Opinion
No. 22026
Decided May 14, 1930.
Banks and banking — Passbook rules and regulations are contract between bank and depositor — Bank's consent necessary to transfer or assignment — Depositor's administrator cannot convert deposit without probate court's consent.
ERROR to the Court of Appeals of Cuyahoga county.
This case involves the contested ownership of a savings deposit in the Union Trust Company of Cleveland. The account was opened with the bank about ten years before the particular transactions embraced in this litigation arose, and was an active current account during all that time, with many deposits therein and many withdrawals therefrom. At the time the dispute of ownership arose, the account showed a credit balance, in round figures of about $2,800. Interest since accruing makes the credit balance, in round figures, now about $3,000.
The account was opened in the name of Rebecca Greenstein, the wife of Jacob Greenstein, who was in active business during the time mentioned. Rebecca gave Jacob written permission to draw checks against this account, which written permit was filed with the bank. Jacob made deposits in and checks against the account, pursuant to the permit. There was never any dispute, prior to the death of Rebecca, about her ownership at all times of the credit balance in the account. Rebecca died intestate, leaving her husband and their six children surviving. Shortly after Rebecca's death, Jacob took the savings passbook to the bank and informed the bank of Rebecca's death, and asked the bank to take up the passbook and issue a passbook to him in his own name, and enter therein the credit balance shown in the surrendered passbook. This was done by the bank, but in so doing the bank omitted to note in the new passbook that it was issued to Jacob as the administrator of his wife's estate, due perhaps to the fact that he had not then been appointed administrator. Three days after this transaction, Jacob was duly appointed administrator of Rebecca's estate by the probate court of Cuyahoga county, and duly qualified and gave bond as such administrator. Jacob filed in the probate court an inventory of the estate of Rebecca, which included as an asset of the estate the credit balance of this savings account; that is to say, $2,800, in round figures.
A very few months after the death of Rebecca, Jacob remarried. His second wife's first name was Bessie. The contest here over the ownership of this savings account is between Bessie and the plaintiff in error herein, C.H. Royon, the present administrator de bonis non of Rebecca's estate, representing the next of kin — Jacob and the six children — Jacob having resigned as administrator and departed for parts unknown, for reasons stated later herein.
Bessie wanted Jacob to change his domicile from Cleveland to Boston. They went to Boston to see if they could arrange living there accordingly. Jacob was not contented in Boston, and returned to his home and children in Cleveland. His efforts to induce his wife to come back to Cleveland failed. He then went to Boston to adjust their differences. On appearing there his wife caused his arrest for nonsupport — a felony in Massachusetts. In order to secure his release on bail he hypothecated with the bailiff of the court the savings bank passbook covering the amount in the Union Trust Company. Later Jacob agreed with Bessie that if she would withdraw her charge of nonsupport, and cause the criminal case to be dismissed, he would assign and transfer to her all of his interest in this savings account. The court assented to this arrangement and dismissed the criminal case and ordered the transfer as agreed upon. The passbook was delivered to Bessie, accompanied by the following assignment, that is to say:
"Boston, Mass., Aug. 25, 1928.
"Union Trust Co., Cleveland, Ohio.
"I, Jacob Greenstein, of Cleveland, Ohio, do hereby assign, transfer and set over unto Bessie Greenstein, all my right, title and interest in and to a certain bank book deposit No. D129536, Union Trust Co. Cleveland, together with all moneys due and to become due thereon, both principal and interest.
"To have and to hold the same to the said Bessie Greenstein, or her assigns, with power to collect the same.
"In witness whereof, I hereunto set my hand and seal this twenty-fifth day of August 1928.
"The amount on deposit in said book is $2,893.04.
"Jacob Greenstein.
"In presence of "Carl V. Boman, "Asst. Clerk East Boston District Court."
The rules of the Union Trust Company, printed in the passbook so assigned, contained the following:
"Deposits may be withdrawn by the depositor in person or by written order; but in either case, this pass book must be presented that such payment may be duly entered therein.
"As the officers of the company may be unable to identify every depositor, the company will not be responsible for loss sustained where a depositor has not given notice of his or her book being stolen or lost, if such book be paid in whole or in part, on presentation.
"In all cases, a payment upon presentation of a deposit book shall be a discharge to the company for the amount so paid.
"No assignment or transfer of this pass book, or of the deposits herein entered, will be recognized by this company, unless the consent of the company shall first be obtained and memorandum thereof entered herein."
The Union Trust Company never consented to this assignment, nor entered any memorandum of consent in the passbook.
Jacob, upon his release, immediately returned to Cleveland, and forthwith commenced an action to restrain by injunction the Union Trust Company from paying the credit balance of this savings account to Bessie or to her assigns. A writ of injunction was promptly issued as prayed for. About thirty days thereafter a grand jury in Boston returned an indictment against Jacob on the ground of nonsupport, and thereupon Jacob left Cleveland for parts unknown, and the plaintiff in error was duly appointed administrator de bonis non of the estate of Rebecca Greenstein, and the issues herein were made up. Briefly stated, they are as follows:
The administrator claims that Jacob's only interest in this deposit was as one of the next of kin (Jacob and the six children); that the whole amount was within the jurisdiction and control of the probate court of Cuyahoga county, listed there by Jacob as an asset of Rebecca's estate, and which was in process of administration in that court prior to and at the time of the pretended assignment by Jacob of the passbook to Bessie in Boston, as mentioned; that Jacob could not assign any interest that he did not own, and that his pretended assignment, by its terms, only covered, if anything, what he did own; and, furthermore, that the attempted assignment was void for the further reason that the Union Trust Company had at no time consented thereto, and that Bessie Greenstein cannot in any sense be held to be an innocent purchaser for value.
The claim of Bessie Greenstein is that the assignment of the chose in action, as represented by the passbook, was a full and complete transfer to her of the whole credit balance in the account, and that the consent of the Union Trust Company to the making of the assignment was in no wise essential to its validity, and that she stands in the same position in all respects as does the holder of negotiable commercial paper acquired in due course; that is to say, purchased for value before due, and without any knowledge of any defect in the title thereof.
The Union Trust Company insists that its consent to the assignment was an essential to its validity, and that the attempted assignment without its consent was void.
The court of common pleas sustained the position taken by Bessie Greenstein, and entered judgment for the full amount claimed, and ordered the Union Trust Company to pay the entire credit balance in the account to Bessie Greenstein. The Court of Appeals affirmed the judgment entered by the court of common pleas. This court ordered the record certified here for review.
Messrs. Stearns, Chamberlain Royon, for plaintiff in error.
Mr. Mark A. Copeland and Mr. Robert M. Morgan, for defendant in error Bessie Greenstein.
Messrs. Gates, Chenowith Blair, Messrs. M.B. H.H. Johnson, Mr. John T. Scott and Mr. Robert W Wheeler, for defendant in error The Union Trust Company.
Messrs. Cannon, Spieth, Taggart, Spring Annat, for defendant in error The First National Bank of Boston.
The rules and regulations of the bank, printed in the passbook in this case, were a part of the contract entered into between the bank and the depositor, and were equally binding upon all subsequent owners and holders of such passbook. These rules and regulations were promulgated for the protection of the bank and for the protection of the depositor as well. They were not unreasonable, nor are they inimical to public policy. They do not prevent the depositor from withdrawing his full credit balance at any time and making any disposition thereof which he elects to make. They do prevent him from substituting another party to the contract without procuring the consent of the bank so to do. The bank was under no legal obligation to accept unconditionally the deposit when tendered, and was acting clearly within its rights in affixing the conditions printed in the passbook, and the depositor, by accepting the passbook, fully and completely assented to those conditions. An assignee or transferee of the passbook cannot avail himself of the part of the contract which suits his purposes and escape the effect of the balance of the contract by simply disregarding it.
Jacob Greenstein, as administrator of Rebecca Greenstein's estate, after including in his inventory filed in the probate court the credit balance of the savings account as an asset of the estate for which he was administrator, and which estate was then in process of administration in that court, was without power to effect an assignment and transfer of such deposit to another party by delivering the bank passbook to such other party, accompanied by an assignment in writing such as was given in this case. Jacob Greenstein's interest in the fund was only that of one of seven next of kin. Surely he had no power to convey that which he did not own. Furthermore, this fund being then within the jurisdiction and control of the probate court, the administrator was obligated to follow the orders of that court in making any disposition of the fund. In fact, the administrator himself had no right to withdraw the fund from the bank and convert it to his own use without authority so to do conferred by the court; and if this be true, then manifestly he could not confer any such right or power upon any other person, no matter what method or means he employed to accomplish that result.
The credit balance in this savings account, evidenced by the bank passbook containing the conditions therein printed, and in process of administration, as stated, falls very far short of being the equivalent of negotiable commercial paper acquired in due course, for value, before maturity.
Bessie Greenstein must be charged, by the receipt of the bank passbook, with full knowledge of the rules, regulations, and conditions printed therein, and with full knowledge of the fact that Jacob Greenstein could not make a valid assignment and transfer to her of such credit balance and the bank passbook without the consent of the Union Trust Company.
Upon the facts manifest in the record, which are not in dispute, the trial and appellate courts should have entered judgment in favor of the plaintiff in error here for the full credit balance in the savings account, and ordered the Union Trust Company to pay the same to the plaintiff in error, C.H. Royon, as administrator de bonis non of the estate of Rebecca Greenstein.
Judgment reversed and final judgment for plaintiff in error.
MARSHALL, C.J., KINKADE, ROBINSON, JONES, MATTHIAS, DAY and ALLEN, JJ., concur.