Emerson v. Citizens State Bank of Mahnomen , 176 Minn. 584 ( 1929 )

¹ Reported in 224 N.W. 239. Plaintiff appealed from an order denying her motion for a new trial.

On February 15, 1926, plaintiff by letter sent to defendant bank a deed conveying certain land to one Luecken with instructions to deliver upon his paying $1,200, "providing the full amount is placed in the bank as my account." The bank acknowledged the receipt of the letter and restated the instructions. On March 20, 1926, the bank delivered the deed to grantee upon his leaving with the bank $1,190 and claiming a credit of $67.51 because of taxes. Thereupon the bank wrote plaintiff that the grantee "requests that this item [$67.51] be deducted from the $1,190.00 and if you will authorize me, I will deposit the balance, $1,122.49, to your account as per his instructions." Further correspondence followed in which the bank urged plaintiff to yield to the demands of the grantee, but she claimed they were not consistent with her contract; and on April 12, not being advised that her deed had been delivered, she advised the bank that the "deal is dropped" and demanded the return of her deed. On April 19 the bank sent to plaintiff two interest-bearing certificates of deposit for $600 and $590 payable in six months and twelve months, respectively, from March 20, 1926. Four days later the bank closed.

1. Plaintiff's instruction to the bank to place the money to her account meant that it was to be placed to her credit in her checking account, which had no balance since January 6, 1926. The bank did not do this. It held the money. It is claimed that the certificates were written on the day of their date. They were not delivered. They were unauthorized. They were never accepted. Plaintiff expected and intended to use her money in April. She did not wish certificates of deposit. The conduct of the bank in attempting to have plaintiff take the time certificates against her positive instructions in its apparent precarious condition furnishes a possible reason for not crediting the checking account.

The relation of creditor and debtor does not exist because of the unaccepted time certificates. Nor was that relation as contemplated by a credit on the checking account ever realized. The money was received to be given to plaintiff. The bank's duty in reference to the money was indicated in plaintiff's instruction. Its agency in behalf of plaintiff required the money to be credited to the checking account. This was not done.

The bank received the money as plaintiff's agent. Its duty was to deposit the money to the checking account. This would have created the relation of debtor and creditor. It violated its instructions and withheld the authorized credit. It could not deprive plaintiff of her title by an unauthorized disposition of her money which really amounted to a breach of trust. It remained hers. In this situation the bank closed. It follows that the bank never acquired title to the money and that the relation between the bank and plaintiff was that of trustee and cestui que trust; and that plaintiff is entitled to her money and her claim should be allowed as a preferred one. Blummer v. Scandinavian Am. State Bank, 169 Minn. 89,210 N.W. 865. See Winkler v. Veigel, 176 Minn. 384, 223 N.W. 622.

Reversed.