Facts
- Eliza Jenkins held a deposit account at Scituate Savings Bank.
- Jenkins assigned her claim and delivered the deposit book to Craig, who notified the bank of his ownership.
- The bank was later summoned as trustee of Jenkins in a creditor’s suit against her and was defaulted.
- After judgment, execution issued; Charles G. Davis, attorney for the judgment creditor, took the execution and demanded payment from the bank within thirty days.
- The bank’s treasurer issued Davis a new deposit book “as trustee” for the amount of Jenkins’s deposit, and Davis credited that amount on the execution (returned satisfied in part).
- After the bank entered receivership, Davis petitioned in equity to have the receivers rank him as a creditor and pay dividends on the amount shown in the new deposit book.
Issues
- Whether Davis could be treated as a creditor of the bank based on the new deposit book issued to him after trustee process, despite a prior assignment of the underlying deposit to Craig with notice to the bank.
- Whether issuing a deposit-book credit to Davis constituted payment or otherwise created an enforceable contractual obligation by the bank.
- Whether the bank’s promise implied by the new deposit book was enforceable without consideration when the bank had no underlying liability on Jenkins’s deposit.
Decision
- The Supreme Judicial Court affirmed dismissal of the petition.
- Davis could not claim the deposit as Jenkins’s assignee because the account belonged to Craig, whose title was not affected by later dealings between Davis and the bank.
- Crediting Davis in a new deposit book was not payment; it merely reflected a debt entry on the bank’s books.
- Any recovery by Davis required a binding contract with the bank, but the promise represented by the new deposit book was unsupported by consideration because the bank owed no liability on the underlying account.
Legal Principles
- A prior assignee of a bank deposit, upon notice to the bank, holds title beyond the reach of later arrangements premised on the assignor’s supposed interest.
- A bank’s credit entry or issuance of a deposit book does not itself constitute payment; it evidences (at most) a debtor-creditor relation as to that credit.
- An alleged new promise by a bank to pay a deposit amount is not enforceable without consideration when the bank is under no preexisting liability and receives no bargained-for exchange.
- A promisee’s subsequent acts in reliance do not supply consideration sufficient to convert a gratuitous promise into a binding contract.
Conclusion
Because the deposit had been assigned to Craig and the bank’s issuance of a new deposit book to Davis neither effected payment nor created a supported contractual obligation, Davis was not entitled to be ranked as a creditor or to receive dividends from the bank’s receivers.