4715 REALTY CORPORATION, A FLORIDA CORPORATION, APPELLANT,
v.
CENTRAL BANK AND TRUST COMPANY, APPELLEE
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4715 Realty Corporation appealed a summary judgment favoring Central Bank and Trust Company in a dispute over collateral for a letter of credit. The court reversed, holding that a bank cannot set off funds belonging to a third party unless it lacked knowledge that those funds belonged to someone other than the depositor.
The court held that if a bank actually knows or has sufficient knowledge to be charged with notice that deposited funds belong to a third person rather than the depositor, it may not seize and retain those funds to offset the depositor's debt. A genuine issue of material fact existed regarding whether the defendant bank knew or should have known the funds belonged to the plaintiff corporation.
[1] A bank may not seize and retain funds deposited in an account to offset the debt of its depositor if the bank actually knows the funds belong to a third person or has kno…
[2] A genuine issue of material fact exists regarding a bank's knowledge of third-party ownership of deposited funds when the depositor is not the owner of the funds.
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Join FLexlaw to unlock all legal intelligence“If a bank actually knows that funds deposited in an account belong to a third person or if it has knowledge of sufficient facts to charge it with notice, it may not seize and retain the funds in order to offset the debt of its depositor.”
Establishes the controlling legal rule that banks cannot set off funds known to belong to a third party, regardless of the depositor's debt.
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Join FLexlaw to unlock all legal intelligence4715 Realty Corporation requested defendant bank issue a letter of credit to Metropolitan Dade County in July 1970, with the bank requiring $1,000 in …
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PER CURIAM.
Plaintiff-appellant seeks review of a summary judgment entered in favor of defendant-appellee.
Plaintiff-appellant, 4715 Realty Corporation, was a customer of the defendant, Central Bank and Trust Company, and maintained a commercial account with the bank. Appellant corporation in July 1970 requested the defendant-appellee to'issue a letter of credit to Metropolitan Dade County. The bank agreed provided that plaintiff would deposit $1,000 to secure the defendant for any liability it might incur thereunder. In compliance therewith, plaintiff-appellant drew a check for the sum of $1,000 on its commercial account with the defendant bank to the order of Nathan Rosenblum who in turn opened a savings account with the defendant with the check and then delivered the passbook to the bank as collateral security for the letter of credit. The bank issued its collateral receipt for the passbook and issued its letter of credit. Nathan Rosenblum also executed an assignment of the passbook to the bank. After the letter of credit expired and was returned to the defendant bank, plaintiff requested the return of its collateral. Defendant refused because it claimed a set-off by virtue of a prior judgment against Nathan Rosenblum. Thereafter, plaintiff filed the instant suit. Both parties moved for summary judgment which was granted in favor of the defendant. Plaintiff appeals therefrom. We reverse.
If a bank actually knows that funds deposited in an account belong to a third person or if it has knowledge of sufficient facts to charge it with notice, it may not seize and retain the funds in order to offset the debt of its depositor. 4 Fla.Jur. Banks and Trust Companies § 187 (1969). Reviewing the record in the case sub judice in the light most favorable to the plaintiff against whom the summary judgment was entered, we conclude that there exists a genuine issue as to whether the defendant bank actually knew or had sufficient knowledge to be charged with notice that the funds deposited by and in the name of Nathan Rosenblum belonged to the plaintiff corporation.
Accordingly, the judgment herein appealed is reversed and the cause remanded for further proceedings.
Reversed and remanded.
BARKDULL, Chief Judge
(dissenting).
I respectfully dissent. The bank did not direct that the account be opened in the individual’s name. The $1,000.00 could have been posted with the bank under the corporate name. The account, as actually opened in the name of the individual, who was the judgment debtor of the bank, was an unrestricted account and I would sustain the action of the trial judge. Bank of West Orange v. Associates Discount Corporation, Fla.App.1967, 197 So. 2d 858; Ribaudo v. Citizens National Bank of Orlando, 5th Cir. 1958, 261 F. 2d 929; McKee v. Hood, 5th Cir. 1963, 312 F. 2d 394; 4 Fla. Jur., Banks and Trust Companies, § 187.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Venceslao Nardi v. Cont'l Nat'l Bank, 559 So. 2d 307 (Fla. 3d DCA 1990)…deposited in an account belong to a third person or if it has knowledge of sufficient facts to charge it with notice, it may not seize and retain the funds in order to offset the debt of its depositor.” 4715 Realty Corp. v. Central Bank & Trust Co., 301 So. 2d 792, 793 (Fla. 3d DCA 1974) (emphasis added; citation omitted). Here the account name “N Security Escrow Account” put the bank on such notice, at least to the point of requiring the bank to make inquiry to determine whether or not the funds were, as the…
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BankATLANTIC v. Streicher Enters., Inc., 756 So. 2d 195 (Fla. 4th DCA 2000)…between the Tribe and the agent, the partial summary judgment was erroneously granted, because there remained a question of fact as to the ownership of the accounts. We agree and therefore reverse. In 4715 Realty Corp. v. Central Bank & Trust Co., 301 So. 2d 792 (Fla. 3d DCA 1974), the plaintiff, a customer of the defendant bank, obtained from the bank a letter of credit, upon deposit by its agent of a check for $1,000 and the agent’s assignment and delivery of the passbook to the bank as security for the l…
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T. K. Builders, Inc. v. Exch. Bank OF Cent. Fla., 320 So. 2d 39 (Fla. 2d DCA 1975)…e, that the summary judgment was improper herein, the judgment appealed from should be, and it is hereby, reversed; and the cause is remanded for further proceedings not inconsistent herewith. BOARDMAN and SCHEB, TT., concur. . (Fla.App.3d, 1974), 301 So. 2d 792.…
Previewing 3 of 4 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Ribaudo v. Citizens Nat'l Bank OF Orlando, 261 F.2d 929 (5th Cir. 1958)
- McKEE v. Hood, 312 F.2d 394 (5th Cir. 1963)
- Bank OF W. Orange v. Assocs. Disc. Corp., 197 So. 2d 858 (Fla. 4th DCA 1967)
- Raudabaugh v. State, 197 So. 2d 858 (Fla. 1st DCA 1967)