13. Payment To Trustees

We now come to the payment of deposits made by trustees. They die, and the beneficiaries claim them; to whom shall the bank pay, the administrator or executor of the depositor or the beneficiary? The cases may be divided into two classes: first, those in which the deposits are put in the name of a trustee for some peculiar reason, but with no intention of creating a trust for the benefit of any one; and, second, cases in which the depositor's intention is to create a trust for the benefit of another in the true sense of the term. The first kind of trust, which is so only in form, creates no benefit, no truly trust relation. The object of making it often has been to evade the law restricting the amount that a depositor can put in a savings bank. This is easily done by putting an amount in his own name, another amount in his name as "trustee," perhaps a third amount as trustee for a person who is named, and so on. In all of these cases no real trust is created, and the claiming beneficiary has no right to anything; even though such a deposit be a violation of law, this is no ground for permitting a beneficiary to take it. The depositor may have been guilty both of a moral and legal wrong, but the rights of a claiming beneficiary are not thereby strengthened.

1 Jochumsen v. Suffolk Savings Bank, 3 Allen 87.

The following case is an example of many others. A deposited a sum in his own name, and another sum in his name as trustee for his daughter B, and kept the book. Alter his death she claimed the trust deposit, but failed in her contention. Furthermore, oral proof was admitted to show that the deposit was made to evade a law limit-ing the amount that a depositor could put in a savings bank. In another case in which a similar deposit was made, the beneficiary did not know of the depositor's action until alter his death. She tried to hold it and also to show that it was the depositor's Intention to create a trust. She failed as in the other case. Therefore the rule clearly is that "a deposit in a savings bank in trust for another who is neither party nor privy to the transaction is an executory trust if the depositor retains the title and power of disposing of the property," and can not be enforced. In other words, such a trust conveys nothing to the person named as beneficiary. The bank consequently is safe in such cases in paying the deposit to the legal representatives of the depositor.

When a depositor really intends to create a trust for the benefit of the beneficiary, a different rule applies, and he or she can claim the money. An illustration may be given. A deposited money in a savings bank in the name of B, her niece, intending that it should be a gift, but retaining the pass book until her death. Shortly before her death, for the first time, she informed B of the gift. The court sustained B's claim to the deposit. In another case there was written on the depositor's book "for his daughter," "in trust for" her. These words, the court declared, clearly showed the creation of a trust for her benefit, and she took the money. There are numerous decisions of similar purport. The retention of the book by the trustee is not regarded as negativing such intention. In one of the cases the court remarked that the trustee retained possession of the book because the deposit was made in her name as trustee, and not because she had not given the beneficial interest of the deposit to the beneficiary.

On this point the decisions of the courts are conflicting. In most of these a trust is upheld when it is clear that the depositor intended to create one, whether the beneficiary knew of its existence or not. But in some states, especially in Massachusetts, knowledge by the beneficiary is an essential element to establish the trust relation. In all cases, however, proper evidence may be used to explain the trustee's intention. Difficult as the question may be for a bank to determine always what was the depositor's intention, it must make no mistake. If a trust exists, the deposit must be paid to the beneficiary; for, if it is not, there can be a recovery against the bank. On the other hand, if the contrary mistake has been made, the representatives of the depositor can recover against the bank tor the wrongful payment to some one else.

Lastly, there is another principle affording to a bank some protection. If a deposit is made "in trust for B," and letters of administration are granted to an administrator on the trustee's estate, and the deposit is paid to him, the bank receiving no notice of any claim by the beneficiary, its action is justifiable. It owes no duty to the beneficiary until he forbids its payment, consequently if this is not made until the bank has acted, unless unusual circumstances surround his condition, the beneficiary has no claim thereon.

14. Appointment Of A Drawer

In some states a book is kept in which a depositor can, if he wishes, appoint a person to draw out his deposit after his death, it he has not disposed of it by will. This is done by virtue of a statute enacted for that purpose. It saves the expense and trouble of appointing an administrator, and the law is regarded with favor where it has been longest in opera tion.1

1 Fidelity Insurance co,v Wright,16 Pa. Week. Notes 177.