
"The essential thing to be noted is that this money was delivered to the Bank of Hansen for a specific purpose; that is, to be turned over to the Kuna State Bank. Because that purpose was not carried out equity, in order to prevent a fraud, will give rise to a constructive trust in favor of the original owner of the money or the cestui que trust." (Citing cases.)
The Commercial State Bank merely assumed charge or custody of the money, without authority to use it, the Pacific States Savings  Loan Company being at all times entitled to receive it on demand or upon check issued by its agent, the Title Abstract Company, or to have the money remitted to it by the Commercial State Bank.
It is a general rule that where a deposit is made in a bank with the distinct understanding that it is to be held by the bank for the purpose of furthering a transaction between the depositor and a third person, or where it is made under such circumstances as give rise to a necessary implication that it is made for such purpose, the deposit becomes impressed with a trust which entitles the depositor to a preference over the general creditors of the bank where it becomes insolvent while holding the deposit. This is true where money is deposited in a bank for transmission to a third person. (Montagu v. PacificBank, 81 Fed. 602; Stoller v. Coates, 88 Mo. 514; Harrison v.Smith, 83 Mo. 210, 53 Am. Rep. 571; Widman v. Kellogg, 22 N.D. 396,133 N.W. 1020, 39 L.R.A., N.S., 563; St. Louis v.Johnson, 5 Dill. 241, Fed. Cas. No. 12,235; Moreland v. Brown.
56 U.S. App. 722, 86 Fed. 257, 30 C.C.A. 23; Ryan v.Phillips, 3 Kan. App. 704, 44 P. 909; Re Jarmulowsky *Page 490 
169 C.C.A. 297, 258 Fed. 231; People v. California SafeDeposit  T. Co., 23 Cal. App. 199, 137 P. 1111; Hudspeth v.Union Trust  Savings Bank, 196 Iowa, 706, 31 A.L.R. 466, 195 N.W. 378; Chapman v. Sipe Springs First Nat. Bank
(Tex.Civ.App.), 275 S.W. 498; Blummer v. Scandinavian American StateBank, 169 Minn. 89, 210 N.W. 865; Farmers' Trust Co. v. BurnesNat. Bank (Mo.App.), 285 S.W. 110; Mothersead v.Harrington, 123 Okl. 179, 250 P. 483; see, also, State v.Banking Corp., 77 Mont. 134, 251 P. 151.)
I can see no justification for setting aside the contract of the parties and in reversing the judgment of the trial court.